Discussion in 'Illinois' started by Brian Weaver, Aug 2, 2011.
And so it goes.
Of all of the newsletters you've written that one was the most "entertaining".
thanks for posting it.
You should have seen it live at the ICAP seminar on Monday.
Appraisers were amazed at some of the properties and many are very familiar with the areas in question.
We aim to please. If it isn't at least a little fun to read...? Otherwise all of this appraisal-talk is just dry as dust.
Brian: I appreciated your Englewood presentation on Monday. I think many appraisers, including me, were confused about the goings-on in that neighborhood early on. The recent housing market made obvious what was not obvious several years ago. The MLS also tightened-up some of their reporting requirements. Confusing or non-existent MLS data was problematic in some neighborhoods (like Englewood). So, though I appreciate you making a complex issue simple, I also submit situations similar to that in Englewood were not so quickly or simply recognized immediately following the height of general Chicago-area market appreciation. Heck, if we would have even had the MLS search and analysis capability then that we do now, the situation would have been more transparent.
Brian, thanks for your effort, as usual very helpful and informative newsletter. However, your Treaty of Versailles historical reference regarding floor plan functional obsolescence appears to be off. The treaty was signed July 28th 1919 and per FFIEC site; the median age of most homes In Englewood census tracts indicate 56 years.
Another great newsletter.
I never purchased those prewritten language programs, but I recall seeing them in the past.
There can be great insight into previous price trends that can assist the appraiser with a reconciled valuation approach. Extended sales histories can point out trends from investor activity, to prevalence of flipping or longer term ownership trends. Any way you slice it, extended sales histories are most times more informative than not.
I like to keep the bottom line of the grid for a line I've entitled: Market appeal (no adjustment). This allows a continuance or further detail of comparison where one can enter lines like: more remodeled, less remodeled, Best! remod, avg - updated, by the park, poor - traffic, short or lo, regular seller, etc, etc depending on the appropriate scenario. UAD may be good in terms of that issue. It's true that the flippers count on the trust of MLS data as listed. It's no coincidence that a short or lo will be commonly marketed without as many pictures. Makes it simpler for the investor flipper to claim so many improvements were made when they turn the price around. Imposed mandatory 10+ pictures requirements on listings could be a very productive guidance.
A 3.8% land to total value ratio? You can never say you've seen it all in real estate, but one would expect a modern construction super lofty residence or a clear distinction against lower priced properties with those figures. And even then one would expect that single instance to be a trend setter of sorts that would hopefully boost area demand for land. In CO, there are areas like that were regentrification and modernized or grandfathered zoning was finally taken advantage of to scrape or recreate with dramatic improvements. It only took a few years, or perhaps the better part of a decade, but the balances caught up with the prices, and now those areas show consistently higher land value demand as regentrification became more common than not and the value of building allowability eventually contributed to the continued increases in land value/prices. If that area is in that much trouble, why don't they take the reigns off and allow for really open redevelopment programs on all scales? One really old troubled area in Denver is now a reclaimed artists haven of sorts. lots of unusual building and highly a-typical zoning.
Highest and best appraising is only appropriate when in proper alignment with the principals of substitution in whole and narrowly defined areas. That also includes considering the differences in cost when standing in the buyers shoes and considering buying old to remodel, or paying a slight premium to buy already remodeled.
Packing a section 8 voucher. Good one. I keep turning in my draw card, but never get drawn... In CO, that's a lottery program with limited application periods and fixed distribution amounts that is typically anomalous compared to the whole in many areas.
Question: FMR is tied to median income numbers and I would assume there is discrepancy in the boundaries tied to these analyses? County wide may work in less dense areas, but seems to have real issues in a denser city setting. Links to become more educated on that subject?
I was aware of the quacky sales in Englewood back in the year 2007. Discovered them while completing many REO assignments within the area. In may of 2010, I completed a REO appraisal in the community and defined a portion of the area of Englewood and found 19 sales occurring within 90 days. The range for the first 18 sales was from $5,000 to about $90,000. Guess what the 19th sale sold for? If you guessed anything under $200,000 you were way off. The property closed for $350,000 with a prior sale less than a year ago for somewhere around $35,000!!!!!
I guess I've been away from this site too long. Great article, Brian!
I've got photos of a fair percentage of those Englewood 2 units, although I'm pretty sure the bulk of them are of the $350,000 FRAME ones which were generally the subject/original comps for past assignments with effective dates from 2005 through early 2008. I haven't had anything down there with more recent effective dates, I guess my client base finally got wise after then. I have had occassion to look at more current sales and have been amazed that the same basic game is still going on down there although many of the players have changed.
A quick MLS search I just did revealed eight $300k plus (14 $200k plus; total listed sales = 168) closing in 2011 YTD for MRED Areas 8067 and 8068. A random look at the Realist public record reports showed 100% of my sample to have been financed via ... you guessed it, FHA loans.
Not cool, fellow taxpayers, not cool.