Time adjustments are not required. Unless they are needed . . . Appraisal time adjustments are also labeled as “market conditions” adjustments. Or, more recently in Evidence Based Valuation, “Market Price Indexing (MPI)©”. The FHFA blog post of 1/16/2024 defines “underappraisals” as those loan appraisals which come in below the contract price. The rising market […]
Time adjustments have long been required as good appraisal practice. On the residential side, they are required in guidelines issued by FannieMae and FreddieMac (the GSEs). Unfortunately, the requirement for time adjustments (“market conditions”) has been ignored by the lenders selling to the GSEs (Government Sponsored Enterprises). Why? Editor’s Note: Read Part 1 of this […]
A time adjustment is needed because all our sales data is historical. A sale price 6 months ago cannot be properly reflected in today’s dollars. Two parts. Two components. Two reasons: The value of the dollar has changed. The competing market price level has changed. Editor’s Note: This blog is part 3 on the GSE […]
Recent GSE (Fannie Mae and Freddie Mac) guidelines for appraisers and lenders make some assumptions. In particular we can use, for example, the requirements for market analysis and time adjustments. This is part 4 on our series on GSE Guidelines. Read the series here. USPAP (Uniform Standards of Professional Practice) Rule 1-4 states that an […]
First, note that the time adjustment is core to market analysis. It is not about “comparing comps.” It quantifies two things. The change in: 1) the value of the dollar and, 2) market segment price levels. This is part 5 on our series on GSE Guidelines. Read them all here. Reference: FHFA Working Paper 24-07: […]
Time-series adjustments and market conditions are required by Fannie Mae and Freddie Mac. Part Six on GSE Guidelines. Read the series here. A recent FHFA research paper revealed that as few as 10% of appraisals had been even attempting a time adjustment, although in some markets, where the value was not “high enough,” the time […]
Fun insanity — time adjustment requirements made simple. A concise market conditions guide and summary. Editor’s Note: This is part 7 of a new series on Time. Get caught up here. Let’s outline the new GSE requirements: Time “adjustments” will be a required field, even if exactly zero! (Zero is a number.) Time-series analysis is […]
Is time an adjustment? What is “acceptable” appraisal practice? The new GSE (FannieMae, FreddieMac) guidelines still require adjustments for market conditions. This is part 8 of our series on GSE Guidelines. Read the series here. Market conditions are different at different points in time. Duh! Time adjustments have always been required. Seldom enforced. Seldom done. […]
It is clear: market analysis and time adjustments are more important than ever, and the appraisal and review requirements are critical to responsible valuation, compliance, and risk management. Time adjustments and market analysis was the topic presented in our TYN2K Webinar January 15, 2025. Fannie Mae’s Lyle Radke was our presenter, followed by a two-hour […]
Time adjustments are now required by Fannie Mae and Freddie Mac. Time adjustments were previously required “when necessary.” Now a “market conditions” adjustment is required on every appraisal. This means that even if personal judgment says the subject market is “stable,” an analysis must be performed to arrive at the zero adjustment conclusion. An FHFA (Federal Housing Finance […]
We now consider the second “time adjustments” method noted in the FHFA paper (24-07). It, too, is noted as being “commonly” used in appraisals. The first method we reviewed was “paired sales”. Now we look at the second method, called “grouped data.” This “related technique, grouped data analysis, involves grouping data by an independent variable […]
In this post, Adjust for Time, Part 12, (read the whole series here) the FHFA Working Paper 24-07 infers a third “common strategy” for time adjustments. We will call this the plot–regress method. In this strategy “MLS data on individual sales can be retrieved, and the appraiser can regress sales price on a time trend […]
Market conditions, time adjustments. The fourth “strategy” noted in the FHFA Working Paper 24-07, we call the “Time Out” strategy. Editor’s Note: Read the entire series HERE. Simply put, the appraiser avoids the issue cleanly, by just ignoring the ‘box’ where the time adjustment should go. Easy. The FHFA report states: “The most common method […]