Do you adjust listings in the grid?

[Elliott]

Do you adjust listings in the grid? Nope

Then why grid them?

 

[KD247]

Question:

Is an arms length brokered transaction, selling for 20% below the established market levels considered a valid comparable if all elements for a sale contained in the definition of Market Value are there?

I tried to make the point that these things are never black and white, and you respond by asking, "Black or White?" (I'm not really sure if by "...transaction, selling for..." you mean a listing or a closed sale.)

"Valid" comparable? Who knows. It is what it is. A 20% "low" closed sale can reflect a market change, unknown motivations, unknown defects, unknowledgeable sellers, etc. Once the appraiser investigates and settles on a reason, the sale can be correlated with other data and it would no longer be considered a "low sale". I know some appraisers are quick to discard any outlying data but I have a hard time ignoring any relevant data without an explanation. Particularly when looking at places like parts of Florida, where there might be a clear stream of sales around $350k, polluted by a few sales at around $200k. Then among the $400k listings, there are one or two for around $180k. Are you suggesting that we categorize the disruptive data as "not valid" and stick to the data that fits a better pattern?

Regarding the use of listings, and whether to adjust the asking price for typical negotiated reductions, I'll repeat my opinion that there is no one "correct" procedure. If including listings paints a clearer picture of the rationale for the opinion of value, they should be included. Same for adjusting the asking price based on typical sp/lp ratios. If it contributes to the reader more thoroughly understanding the appraisal, adjust away.

In my experience, including the lowest priced, most directly competing, and currently available listing almost always adds a valuable perspective to the appraisal. Omitting a relevant listing often results in a deficient appraisal. Also in my experience, adjusting that lowest-priced listing for typical negotiated reductions tends to distort the relevancy of that listing.

 

[hastalavista]

In your example the unadjusted listing prices might be somewhere around $565k. I don't think the listings would be anywhere near that low in a stable market. Having two listing agents each set an asking price lower than the closed $585K comp would be... uh, out of character?

I think you are viewing the prices as gross prices. Richard's question and my answer specifically stated "adjusted" prices.:new_smile-l:

 

[McPheeters]

Do you adjust listings in the grid? Nope

Then why grid them?


Why not? Is there a rule that says if they are in the grid of a "form" page, they must be adjusted?

 

[Mike Kennedy]

Do you adjust listings in the grid? Nope

Then why grid them?


Why not? Is there a rule that says if they are in the grid of a "form" page, they must be adjusted?

They must be analyzed and adjusted based on the markets' perception of list price v sale price typical in a specific neighborhood as of a point in time. If not, and/or if given NO WEIGHT, they have no place in a grid. If analysis of the prior 1 month to 12 months worth of reported MLS sales ALL indicate typical List to Sell Discounting is characteristic, then failure to acknowledge that fact by adjusting the Listings used in a grid as Comparables..... is assuredly misleading.

Unless local properties ROUTINELY sell at 100% of List - not adjusting the Listings, if inserted into a grid AS A COMPARABLE, should reflect typical local BUYERS actions i.e. unless unique properties or in extremely high demand, school, water, mountain/valley location demand market segments.... Sellers, Buyers, Listing and Selling Agents, and Lenders all KNOW (and can prove via MLS data) that IF utilized in SCA - Listings should reflect the TYPICAL L/S price discount customary in a neighborhood. Failure to reliably report and adjust for that aspect of market conditions by ignoring buyer and seller actions (discounting from List) is intentionally negligent.

 

[Couch Potato]

Don't Mislead.

Do you adjust listings in the grid? Nope

Then why grid them?


Why not? Is there a rule that says if they are in the grid of a "form" page, they must be adjusted?

The "why not?" would be placing them in an adjustment grid, then not adjusting, implies no adjustment should be made. If there are real differences that would be adjusted if it were a sales, the report would be misleading. If you are not going to adjust, don't use a grid.

 

[PropertyEconomics]

They must be analyzed and adjusted based on the markets' perception of list price v sale price typical in a specific neighborhood as of a point in time. If not, and/or if given NO WEIGHT, they have no place in a grid. If analysis of the prior 1 month to 12 months worth of reported MLS sales ALL indicate typical List to Sell Discounting is characteristic, then failure to acknowledge that fact by adjusting the Listings used in a grid as Comparables..... is assuredly misleading.

Unless local properties ROUTINELY sell at 100% of List - not adjusting the Listings, if inserted into a grid AS A COMPARABLE, should reflect typical local BUYERS actions i.e. unless unique properties or in extremely high demand, school, water, mountain/valley location demand market segments.... Sellers, Buyers, Listing and Selling Agents, and Lenders all KNOW (and can prove via MLS data) that IF utilized in SCA - Listings should reflect the TYPICAL L/S price discount customary in a neighborhood. Failure to reliably report and adjust for that aspect of market conditions by ignoring buyer and seller actions (discounting from List) is intentionally negligent.

THERE IS NO BUYER ... its not something that you can accurately adjust for ..... :Eyecrazy:

 

[Mike Kennedy]

PE- LP/SP discounting analysis and adjustment is absolutely no different than extracting typical DOM forecasted for the subject or analyzing and reporting prevalent financing trends including adjusting for concessions to comparables (if market-indicated).

 

[TJSum]

I would agree with the "adjusters" if you have a solid number to use. But there is just way too many unkowns to adequately feel confident with that number. IMHO it is more misleading to use a number with that many unknowns attached to it. You are assuming the listing will actual receive a contract offer, in this current market many listings expire or are withdrawn from the market. What happens if your gridded listing is one of those, what is the LP/SP ratio for those ?????????? It is also assuming there will not be further price drops before a contract is offered.

It seems like the AMC's and clients who want this adjustment want to bring the listings in line with the actual sales in a neat little package so they can equate them. But IMHO listings should not be equated to sales, they are just listings, period, and should be treated as such.

 

[PropertyEconomics]

PE- LP/SP discounting analysis and adjustment is absolutely no different than extracting typical DOM forecasted for the subject or analyzing and reporting prevalent financing trends including adjusting for concessions to comparables (if market-indicated).

I am not going to forecast a sales price that hasnt occured for a buyer that doesnt exist. Simple as that.