Active and Pending Sales

[toddmallard]

Do you let the active sales or pending sales in your area influence your estimated market value. some folks say "we are historic" and thats that.
We were not able to set the market value when the market was going up, than why should we set the value when it's going down?

What do you think ?. I have heard many different opinions, again without set rules everyone is correct. Its how you interprit the guidelines.

 

[Lee Lansford]

Do you let the active sales or pending sales in your area influence your estimated market value. some folks say "we are historic" and thats that.
We were not able to set the market value when the market was going up, than why should we set the value when it's going down?

What do you think ?. I have heard many different opinions, again without set rules everyone is correct. Its how you interprit the guidelines.

If you are completing appraisals using the current Fannie forms, the "neighborhood" section of your appraisal has great significance in developing your opinion of value.

It's not "how you interpret the guidelines", it is understanding ones responsibilities as a competent appraiser.

 

[Randolph Kinney]

To put it bluntly, I am not going to give a value higher than current listings. It is why lenders want to see listings in the appraisal. It is why Fannie on page 2 of the 1004 at the top has a summary of the listing competition.

Do you let the active sales or pending sales in your area influence your estimated market value. some folks say "we are historic" and thats that.
We were not able to set the market value when the market was going up, than why should we set the value when it's going down?

What do you think ?. I have heard many different opinions, again without set rules everyone is correct. Its how you interprit the guidelines.

 

[moh malekpour]

Do you let the active sales or pending sales in your area influence your estimated market value. some folks say "we are historic" and thats that.
We were not able to set the market value when the market was going up, than why should we set the value when it's going down?

What do you think ?. I have heard many different opinions, again without set rules everyone is correct. Its how you interprit the guidelines.

.Todd, I think you mean Active listings not active sales. In my market, I will not let active listings to influence the market value conclusion. Active listing is active listing and under no circumstance it can be considered a sale or even close to sell. There are so many irrational active listings in the market that if you want to use them as indicative of value, you practically can get any value. I use them as a support after I get my value conclusion. However, there are always exceptional rules when you absolutely have no sales within a reasonable time and distance. Then you may use the active listing cautiously. Pending sale is different thing. It is a half way sale. It has a possibility to be a closed sale and I usually use it as a 4th comp

 

[Ariba]

I will not let active listings to influence the market value conclusion. Active listing is active listing and under no circumstance it can be considered a sale or even close to sell.

Pretty strong language for a declining market area. What if the active listing or pending sale do not support your market value conclusion of the subject property? In a declining market you have to look at active listings and pending sales or you are not doing your job.

 

[Hall McClenahan]

Do you let the active sales or pending sales in your area influence your estimated market value.

If you don't look at listings where do you get your understanding of the current Supply or it's effects?

Pending sales are indicators just like all the other bits of data you can find. The more factual data you have the higher your chance of making an informed opinion.

some folks say "we are historic" and thats that.

Some say we are prostitutes and unnecessary. For some "they" are correct, as to the others they have either not met them or don't want to. If the ring is not pure then the bell is cracked. I guess it depends on which bell is being rang and by whom.

We were not able to set the market value when the market was going up, than why should we set the value when it's going down?

Sorry, unfortunately I am unable to answer this question as I have never set the market value ever.

We have entirely to many hacks that refuse to do the job correctly. Like the investors they are only in it for the money and could careless if the job they do is correct. To increase their profit they went out and trained as many hacks as they could and fooled them into thinking they knew what they were doing. Blind leading the blind and being cheered on by the deaf and stupid.

The forces that create value are not just words in the text book we had to read to get our license. If we don't understand and apply factual supply and demand effects to the real estate at the time of valuation then "they" are correct and the product is only historic. Of course those that don't can be disproved and dismembered at will by a real appraiser.

There are many making a good living doing just that.

 

[Tom Woolford]

Generally I track actual sales for 12 - 24 months graphing the listing price vs the selling price. In some discrete markets there is a "normal" spread of 8 - 10k, while in other more competitive markets it can be as much as 25K on average. Listing data can be a useful tool to anticipate which way the market is going. Definitive? No. But another tool in the box.

 

[CCAAMO]

Do you let the active sales or pending sales in your area influence your estimated market value. some folks say "we are historic" and thats that.
We were not able to set the market value when the market was going up, than why should we set the value when it's going down?

What do you think ?. I have heard many different opinions, again without set rules everyone is correct. Its how you interprit the guidelines.

The value is as of the effective date of the appraisal. If that date is the same date that you inspected the property, that is not historic, it is current.

 

[Terrel L. Shields]

Active offerings, fallen contracts, etc. are part of the "market data". Market data is not limited to "closed sales"...Today we have subdivisions in my area where listings of 365+ days are listed higher than are listings of 30 days. And we have sales approaching a year old that are higher than those same listings. Can I possibly appraise a property where nearby similar homes are selling for less than the closed sales of 6 mo. + ago? I have to make a downward adjustment and in the absence of more recent sales or data to support a time adjustment down, I have to "consider" listing information.

Today in rural areas where developers have fled after paying up to $15,000 an acre, the only recent sales are below $6000 per acre and falling. Soon a lot of those tracts, some already in foreclosure or litigation, will 'hit the market' and I predict they will sell for a fraction their 2005 prices. It hasn't exactly happened yet, but the evidence it will is there. So, should I still appraise a property at $15,000 an acre when regionally I see land values deflating fast?

 

[Michael Tipton]

The following is copied from FHLMC's sellers guide, Section 44.15: Property description and analysis (03/01/08)
...
Additional comparables, in the form of closed sales, sales under contract or current listings, may be used to support the appraiser's adjustments and conclusions, address changes in the market, support the use of older comparables in stable neighborhoods or support the use of distant or less similar comparables in rural areas.
...

http://www.allregs.com/tpl/Main.aspx