Sales Price to List Price Ratio

[TJSum]

Based on all this logic of not wanting to predict an event I guess those who are apposed to this adjustment do not give an opinion of values since this is a prediction of a what could have been, I do not see the difference.

That is exactly the point. How many subject properties are in your assignment?

 

[TJSum]

If I am going to include listing on a grid then I believe it is important to adjust them. If the data shows sales typically are, say, 3% below the listing price then a 3% adjustment is supportable and warranted. Not to do so indicates a severe lack of understanding of the appraisal process.

Why not present it as a listing, "as is". Listings tell one part of the story, actual sales tell something else. Why is there a need to equate the two with some sort of pretend sales price? IMO those that need to do that do not understand what listings represent, they are not pretend sales, they are listings and should be presented as such.

 

[TJSum]

Lets use a case study.

We are in a cookie cutter townhome community. The last three sales, all very recent, all adjust to $94,500 - $95,000 - $95,500.

There are two active listings that adjust to $95,900 and $96,900 without the LP/SP ratio adjustment. The LP/SP ratio for this community has been 95%. This means once you apply your ratio, the two listings will adjust out at $91,105 and $92,055.

What will your value opinion be?

If your value opinion is $91,000 to $92,000ish, are you reporting the market or trying to set the market?

If your value is $94,500 - $95,500, what is the point of the LP/SP ratio?

Now lets add another twist, suppose there are four listings, the other two adjust out to $100,000 and $101,000. In the real world, how many appraisers will choose to go with the two higher listings, apply the LP/SP ratio adjustment, so the numbers all fit neat and tidy and call it a day. The demand for the LP/SP ratio adjustment could cause many appraisers to actually choose inferior listings to what really should be shown.

 

[Mike Garrett RAA]

Thats the reason you don't base your appraisal on just listings!

 

[CANative]

Lets use a case study.

We are in a cookie cutter townhome community. The last three sales, all very recent, all adjust to $94,500 - $95,000 - $95,500.

There are two active listings that adjust to $95,900 and $96,900 without the LP/SP ratio adjustment. The LP/SP ratio for this community has been 95%. This means once you apply your ratio, the two listings will adjust out at $91,105 and $92,055.

What will your value opinion be?

If your value opinion is $91,000 to $92,000ish, are you reporting the market or trying to set the market?

If your value is $94,500 - $95,500, what is the point of the LP/SP ratio?

You're saying that here are the adjusted price indications of the competition and by the way the sales prices of most listings are typically 5% less than the listed price. But you don't want to actually put them in a sales grid because that would blow your theory about what the closed sales you used for MV indications actually mean.

You're saying the same thing as if you had gridded and adjusted... you just didn't grid and adjust because it would look ugly.

 

[Mike Kennedy]

Lets use a case study.

We are in a cookie cutter townhome community. The last three sales, all very recent, all adjust to $94,500 - $95,000 - $95,500.

There are two active listings that adjust to $95,900 and $96,900 without the LP/SP ratio adjustment. The LP/SP ratio for this community has been 95%. This means once you apply your ratio, the two listings will adjust out at $91,105 and $92,055.

What will your value opinion be?

If your value opinion is $91,000 to $92,000ish, are you reporting the market or trying to set the market?

If your value is $94,500 - $95,500, what is the point of the LP/SP ratio?

Now lets add another twist, suppose there are four listings, the other two adjust out to $100,000 and $101,000. In the real world, how many appraisers will choose to go with the two higher listings, apply the LP/SP ratio adjustment, so the numbers all fit neat and tidy and call it a day. The demand for the LP/SP ratio adjustment could cause many appraisers to actually choose inferior listings to what really should be shown.

which of the four are the most similar with the most recent List Dates? Which of the four listings report either no adjustments or the fewest adjustments to OLP? Which of the four shouldnt be used due to list date aging and/or mutiple downward adjustments on current listing OR had a prior listing? Why not use all 4 listings?

 

[David Dietz]

The demand for the LP/SP ratio adjustment could cause many appraisers to actually choose inferior listings to what really should be shown.

The same can be said for the request of sales within 30 days, one mile, same neighborhood only sales or sales from another neighborhood and the list goes on. Maybe we should ignore all requests.

 

[John Hassler]

John - a few questions, please.

1. Does your report also not address market conditions including addressing typical L/S discounting as market-indicated?

2. Do your mortgage appraisal reports ever require the 1004MC in SOW? If so, do the reports provide additional commentary analysis?

3. Are your mortgage reports done on Fannie/Freddie forms? Do they fall under GSE guideline SOW requirements? >>

2009 Fannie Selling Guide- Appraisal Requirements
"Requirement
Influences that may affect value based on market evidence—such as closed sales, contract sales, and offerings or listings of the most comparable properties for sale in the market area; market studies; etc.—must be researched, analyzed, and considered in the appraisal report."​

4. Do any of your mortgage reports fall under FHA/HUD guideline requirements in SOW?



Thanks in advance.

1) My discussion of market conditions includes current inventory, buyer demand, interest rates for conforming loans, interest rates for jumbo loans, buyer/seller concessions, etc, and - yes - SP:LP.

2) I've developed a one-page addendum to the 1004MC form which I call the Clarification of the 1004MC Form which has four subsections: Definitions and Calculations, Analysis of the 1004MC Data, Limitations of the Data, and Application of the Data and Conclusions From the 1004MC Information in the URAR.

3) I've effectively priced myself out of the GSE market however just this week I did my first 1004mc in a month at the request of the client for the short sale of a $3m loan.

4) As I've noted in a previous post in this thread, I am not FHA approved. It does not fit my business model.





Now thatI've answered your questions how about a little quid pro quo. I'm assuming you do make SL:LP adjustments to listing comparables.

1) How do you develop your SP:LP? Do you use Original List Price? Last Listing Price? Another method entirely like Greg Boyd? And do you comment on the reliability and credibility of making a SP:LP adjustment?


2) Do you also make an adjustment to the listing for the typical/median seller concession? That is to say if seller concessions in your subject's market range from 0% to 3% with an median of 2%, do you make a 2% adjustment to the listing. If not, why would you apply the market derived information different from SP:LP information?



Looking forward to your repy.


.

 

[Mike Kennedy]

1) 3) I've effectively priced myself out of the GSE market however just this week I did my first 1004mc in a month at the request of the client for the short sale of a $3m loan.

Now thatI've answered your questions .

Yes you did - partially. Kindly address the SOW requirements for the mortgage? / frt? assignment "this week" on a 1004_05 in compliance with Fannie Guidelines? Did the report including Active Listings? How were they addressed?

 

[CANative]

2) I've developed a one-page addendum to the 1004MC form which I call the Clarification of the 1004MC Form which has four subsections: Definitions and Calculations, Analysis of the 1004MC Data, Limitations of the Data, and Application of the Data and Conclusions From the 1004MC Information in the URAR.

Why struggle to spoon feed clients clarifications to a stupid form that they demand?

FTR... far be it from me to tell anyone else how to prepare an appraisal. But from a personal standpoint adjusting listings for market errors just "feels right" and that's why I've always done it. It was uncomfortable at first until I read in a report I was reviewing (completed by that CG out in Fort Bragg you probably know) where she adjusted off some $$$ because in her opinion the list price was too high.