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  #31  
Old 04-02-2009, 11:49 PM
Larry Foster Larry Foster is offline
 
Join Date: Aug 2005
State: North Carolina
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Default Excerpts From FNMA Selling Guide In Reference To Comparable Sales

The following are excerts from FNMA Selling Guide in reference to comparable sales. It appears FNMA recognizes a pending sale as a sale.

Section 406.03 - Sales Comparison Approach
The sales comparison approach to value--traditionally referred to as the market data approach--is an analysis of comparable sales, contract offerings, and current listings of properties that are the most comparable to the subject property. However, we require the appraiser to report only the comparable sales in the appraisal report. The appraiser's analysis of a property must take into consideration all factors that have an impact on value, recognizing that a well-informed or well-advised purchaser will pay no more for a property than the price he or she would pay for a similar property of equal desirability and utility if it were purchased without undue delay. To accomplish this, the appraiser must analyze the closed or settled sales, the contract sales, and the current listings of properties that are the most comparable to the subject property. This is particularly important in soft or declining markets because the competing current listings and contracts probably reflect the upper-end of value for the subject property as of the effective date of the appraisal, and we expect appraisers to accurately report and reflect market conditions as of that date.

A. Selecting the comparables.
The appraiser must report a minimum of three comparable sales as part of the sales comparison approach. The appraiser may submit more than three comparable sales to support his or her estimate of market value, as long as at least three are actual settled or closed sales. Generally, the appraiser should use comparable sales that have been settled or closed within the last 12 months. However, the appraiser may use older comparable sales as additional supporting data if he or she believes that it is appropriate. The appraiser must comment on the reasons for using any comparable sales that are more than six months old. In addition, the appraiser may use the subject property as a fourth comparable sale or as supporting data if the property previously was sold (and closed or settled). If the appraiser believes that it is appropriate, he or she also may use contract offerings and current listings as supporting data.

4. Date of sale/time adjustment.
We will accept more than three comparable sales as part of the appraisal report, but at least three of them must be actual settled or closed sales. The appraiser should provide the date of the sales contract and the settlement or closing date for each comparable sale. Unless the appraiser believes that the exact date is necessary to understand the adjustments, only the month and year of the sale need to be reported. If the appraiser does not report both the contract date and the settlement or closing date, he or she must identify the reported sale date as either the "contract date" or the "settlement or closing date." If the appraiser reports the contract date only, he or she must state whether the contract resulted in a settlement or a closing.


I believe a pending sale is also an important indicator of market activity and should be considered a sale as it is a "meeting of the minds" between a buyer and seller. When a purchase contract is reported as pending it is usually after the attorney review period and once any repair requests are negotiated the sale will most likely close. The pending sale is rarely considered available for purchase by buyer's agents and the sellers are typically satisfied with the terms of the existing contract. I consider a pending sale as an absorbed listing and also a much welcomed and relevant indicator of value.
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  #32  
Old 04-02-2009, 11:59 PM
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DKAYTES DKAYTES is offline
 
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State: New Jersey
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Default

Quote:
Originally Posted by Mike Kennedy View Post
Additionally, most agents will usually not show properties already under contract

They might wanna consult their fiduciary requirements when representing the seller; they are typically required to accept ALL offers, including those at the closing table, until the deal is done. If it's not closed, it's available and active aka "it ain't sold till it's sold".
Mike,

I have seen in the MLS many times over "act-F" still active/under contract with a first right of refusal. So you could argue it is a pending sale, but still being shown if a better comes along. So yes, I include that and pendings with the listing stats.

One of the biggest issues here - is that all of us are kind of depending on the realtors to input the information accuratly in the MLS. Example, if you are looking for "true comps" and the realtor enter some generic age instead of the actual age or make an accurate guess at the age if not available in the tax records, it will thow off our searches for comps. Many times over I see in the age fields "999" for age on a property that might be 20-30 years old. So if I am searching for comps ( like tonight) where my subject was 108+- yr old, that 20-30 yr old house will be included in the data. There should be some accountability on the realtors if we are relying on the input of the data to track the trends. Another thing that kills me when looking for comps is when realtors list rachers as a "1-story colonial" when searching for 2 story dwellings. I guess because there might be a basement.... The data is only good if it is put into the MLS accuratly.

IMO I would think it would a better idea to provide a picture of the entire housing market in an area vs. just "comps", especially when there is a lack of data to make a true determination of the trend from the data or lack of in some cases. Also I think they will be tweeking this form to make more sense.

A snapshot of all SFR housing gives a better picture to the checkbox people as compared to do oddball properties or in an area where there are just 12 sales in an entire area. Had one of those recently. ( thank goodness before the 1004MC)
  #33  
Old 04-03-2009, 07:22 AM
Mike Kennedy's Avatar
Mike Kennedy Mike Kennedy is offline
 
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Location: Southern Hudson Valley
State: New York
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Default

Quote:
Originally Posted by Larry Foster View Post
The following are excerts from FNMA Selling Guide in reference to comparable sales. It appears FNMA recognizes a pending sale as a sale.

