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Do you adjust listings in the grid?

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ZZGAMAZZ said:
Senior appraiser in the small company I work for says that although he includes active listings because the clients require him to do so, he does not give credence to them because the opinion of value of the subject is based upon market exposure time rather than marketing time, and there is no way to predict the future for the listings.

I don't agree . . .
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Gama ... two things .. of course you disagree because you are all knowing and the senior appraiser teaching you says things different .. its called learning ... and second ....

please tell me how you would predict the future?
 
ZZGAMAZZ said:
...he does not give credence to them because the opinion of value of the subject is based upon market exposure time rather than marketing time...
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I'm trying to sort out what's being said here.

So your senior appraiser's problem with listings is that the subject's hypothetical exposure time is in the past and the listings will be marketed into the future? If a similar property was listed at exactly the beginning of the subject's hypothetical exposure time, and closed escrow at unknown terms on the subject's appraisal date, would that property's asking price be any more relevant?

I don't think so, it's still only an asking price. It doesn't look like your senior appraiser has really thought this all the way through; does he really mean that he doesn't like to use predicted closing prices as indicators of the subject's value? Even though I don't follow his supporting logic, this conclusion sounds ok - except that he's thrown the baby out with the bathwater.

If he's giving listings no "credence" whatsoever, he's missing out on the opportunity to use that data in establishing a ceiling for the subject's value, and he's also missing the opportunity (as Richard Carlson pointed out) to use listing data in analyzing market trends.
 
ZZGAMAZZ said:
Senior appraiser in the small company I work for says that although he includes active listings because the clients require him to do so, he does not give credence to them because the opinion of value of the subject is based upon market exposure time rather than marketing time, and there is no way to predict the future for the listings.

I don't agree . . .
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That's a good sign.

That senior appraiser would have a point if the reference was to listings not yet on the market. Exposure time is in the past, but listings on the market during that period of time certainly are valid pieces of market data to use. If one considers the appropriate exposure time on a job to be 120 days, and the house next door is a model match on the market for the past 115 days at $350,000 only a fool would not recognize that as relevant to the opinion of value. Its impact on the opinion would depend on how that list price relates to the recently sold properties, other current listings and all the other data, but it is certainly relevant.
 
PROP: I can't predict the future and I would opine to do so only if the SOW was prospective. Substitution precludes a willing & knowledgable buyer from paying more for the subject than for the alternative, which in this case is an active listing with sufficient exposure that hasn't sold.

Stubborn, yea, but equally as willing to learn and to think outside the box; however, comparable listings that don't sell are more predictive about the future than a perfect r square correlation...(I.M.H.N.ewbeeO.)
 
OK...so after all these posts, there are such differing opinions on my question:new_all_coholic:

I guess utimately, the answer would be whatever you do (adjust in the grid or not adjust at all) make sure that your final product is not misleading.

I (personally) really like the idea of not even using the listing grid pages & scanning the actual listings instead. I agree that a "layman" might mistake no adjustments in the listing grid as the listing isn't any different than the subject.

Thanks to everyone that answered! I hope that all the reviewers who read this post think about it if they have any reviews where the appraiser did or did not adjust in the grid. And they realize the differences in opinions on this particular issue.

IMO, everyone is right whether they do or don't adjust as long as their reports don't mislead, but for me, I'm not going to adjust & explain my reasons why & scan in the listings.

:flowers: :flowers: :flowers:

Thanks again!
 
ZZGAMAZZ said:
PROP: I can't predict the future and I would opine to do so only if the SOW was prospective. Substitution precludes a willing & knowledgable buyer from paying more for the subject than for the alternative, which in this case is an active listing with sufficient exposure that hasn't sold.

Stubborn, yea, but equally as willing to learn and to think outside the box; however, comparable listings that don't sell are more predictive about the future than a perfect r square correlation...(I.M.H.N.ewbeeO.)
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Gama there is one part of the equation that you have missed .. and that is the BUYERS make emotional decisions and there very well may be reasons they will pay more for one home over another that is comparable. They make emotional decisions, different color, different style house next door, faces a different way, etc.. Just because we say they shouldnt pay more on the principal of substitution doesnt mean they wont.
Not to mention other factors that could come into play in any given listing, a crappy realtor, a horrible owner, a messy house, any number of things could turn buyers off and result in a longer marketing period. Thus you see the difficulty in understanding listings and why they have been on the market for x number of days longer than you think they should.
Buyers make their own decisions and they dont know squat about appraisal theory. Nor do they care.
 
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Prop: Your line of reasoning would appear to question the SCA adjustment process for sold comparables as well. That's a slippery slope that could be interpreted to debunk appraisal-related collaterization. I'm of the opinion that most all issues/values that appear to be aberrations can be explained with sufficient due diligence--although that type of analysis along with the commensurate liability should demand a heck more of a premium fee than what I make...
 
ZZGAMAZZ said:
Prop: Your line of reasoning would appear to question the SCA adjustment process for sold comparables as well. That's a slippery slope that could be interpreted to debunk appraisal-related collaterization. I'm of the opinion that most all issues/values that appear to be aberrations can be explained with sufficient due diligence--although that type of analysis along with the commensurate liability should demand a heck more of a premium fee than what I make...
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No Gama it isnt .. the whole theory of appraisal practice is what does the market recognize. Nothing more and nothing less. I go to the market .. not trying to reason it though a book .. the book told me to do the analysis ... and if a 3,500 square foot house sells for the same as a 3,800 square foot house there is no adjustment to be made. GO to the market. In those instances slightly larger rooms dont always equate to extra value. In time you will find examples like this.
 
...what I meant to say is that active listings in the grid should be subjected to the same type of analysis as comparables that have closed sale. I include the number of days on market for all of my sold comps as a great way to validate to a reviewer that the property actually was listed, and an additiona piece of rich data used in the anlaysis, although typically not as a source of adjustments...
 
. . . one day at a time . . .
 
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