Most weight to pending sales!

[Chelley Bahner]

How often do you see listing prices that are lower than sale prices? In my area, next to never! Where do you think the realtors are coming up with their listing prices? From the closed sales! But they list just a little higher, in case you get that one fish that bites. Why list lower than the closed sales if you can get just a little more for your listing?

I don't put much reliance on active listings at all. You can list your house for whatever you want to. Most people know about the slump in the market, but, of course, their house isn't affected by it. Active listings are only one part of the final equation. We know what you want for it, but what is someone willing to pay for it?

Using and adjusting for active listings is absurd unless there are lower listings out there, which, I'm sure, is rare. I haven't seen any yet. They do nothing but muddy the waters. If you want to find a decline in a market, look at sale trends over the past month compared to the month before and so on... Even in a declining market, listing prices still tend to be a little higher than sale prices.

Without buyers, sellers have no marketplace.

 

[Jungle Boy]

How often do you see listing prices that are lower than sale prices? In my area, next to never!

Using and adjusting for active listings is absurd unless there are lower listings out there, which, I'm sure, is rare. I haven't seen any yet. Even in a declining market, listing prices still tend to be a little higher than sale prices.

It depends where you're from... maybe not in Colorado.... yet....

Change your information to reflect your status, if you want your views to be taken seriously.

 

[Dee Dee]

How often do you see listing prices that are lower than sale prices? In my area, next to never! <snip>

I don't put much reliance on active listings at all. <snip>

Using and adjusting for active listings is absurd unless there are lower listings out there, which, I'm sure, is rare. I haven't seen any yet. <snip>

I'm guessing you're on the western slope, or you're not an appraiser at all.

 

[Alison Swain]

The problem here is that listing agents generally won't share the contract price on pending sales. Couple that with the fact that so many pendings never make it to the closing table (at least for now). For months I've had realtor friends tell me about entire monthly pipelines of pending sales being wiped out before they could close.

 

[Wendy]

How often do you see listing prices that are lower than sale prices? ...snip....Using and adjusting for active listings is absurd unless there are lower listings out there, which, I'm sure, is rare. I haven't seen any yet. ...

You should check out my market. Quite common for the past year to see listing prices well under sales prices. Even for sales in the past 90 days.


Alison,
You're right. More and more often the fat lady never sings.

One thing different for me - I have had good success in getting Realtors to tell me the contract price on pendings. If they will not give the actual price, most will give me a percentage range of list (ie: contract is within 3-5% of list). Key is to get a conversation going about other topics and then slip the 'ol contract question in at the very end.

 

[Smokey Bear]

WHat does the market analysis say? Are sale prices consistently above or below list prices? If they're below, and your active listings/pendings are below the highest comps, then they should be included and given weight. The principle of substitution doesn't support a higher value than what's currently listed that will more likely sell below list price, if that's what your market shows.

 

[Doug Meyer]

I might have to disagree here. I just completed an assignment in a 54 home community with very few sales. Most sales were larger than the subject. There was 1 pending sale that is scheduled to close within 3 days. Realtor provided all information including concessions, so I used that as a sale and included comments as to why. This property was similar to the subject in size and in small areas, in my opinion should be utilized.

 

[Joyce Potts]

When analyzing your appraisal data does anyone give the most weight to pending sales and/or active listings? Do pending sales and/or active listings better reflect the current market than closed sales that may have been closed 3-6 months earlier? In a declining market you your opinion of value will be below the latest closed sale.

On active listings do you call the agent to see how many showings? According to industry standards suggest that if the agent haven't received an offer after 8-12 shownings, a price adjustment is probably necessary. Do you consider that?

If you do use active listings in your appraisal report to support your opinion of value, how do you adjustment in your grid to reflect active listings? Which price differential do you use for you active listings: sold to list, net sold to list, sold to original, or net sold to original?

If I can get some kind verfication of the pending contract price and the concessions, I absolutely, positively will give them primary reliance. In my market, values have fallen since January 2008. In a 'transitional' market, sole reliance on 'historic' closed sales provides a value more reflective of the timer period surrounding my closed sales. The pendings and listings must be taken into consideration and factored in.

If I have active listings of properties that have excessive days on market with continual price reductions that still haven't sold, and their current list prices are below my historic closed sales, what better market support could you have that the market is still declining?

As I've said many times before, the FNMA guidelines need major reforming. They are guidelines, guidelines, guidelines--not the ten commandments. Learning to analyze all the market data sets the appraisers apart from the form monkeys, IMO.

 

[Don Clark]

If I can get some kind verfication of the pending contract price and the concessions, I absolutely, positively will give them primary reliance. In my market, values have fallen since January 2008. In a 'transitional' market, sole reliance on 'historic' closed sales provides a value more reflective of the timer period surrounding my closed sales. The pendings and listings must be taken into consideration and factored in.

If I have active listings of properties that have excessive days on market with continual price reductions that still haven't sold, and their current list prices are below my historic closed sales, what better market support could you have that the market is still declining?

As I've said many times before, the FNMA guidelines need major reforming. They are guidelines, guidelines, guidelines--not the ten commandments. Learning to analyze all the market data sets the appraisers apart from the form monkeys, IMO.

Fannie Mae does allow for use of pending sales:

See guidelines:

406.02: Selection of Comparable Sales (06/30/02)


The appraiser must comment on the reasons for using any comparable sales that are more than six months old. For example, if the subject property is located in a rural area that has minimal sales activity, the appraiser may not be able to locate three truly comparable sales that sold in the last 12 months. In this case, the appraiser may use older comparable sales as long as he or she explains why they are being used.
The appraiser may use the subject property as a fourth comparable sale or as supporting data if the property previously was sold (and closed or settled). If the appraiser believes that it is appropriate, he or she also may use contract offerings and current listings as supporting data.

 

[Mike Boyd]

How often do you see listing prices that are lower

Using and adjusting for active listings is absurd unless there are lower listings out there, which, I'm sure, is rare. I haven't seen any yet. They do nothing but muddy the waters. If you want to find a decline in a market, look at sale trends over the past month compared to the month before and so on... Even in a declining market, listing prices still tend to be a little higher than sale prices.

Without buyers, sellers have no marketplace.

NOT in my market! You must be working in a unique market area.