please feel free to contact me if I can help with anything.

fbrick2011@yahoo.com

Thanks,
Fred

We have been warning agents about this for months on end. They simply would not listen! Now they get a quick lesson on reality.

We interviewed Jonathan Miller yesterday and it was amazing what he said about the valuation of homes in this market.

A realtor need not be caught by surprised in this market. They should expect the obvious.

Here in South Florida closed sales mean virtually nothing. We have actives WAY below previous closed and the regression analysis paints an entirely different picture.

One in a row for appraisers.

>Fred surprised all of us.

Fred,

>Indeed, hyperlink. You are a flexible professional, apparently not given to much hyperbole, and thoughtful in every way.

Hyperlink your name.

There are tons of SD originators who would appreciate an appraiser who openly discusses these topics. While we may not be able to choose you after Jan 1, It would be nice to get a cogent explanation when it doesn’t work out

You are demonstrably head and shoulders above your peers.

My comment about “we’ve been trying to do…” was probably construed as a defense of all appraisers… sorry about that one. I was referring to some of the analysis that some guys and myself do that is a little more flexible. Look, if the appraiser of Kris’s deal just applied a 1.5%/month negative time adjustment because that is what the overall rate is, and didn’t look beyond that, that’s taking a hard line.

Let’s say the overall rate of annual decline for attached housing in the Scripps Ranch area is 18%. There are lots of different ways to look at that. Let’s take attached homes that sold for $300K - $400K as a rung of pricing. If I run that through the regression analysis I mentioned, I come up with a declining rate of just over nine percent annually. If the closed sales and listings validate it, that’s what I would use as a rate of decline in time adjusting. Or maybe I would have to dig in farther into it………

I think we can all agree that most areas have some rate of decline going on at this time. And there are undoubtedly appraisers who don’t do enough analysis and just use some overall rate…… “ready, fire, aim!” afflicts every profession, right? If the appraiser applies the same level of decline to Encinitas Ranch that is going on in Village Park (both in 92024, but very different markets), that’s rigid.

What concerns me is the idea that seems to be circulating here that by observing the declining market, appraisers are contributing to the trend. “And if every appraisal used this declining market logic in determining value, how would our market or any market reverse course?” Appraisers just don’t have that kind of power. Did agents object when we used positive time adjustments to make purchase appraisal numbers work in 2004 and 2005? Did our use of them cause the market to keep going up farther than it should have? As soon as the market leveled off, appraisers generally quit applying positive adjustments…. and as different areas begin to stabilize out of this downturn, appraisals will reflect it (or should anyway)….. Uncle……

You write ethically and intelligently about this topic. However, as with all theoretical applications to the real world, your declining value approach casts no doubt to the fact that the theory itself has reached a mathematical limit (Brian says it much simpler), and it seems that the concept of limits with regard to those mathematical interpretations is not understood by either yourself or your colleagues.

Look, I’m not making this up. Even Einstein cried “uncle” when he was unable to completely blend his Theory of Relativity into the Unifying Theory. That is, he didn’t continue to bang his head when the observable facts began to undermine his theories.

This is an exercise in frustration for real estate agents, and rightly so. The dogma associated with declining values just creates a failed theory, and even your articulation of the rationale is insufficient to make the “error” go away.

Come on, cry “uncle” just once, for the sake of all of us who still revere the observable over the theoritical. This valuation of this home was subjected to a dogmatic, theoretical approach, and the concept of a well reasoned “arms length” transaction is now being discounted by you as if we were all crying out that the earth was flat.

We’re saying that the variable you are using in the declining market evaluation must be applied logically, not dogmatically. There can hardly be an argument in support of dogma here. To do so, again as aptly put by some of my colleagues, is professional foolhardiness.

Fred: Regarding the monthly 1.5% declining value, I still don’t agree with the appraisal approach. It’s overly simplistic to take a regional or even a community average as the defining parameter when the neighborhood comps for that particular product doesn’t match with it. When you have good supporting data, you can’t just ignore it in favor of a generalized declining %.