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What do you recommend for this condo?

Discussion in 'Urgent - Help Needed' started by 65076507, Oct 2, 2011.

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  1. 65076507

    65076507 Junior Member

    0
    Jan 1, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Maryland
    Subject is a one level condo built and purchsed in 2009. COndo has it all (ss appliances, granite, tray ceilings, rooms light up automatically upon entering, 2 covered balconies, marble floor in foyer, 42" brazilian cherry cabinets, solid hardwood floors, etc.) It was purchased for $605,000 mid 2009 from the builder.

    Now my point. There are only 4 solds within the year in same condo project. sold for 395K, 405K, 405K, and 410K. each one has about 300-400 less square footage and although they are all very nice not one is of the same quality of construction as the subject. Not that we really pay attention to tax assessed value but for what it is worth, the subject's asseseed value is almost exactly 100K higher than the 4 comps.

    I went back and did a 3 mile radius and literally there is nothing similar to the subject. CLient wants 4 solds and 2 actives/pendings but I only have 4 solds to give. Nothing else out there. I know I rambled on but I do not wanna screw this one up so I am looking for suggestions/comments on this one guys! Thanks in advance!
     
  2. 65076507

    65076507 Junior Member

    0
    Jan 1, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Maryland
    just to clarify having no actives or pendings is not my concern. my concern is the value issue. just wanted to clarify. thanks
     
  3. residentialguy

    residentialguy Elite Member

    181
    Mar 24, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Minnesota
    You need to do what you need to do. Don't let the lender guidelines hold you back. If they insist, then it would be against USPAP to let guidelines interfere with you producing a credible report. I would go back 2 years and also go out as far as you have to in order to find comps in a similar neighborhood. I would even use your comp's prior sale against other smaller sales to see the market reaction back in 2009. Just because you can't find guideline comps doesn't mean it is worth less.

    It won't be easy, it won't be pretty and they're not going to like it...gotta love this job.
     
  4. 65076507

    65076507 Junior Member

    0
    Jan 1, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Maryland
    I am curious what you guys think of each:

    1. use those 4 comps and make large adjustments for quality of construction and thus market value will not be bracketed
    or

    2. use comps from over a year ago that are more similar to the subject
    or
    3. a combo of the 2

    any thoughts?
     
  5. 65076507

    65076507 Junior Member

    0
    Jan 1, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Maryland
    Ideally, I do not like either option but which is the lesser of 2 evils?
     
  6. residentialguy

    residentialguy Elite Member

    181
    Mar 24, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Minnesota
    You don't choose either or....you choose both.

    Maybe you didn't get my PM.

    You need to go out 2 or even 3 years along with using the current smaller ones. I would try to find at least 6 sales plus a couple actives. That size adjustment will be significant and you will need to show how you got that adjustment. One of the ways is to show the market reaction of the larger size vs smaller size in older sales, including your subject. Your subject sounds very high end, too...which is another large adjustment. Make them, but have clear and concise support.

    You will need to dig back into the trends over the years you are pulling comps from and make any necessary adjustments there for time. Be careful not to let REOs and Short skew the trends. I would do a market analysis on the Traditional arm's length sales, the REO and Short sales trend and a combination...that will show if they are 2 separate markets producing 2 different values and it will show how the distressed sales have affected the market and show that you are not ignoring sales and just cherry picking.

    Also, call the local Realtors and pick their brain as to how much contributory value there is in the larger size and higher quality.

    You will always have a subjective element to your option. For a back-up CYA, I would also state this at the end of your sales approach comments.

    DISCLOSURE AND DISCUSSION OF PAIRED DATA ANALYSIS AND ADJUSTMENTS:
    Not all adjustments in the Sales Comparison Approach can be directly extracted or supported by the available market data with a high degree of accuracy. Some adjustments have an element of subjectivity and professional judgment which the appraiser has applied based on prior observations of the reactions of typical/knowledgeable buyers' and sellers' in the marketplace. This method is a standard and well accepted practice within the appraisal industry. All interested parties are encouraged to have an understanding of basic valuation practices when appraising atypical or complex properties; or where there is an extreme absence of like elements of comparison; or in instances where the market data is inconsistent with which to draw better supported adjustments and overall value conclusions. Individual adjustments cannot be relied on independently.
    Appraising Residential Properties, 4th Edition, Appraisal Institute, Page 342, "Limitations of Paired Data Analysis" states: "...This brief discussion of paired data analysis may seem to suggest that identifying the effects of property differences from market data is a straightforward procedure that can produce accurate, complete mathematical results in all appraisals. Such an impression would be misleading. Appraisers develop an opinion of market value by applying their judgment to the analysis and interpretation of data. Paired data analysis is a tool that an appraiser can apply to market data in some circumstances. When used in conjunction with other analytical tools, this type of analysis supports and guides the appraiser's judgment, but it does not take its place. Perfect sets of comparables that vary in a single, identifiable respect are rarely found. Because properties that are sufficiently similar to the subject are usually limited in number, the decision to apply paired data analysis in a given situation is a matter of judgment. Often the sampling size may not be larger enough to provide a solid statistical foundation for the appraiser's conclusions. Nevertheless, paired data procedures are important valuation tools that appraisers should use whenever possible. Identifying matched data sets and isolating the effects of variables is a practical methodology for studying market data, even if a comprehensive paired data analysis cannot be performed. When only a narrow sampling of market data is available, which would not lend itself to statistical analysis, paired data analysis can be used to test the results of other analytical procedures..."
     
  7. 65076507

    65076507 Junior Member

    0
    Jan 1, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Maryland
    ResGuy,
    Sorry. I just got your PM. Thanks for the help. It is greatly appreciated.
     
  8. residentialguy

    residentialguy Elite Member

    181
    Mar 24, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Minnesota
    Also, check for similar sized recent canceled and expired sales. It may indicate a ceiling. Call the Realtor and talk about it.

    Is this a high rise? Floor location can be a huge factor in value, too.
     
  9. leelansford

    leelansford Elite Member

    48
    Mar 29, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois

    Just out of curiosity, what were the sale prices (and dates) when these four sold new?
     
  10. 65076507

    65076507 Junior Member

    0
    Jan 1, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Maryland
    Lee,

    They paid 603K, 589K, and 467K. With that being said, maybe my subject is worth 200K less than what she paid for it like the other comps. I can't figure out why the 467 sold so cheap. The one comp has no prior sale listed for some reason. Based on this, it seems like people overpaid in the brand new market.
     
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