Section 406.03 - Sales Comparison Approach
The sales comparison approach to value--traditionally referred to as the market data approach--is an analysis of comparable sales, contract offerings, and current listings of properties that are the most comparable to the subject property. However, we require the appraiser to report only the comparable sales in the appraisal report. The appraiser's analysis of a property must take into consideration all factors that have an impact on value, recognizing that a well-informed or well-advised purchaser will pay no more for a property than the price he or she would pay for a similar property of equal desirability and utility if it were purchased without undue delay. To accomplish this, the appraiser must analyze the closed or settled sales, the contract sales, and the current listings of properties that are the most comparable to the subject property. This is particularly important in soft or declining markets because the competing current listings and contracts probably reflect the upper-end of value for the subject property as of the effective date of the appraisal, and we expect appraisers to accurately report and reflect market conditions as of that date.

A. Selecting the comparables.
The appraiser must report a minimum of three comparable sales as part of the sales comparison approach. The appraiser may submit more than three comparable sales to support his or her estimate of market value, as long as at least three are actual settled or closed sales. Generally, the appraiser should use comparable sales that have been settled or closed within the last 12 months. However, the appraiser may use older comparable sales as additional supporting data if he or she believes that it is appropriate. The appraiser must comment on the reasons for using any comparable sales that are more than six months old. In addition, the appraiser may use the subject property as a fourth comparable sale or as supporting data if the property previously was sold (and closed or settled). If the appraiser believes that it is appropriate, he or she also may use contract offerings and current listings as supporting data.

4. Date of sale/time adjustment.
We will accept more than three comparable sales as part of the appraisal report, but at least three of them must be actual settled or closed sales. The appraiser should provide the date of the sales contract and the settlement or closing date for each comparable sale. Unless the appraiser believes that the exact date is necessary to understand the adjustments, only the month and year of the sale need to be reported. If the appraiser does not report both the contract date and the settlement or closing date, he or she must identify the reported sale date as either the "contract date" or the "settlement or closing date." If the appraiser reports the contract date only, he or she must state whether the contract resulted in a settlement or a closing.


I believe a pending sale is also an important indicator of market activity and should be considered a sale as it is a "meeting of the minds" between a buyer and seller. When a purchase contract is reported as pending it is usually after the attorney review period and once any repair requests are negotiated the sale will most likely close. The pending sale is rarely considered available for purchase by buyer's agents and the sellers are typically satisfied with the terms of the existing contract. I consider a pending sale as an absorbed listing and also a much welcomed and relevant indicator of value.

"If the appraiser believes that it is appropriate, he or she also may use contract offerings and current listings as supporting data."

suggest "offerings" vs "contracted SALES" distinguishes pendings as exactly that - pending; until closed other "offerings" may be accepted, price revisions may occur, etc. etc.

additional common listing verbiage" "offer accepted continue to show", "contract pending" etc .
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  #34  
Old 04-03-2009, 11:23 AM
Larry Foster Larry Foster is offline
 
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State: North Carolina
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Quote:
Originally Posted by Mike Kennedy View Post
"If the appraiser believes that it is appropriate, he or she also may use contract offerings and current listings as supporting data."

suggest "offerings" vs "contracted SALES" distinguishes pendings as exactly that - pending; until closed other "offerings" may be accepted, price revisions may occur, etc. etc.

additional common listing verbiage" "offer accepted continue to show", "contract pending" etc .

A contract offering is not a sale. It is only "an offer" which may or may not be accepted. A pending sale is an accepted offer "a meeting of the minds" and carries greater weight in developing an opinion of value. My point here is that if all contract contingencies have been met and let's say the pending sale is scheduled to close tomorrow wouldn't you consider this sales data rather than listing data? A signed and executed sales contract with a scheduled closing date is a binding contract and most likely would not be broken without incurring legal damages. Once all the contract contingencies have been met the vast majority of "sales" do indeed close.
  #35  
Old 04-03-2009, 01:39 PM
TJSum TJSum is offline
 
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Location: Absurdastan
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Why is the debate about whether contracts are more like listings or sales. Why not have them as a separate catergory, an important, but yet different piece of the puzzle. Like I mentioned earlier, IMO there should be three lines at the top of page 2 with a separate line for contracts. With regards to the 1004mc form, well they should toss that sucker and start all over...
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  #36  
Old 04-03-2009, 07:29 PM
Larry Foster Larry Foster is offline
 
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State: North Carolina
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Default Hypothetical Case Study

This is not a debate about what is "more like". It's about classification.

Let's do a simple case study.

If within the defined neighborhood there were;

0 active lisings
6 pending sales
1 closed sale within the last 12 months

Would the Supply/Demand be considered;

Shortgage?
Stable?
Over supply?


Would the Months of Housing Supply be;

72 months?
None?


Based on that there are no available listings and the last 6 listings have recently contracted for sale I would choose Shortage.

And since there are no available listings the housing supply would be None.

The other conclusion I come to is this market has recently changed.
  #37  
Old 04-03-2009, 09:11 PM
vanguard vanguard is offline
 
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State: Minnesota
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Why can't we use an expanded range of actives and sales on the 1004MC in an effort to create a credible median value. Out of that expanded range we can narrow the range to include only those sales and active listings that we consider good candidates for the top of page #2 and on the sales grid.
  #38  
Old 04-03-2009, 10:09 PM
TJSum TJSum is offline
 
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Larry, I agree with you, and yes the market is certainly changing with your sample. With the spring market kicking in, I am see some markets similar to your example, but not nearly as drastic. But the contracts do out number the active listings...
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