Do you adjust listings in the grid?

[Mike Kennedy]

If/When....well Mike, I do not have to take on any assignment with pre conditions/SOW that i find unacceptable, like gridding/adjusting listings on a comparable sales form-page......a la LSI. There, that was easy!:new_smile-l:

Yup it was :icon_mrgreen:

 

[PropertyEconomics]

You haven't met my hypothetical typical buyers. They are very well behaved, make rational decisions, and always search out the best deal. If your hypothetical typical buyers aren't living up to those standards, you should fire them.

Hey if you issue a hypothetical sales price based on those hypothetical buyers I have no problem with that. As long as your hypothetical is well explained in your report. There you go .. youve solved the problem.

 

[KD247]

Yes you can read minds Mdm Cleo. Give your self $24.95 for the reading.

First, I'll need a letter of engagement including a detailed description of the scope of work.

Ok, back on track. You raised a very good point, that buyers' random unpredictability could somewhat reduce the Principle of Substitution's degree of certainty. My reply was that appraisals always consider a hypothetical typical buyer who, by definition, behaves predictably.

For the reasons I've already stated, I agree with you that there's no merit in attempting to forecast what a listing will eventually sell for. And (in my market anyway), there's absolutely no data indicating that asking prices will usually be discounted by a typical amount, or that there's any other way, short of appraising the listing, to make an educated guess. So, we both agree that a listing's asking price shouldn't be adjusted, but it doesn't look like you give the Principal of Substitution much validity. How come? I ask, because several others share the same view.

 

[PropertyEconomics]

First, I'll need a letter of engagement including a detailed description of the scope of work.

Ok, back on track. You raised a very good point, that buyers' random unpredictability could somewhat reduce the Principle of Substitution's degree of certainty. My reply was that appraisals always consider a hypothetical typical buyer who, by definition, behaves predictably.

For the reasons I've already stated, I agree with you that there's no merit in attempting to forecast what a listing will eventually sell for. And (in my market anyway), there's absolutely no data indicating that asking prices will usually be discounted by a typical amount, or that there's any other way, short of appraising the listing, to make an educated guess. So, we both agree that a listing's asking price shouldn't be adjusted, but it doesn't look like you give the Principal of Substitution much validity. How come? I ask, because several others share the same view.

Actually KD you are reading too much into my resistence to adjusting listings for probable selling price. I understand the principal of substitution, I agree with analysis of listings but I also realize there are times when the market says other things. I personally think, and have found in my market, listings typically set the upper limits in value, but not always.
My thoughts have been consistent in this post. I will adjust the listings for physical differences using the listing price and let the list price as adjusted stand on its own. Then when I reconcile my value conclusion I will mention list to sale ratios and show what could be considered a range, based upon these ratios, for the listings. My issue is making an adjustment to a listing for "probable sales price" when it hasnt sold. As you note, buyers and sellers vary from sale to sale and we really dont know what the ultimate selling price of that listing will be.
I think analysis of the listing is fine and required by the scope of work for most appraisal assignments today. It gives further insight into market conditions.
Other than adjusting the listing price by some listing / sale ratio, im in agreement with most here.

 

[KD247]

My issue is making an adjustment to a listing for "probable sales price" when it hasnt sold.

We both strongly agree on that point. Please come up with something to disagree on, or we're both going to have to get back to work.

 

[PropertyEconomics]

We both strongly agree on that point. Please come up with something to disagree on, or we're both going to have to get back to work.

The Sky is Blue .. most of us cant agree on that ... can you and I?

 

[CANative]

PE... by gridding and adjusting listings you're just equalizing the competing properties. You're not forecasting or holding these listings out to be supporting sales. You're just refining the market data with examples of available inventory. I do it all the time.

 

[PropertyEconomics]

PE... by gridding and adjusting listings you're just equalizing the competing properties. You're not forecasting or holding these listings out to be supporting sales. You're just refining the market data with examples of available inventory. I do it all the time.

Then I agree with you too.

 

[reliantappraisals]

I personally dont adjust listings. If they are similar enough they shouldnt need it regaurdless of your viewpoint on this.
I comment on why I dont adjust them and dont typically consider them in the final value.

I put listings in my appraisals to make underwriters happy for the most part.

 

[Queen City Gurl]

Been around and around with this one on other threads before..... I don't see what some posters find any different about adjusting a listing for sub/comp amenity differences, and adjusting the listing price for the typical listing/sale differential ??

All of our adj's are derived from the market, and are based on the behavior of "typical" market participants ! All of our adj's are based on typical, typical typical ..... not just what one purchaser will pay. So, we gather data, and define what is supported in the markeplace..... which, by definition, means what a "typical" participant, would pay for an amenity.

So, when statistical analysis shows a supported, ( lets say 3%) difference between listings and sales in your area... you are not just pulling an adj out of nowhere.. you are basing it on factual data, that is measured in your marketplace...... a market supported adj, just like all of the other ones we make. The fact that it is a "probable" sales price, shouldn't be a problem, as all of the adj's we make are "probable" in that they are an estimate of market activity, and are not concrete.

I agree with Mike, in that it is a necessary adj, or you are not accurately measuring the market, resulting in a false indication of value. Especially with the current market conditions......better look long and hard at active listings. At least this adj, brings the listing comp inline with the market to some degree.

While there are atypical market participants out there... everything we do is based on typical market participants... so why is it a problem to make an adj to the listing price based on another "typical" market participant response?? Just don't get that aversion....