Editor: Appraisal Foundation Letter of August 17, 2011

 
From: Curits Harris [mailto:[email protected]]
Sent: Tuesday, August 30, 2011 1:27 PM
To: '[email protected]'
Subject: Editor: Appraisal Foundation Letter of August 17, 2011

 Editor, RE: John S. Brenan https://appraisalfoundation.sharefile.com/d/sd41485a674242298
Director of Appraisal Issues Your article was on the mark! These folks at the Appraisal Foundation/Appraisal Institute are totally lost. Please see the following statement by Sara http://financialservices.house.gov/UploadedFiles/071311stephens.pdf President of the Appraisal Institute. She is arguing against a PROPOSED federal law that would outlaw the use of Non-armslength sales transactions, when appraising market value. Also, it was reported that Four States have already banned this process. I have been in the Real Estate Business since 1984 and never used a non-armslength sale as comparable to a Market Transaction, all one has to do is read the Definition of Market Value. 1 Interagency Appraisal and Evaluation Guidelines, December 10, 2010The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. REO's, Probate Sales, Gifts, and other Distressed Property Sales do not come close to meeting this definition. Maybe one could, although I would not, argue that no (4) payment in cash, is acceptable. Besides where are his citations? I have never read in any publication that this was an acceptable practice. In other words, they are making this stuff as they go along. He, Brenan, speaks of a bifurcated market, duh!, what he calls bifurcated is actually two markets, one fair and the other distressed. Just as you would never use a Fair Sale to value a distressed property (i.e. for salvage value) you should never use a distressed sale for a fair market sale. One last comment, Of course distressed sales affect the fair sale market but to use distressed sales as comparable further extirpates the problem, forcing a downward arithmetic move to a geometric one. PLEASE KEEP UP THE GOOD WORK, THE REAL ESTATE MARKET HAS BEEN SEVERELY NEGATIVELY IMPACTED BY THE APPRAISAL FOUNDATION/APPRAISAL INSTITUTE. P.SIf you wish to discuss this issue any further my contact information is below. Thanks!
Curtis D. Harris, BS, CGREA, REB
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