Appraisal Institute states FHFA "study" is flawed. The "study" also used the Zillow Home Value Index aka Zestimate which includes tax assessor data, MLS listings, public data, info provided by alleged property owners... The data, analysis and conclusions are all flawed. GIGO, Garbage In Garbage Out. No one would ever publish their paper in a peer reviewed journal for those reasons yet the government sends it out as "factual research." Biased. #appraisalinstitute #FHFA #zillow #zestimatefails #Zestimate #marycummins #realestateappraiser #realestateappraisal
From the article.
"A study on the use of time adjustments by appraisers conducted by two researchers at the Federal Housing Finance Agency in November contains serious flaws that misrepresent the appraisal process and further demonize the appraisal profession regarding racial bias. The study, Underappraisal Disparities and Time Adjustments to Comparable Sales Prices in Mortgage Appraisals, contends appraised values often fail to reflect rapidly increasing home prices in competitive markets. It further casts housing equity concerns, claiming that time adjustments are used less in curing “underappraisal” in majority Black and Hispanic neighborhoods than in major White neighborhoods. The study suggests appraisers should use automated valuation models and lenders should randomly assign appraisal orders to mitigate bias.
For one, the assumption that appraisals should perfectly mirror the pace of rising market prices oversimplifies the role of appraisers and the appraisal process. The study does not sufficiently account for the complexity of making time adjustments in markets with uneven price growth or where transaction volumes are low, limiting the availability of comparable sales.
The study also interprets caution by appraisers as “underappraisal,” when this may represent a prudent check against market volatility. In rapidly appreciating markets, appraisals may appear low compared to contract prices, but this could serve as a risk-mitigation tool, in protecting buyers from overpaying during speculative bubbles.
Further, the research ignores critical dynamics of the appraisal process in how comparable sales may be accounted for by appraisers in the narrative section of appraisals. For example, in some markets, a market change might occur with an increase of as much as 1% per month. Therefore, a comparable sale that is as recent as 2 or 3 months ago, could require a 2% or 3% positive adjustment to the sale price. On the other hand, with a market that is moving at a mere 3% a year, then a three-month old sale would correspond to only a .75% adjustment. An appraiser might well not apply such adjustment, as it could be argued as being of virtual rounding error. An appraiser might well handle the issue in the reconciliation of the three to four or more comparable sales presented in the sales comparison approach, which is completely overlooked by the study.
There may be a myriad of other factors at play. For instance, and for whatever reason, an appraiser’s analysis could indicate that one of the comparable sales sold on the “high” side. Applying a time adjustment for an above-the-market sale, while requiring explanation, might not be appropriate at all.
The study also leans heavily on the use of automated valuation model information from Zillow, which has its own credibility and accuracy problems."
Read the rest at the link.
Link to article
Link to the flawed FHFA "study" "Underappraisal Disparities and Time Adjustments to Comparable Sales Prices in Mortgage Appraisals" by William M. Doerner, Scott Susin, November 2024. Working Paper 24-07
https://www.fhfa.gov/sites/default/files/2024-11/wp2407.pdf
Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.
- Mary Cummins LinkedIn
- Mary Cummins Meet up
- Cummins Real Estate on Facebook
- Mary Cummins Real Estate blog
- Cummins Real Estate on Google maps
- Mary Cummins of Animal Advocates
- Mary Cummins biography resume short
- Mary Cummins Real Estate Services
- Animal Advocates fan page at Facebook.com
- Mary Cummins
- Mary Cummins Animal Advocates on Flickr photos
- Mary Cummins Animal Advocates on Twitter.com
- Mary Cummins on MySpace.com
- Mary Cummins on YouTube.com videos
- Mary Cummins of Animal Advocates on Classmates
- Mary Cummins on VK
Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary, Cummins, #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, certified, single family, condo, condominium, pud, hud, fannie mae, freddie mac, fha, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, brea insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, 1073, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls, historical appraisal, facebook, linkedin
DISCLAIMER: https://mary--cummins.blogspot.com/p/disclaimer-privacy-policy-for-blogs-by.html
No comments:
Post a Comment