Basic Appraisal Standards

15% - 25%, Site adjust’s., 12 Months
There are to be no comparable adjustments that exceed 15% net and 25% gross. This is an
absolute, and one of SAMCO’s more firm requirements. If an appraisal is submitted with
excessive net and gross adjustments, an additional comparable that meets guidelines will be
requested. You can bet on it! In addition, SAMCO will lower your quality ranking, affecting
future assignment opportunities. Are there times when there just isn’t any other way to write the
report? Absolutely! But those are few and far between. But utilizing Search Parameters &
Results as we suggest will clearly show the reader of your report what is available in the
subject's market area. Search Parameters and Results are explained in Issue 3 of the SAMCO
Bulletin Board.

Comparables that exceed 15% net and 25% gross adjustments can still be utilized, especially
when you, the appraiser, feel that they carry significant weight in determining your estimate of
value. However, these comparables must not be placed in the primary (1-3) grid. There may be
a sale that, in your opinion, is the absolute best comparable that slightly surpasses the required
percentages. The excessive adjustments can be addressed and noted, but this comparable MUST
be placed in a supporting grid. This is not a Fannie/Freddie requirement, but a SAMCO one.
This is our reasoning. If an underwriter reviews an appraisal and locates exceptions in the
primary grid, the chances of additional explanations being requested and a more detailed
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scrutiny of the appraisal are increased. SAMCO’s goal is to minimize these requests from
underwriting, improving your profitability.

The site adjustment is a common reason for excessive net and gross adjustments. A rural subject
located on larger acreage with comparable properties much smaller in size (i.e. 20 acres vs. 2
acres) is a typical scenario. SAMCO recommends this type of situation be handled with the
following procedure:

Move comparables that exceed the required net and gross adjustments to a supporting grid. This
is imperative! Even if you believe these comparables are your best, they must be placed on the
comparable 4-6 grid. To further support your comparables in the 4-6 grid, provide bare land site
comparables to PROVE the site adjustment (again, 20 acre bare sites vs. 2 acre bare sites). In
your addendum, discuss how these comparables are the most similar and how you have proven
the site adjustment. Also, list, by comparable, what the net and gross adjustment percentages
would be without the site adjustment. If an underwriter requests further information, SAMCO
will support and defend your appraisal report. It’s simple; you, the appraiser, documented and
discussed with a detailed explanation and facts of how your estimate of value is correct.

A similar process is to be utilized for a comparable sale date exceeding 12 months. The absolute
best comparable may be 12 months and 1 week old, especially in rural areas. This comparable
absolutely cannot be placed in the comparables 1-3 grid, however! All three of the comparables
in the primary grid must be within 12 months old. Dated comparables MAY be placed in the
supporting grid with a detailed explanation added to the addendum. That 12 month and 1 week
old comparable sale may be your best indicator of value. But placing it in the second grid does
not diminish its impact on the Estimate of Value, and in your discussion you can place your
weight on that comparable sale.

SAMCO understands the challenges appraisers are facing, especially in rural areas. This does
not exempt appraisers from complying with appraisal requirements. Remember cram downs?
We are dealing with YOUR client’s profitability. SAMCO is always available to discuss your
challenges. We have been in the appraisal business for 30 years, much of it in rural areas. We
understand your challenges and want to work with you to provide the best report possible. It’s
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easier to work on as you are writing the report, not after it’s completed and sent in. So don’t
hesitate to call and share.




NOTE: The estimate of value is always your decision. With unique properties, writing a
defensible report is challenging. Your goal and SAMCO’s goal is to write the best, most
defensible reports possible, and working together we can do that!

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SAMCO Appraisal Management Company is a nationwide appraisal management service for community banks. We provide regulatory compliance and save our clients actual dollars at the end of the day.

SAMCO is committed to earning your loyalty one appraisal at a time.

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