Do you adjust listings in the grid?

[TJSum]

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

It can be done, isn't that what one does on a RELO appraisal.

Just wanted to clear that point, but I am on your side with this one PE. Forecasting involving the current listings, in order to support todays value for the subject... the data is just not firm enough to hang ones hat on.

Why try to "equate" the listings with the actual sales, just let it stand as a listing. When you do adjust, most readers will get the false sense of security the adjustment implies.

 

[Delta85]

How can you adjust if it has not closed yet? I put listings in to show what the market activity is, usually to cap off several actual closed sales that show the same activity. But if it is an active listing we don't know what the eventual sales price will be so I leave that portion of the grid unadjusted.

 

[PropertyEconomics]

It can be done, isn't that what one does on a RELO appraisal.

Just wanted to clear that point, but I am on your side with this one PE. Forecasting involving the current listings, in order to support todays value for the subject... the data is just not firm enough to hang ones hat on.

Why try to "equate" the listings with the actual sales, just let it stand as a listing. When you do adjust, most readers will get the false sense of security the adjustment implies.

Im not sure RELO assignments actually qualify as "market value" since you are giving an "investment value" they can afford to purchase on. When ain "investor" tells you what to adjust for ... seems to me one is out of the realm of market value appraising.

 

[Carnivore]

It can be done, isn't that what one does on a RELO appraisal.

Just wanted to clear that point, but I am on your side with this one PE. Forecasting involving the current listings, in order to support todays value for the subject... the data is just not firm enough to hang ones hat on.

Why try to "equate" the listings with the actual sales, just let it stand as a listing. When you do adjust, most readers will get the false sense of security the adjustment implies.

The problem comparing REO's and RELO's to REFI'/Purchase is they both have different goals. REO's as we all know are manipulated to sell in a Client prescibed time as opposed to actual market. If I understand RELO's, they are somewhat similar to REO.

Either way REO/RELO or Market Value, in one instance we are dealing with exposure time and in the other we are dealing with market time. Maybe its the other way around, Iconfuse myself sometimes.

There is a reason you have a "Intended Use" statement in your report.

 

[Joyce Potts]

Im not sure RELO assignments actually qualify as "market value" since you are giving an "investment value" they can afford to purchase on. When ain "investor" tells you what to adjust for ... seems to me one is out of the realm of market value appraising.

ERC appraisals are probably THE MOST realistic, truly supported market value appraisals out there, IMO. You are tested on your numbers 99% of the time.

 

[Joyce Potts]

The problem comparing REO's and RELO's to REFI'/Purchase is they both have different goals. REO's as we all know are manipulated to sell in a Client prescibed time as opposed to actual market. If I understand RELO's, they are somewhat similar to REO.

Either way REO/RELO or Market Value, in one instance we are dealing with exposure time and in the other we are dealing with market time. Maybe its the other way around, Iconfuse myself sometimes.

There is a reason you have a "Intended Use" statement in your report.

Sorry, but this is mostly what's wrong with most appraiser's concept of what exactly their function is. There should be NO difference between a ERC/Relocation appraisal and an appraisal for financing, theoretically or otherwise.

The only split hair difference is the marketing time and/or exposure difference. That said, the overall goal is to estimate the value as of a certain date.

The ERC appraisal generally wants a MARKET VALUE given a 90-120 market time.

The conventional appraisal generally lets you set the value BASED UPON whatever marketing time you set out in the scope of work.

When you do an appraisal for financing you're supposed to be valuing the property AS OF THE DATE of the appraisal. Why?

Why?

Why?

Because if YOUR client had to take back that property and put it on the open market to sell (JUST LIKE A RELOCATION APPRAISAL) which is the most probably selling price given current market conditions?????

If FNMA and the general appraisal community had adopted the ERC methodology from the beginning it would pretty much have eliminated much of the inflated value problem, IMO.

BTW, where is stated that the objective is to pick the highest comps to support the HIGHEST possible value?

P.S. If a bank owned property has TESTED and been on the market for more than AMPLE time, as far as I'm concerned IT COUNTS as an arm's length sale. If, however, the price and terms were SIGNIFICANTLY discounted and it sold SIGNIFICANTLY FASTER than the competition, then you may have an argument. A bank owned property does NOT automatically equal a distressed sale.

 

[KD247]

...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.

Assuming that you agree that the lowest priced listings are the most pertinent, how do you reconcile making the same adjustments as for listings with higher asking prices?

And, which listing price do you use to derive your adjustment? The final asking price just before the property sells, or the original listing price, which may be reduced several times before the sale? If you're going to adjust for the typical LP/SP ratio, shouldn't you also be adjusting for typical listing price reductions?

As I've said before, it's very rare to see a market with such consistency that a LP/SP ratio can be used as a meaningful across-the-board adjustment. It would be more communicative and less misleading to adjust each listing by exactly the amount necessary to level the Adjusted Sales Prices, but that would just look like the foolish circular argument that it is. And, it would be very embarrassing to have a listing price reduced by 20% the day after the appraisal is submitted.

 

[Mike Kennedy]

KD247: "Assuming that you agree that the lowest priced listings are the most pertinent,"

Actually, for conventional (non-REO) mortgage appraisals, I suggest arbitrarily using either the lowest OR the highest is improper. Grossly overlisted Actives are speculative; grossly underlisted similarly unreliable (i.e. estate, divorce, pre-foreclosures, quick sales etc.".

Clearly the OLP which has been reduced several times routinely extends DOM excluding that listing from consideration as a comparable. Current LP less any market-indicated typical discount versus List reflects (absent other concessions) what that Listing most likely would sell at IF properly priced, exposed for typical DOM, and subject to typical buyer actions (i.e. slightly discounted price IF that's what the close sales indicate).

IMO analysis of the Actives and Contracts always involves contacting the Listing Agents to determine how the LP was arrived at (when they are willing to divulge - if not wouldn't use an active as a comparable).

Additionally, simply throwing Listings into a report which are not truly competitive because a client demands an arbitrary number reduces the credibility of the report. If comparable - absolutely utilize both contracted and active listings - at their current list and adjust for market indicated discounts where applicable.

 

[TJSum]

"Actually, for conventional (non-REO) mortgage appraisals, I suggest arbitrarily using either the lowest OR the highest is improper. Grossly overlisted Actives are speculative; grossly underlisted similarly unreliable (i.e. estate, divorce, pre-foreclosures, quick sales etc.". From Mike's latest Post.

I see your point when generating any type of average.

Just a side comment to take a break from the debate at hand. I have noticed during the very slow markets of the 90's and now again, it seems the only listings that do sell are either the lowest, or the highest. The bargin hunters swoop up the low end listings, many of which do need work. The high end listings that are newer renovations, buyers are attracted to these due to the vast difference in appeal compared with the competition. The "average" priced home with typical updates seem to sit on the market with no real demand for them. It makes it extremely hard valuing the typical home with average updates for a refi assignment.

 

[Joyce Potts]

Do they not teach the principle of substitution in Appraising 101 anymore?