Asking price adjustments for listings?

[Eric C]

How do you adjust the asking price for a "comparable listing" if its listed too high which is why it hasnt sold. Do you go based on your sales comparison approach and then reduce the difference?

 

[Mike Garrett RAA]

A very good reason not to include listings! Properties can be listed at any price so those are really not good indicators of value. Those listings can indicate competition for the subject property; however, an appraiser should be prepared to indicate an anticipated sales price as adjusted by the typical sales price/list price ratio. Recently, IN MY MARKET, for fairly priced properties that is ranging from 96 to 98%.

 

[Eric C]

I agree I think the use of listing comps is worthless but sometimes is required by the client.

I always adjust the sales price to list ratio but if the listing price is higher than market then the adjusted price will still be high and not supporting the appraised value.

If my 3 closed sales give me, say, $250K and a the lowest listing is $280K with DOM longer than average, can I adjust $30K?

 

[Lee Lansford]

How do you adjust the asking price for a "comparable listing" if its listed too high which is why it hasnt sold. Do you go based on your sales comparison approach and then reduce the difference?

You will find various schools of thought on how to "solve" your problem. Here's but one possible course of action:

Provide sufficient information and analysis, without adjustment for "listed too high", and the client/intended users should be well-informed.

Finally, appropriate current offerings are--of course--of relevance via The Principle of Substitution.

 

[Mike Garrett RAA]

You could...but I bet the underwriter goes nuts!

 

[Lloyd Bonafide]

If you need to put listings in the report, (as most of us do), I wouldn't worry if one listing adjusts out well above the closed sales. It doesn't really mean anything in most cases, except that the list price is not competitive.

The harder ones to explain are when the only ones available are short sale listings, which are priced below the closed sales, in a stable market.

 

[Eric C]

If you need to put listings in the report, (as most of us do), I wouldn't worry if one listing adjusts out well above the closed sales. It doesn't really mean anything in most cases, except that the list price is not competitive.

The harder ones to explain are when the only ones available are short sale listings, which are priced below the closed sales, in a stable market.

so you think its better leaving it without adjusting it right?

 

[Mike Kennedy]

There is no restriction prohibiting adjusting a Listing for the extracted typical List to Sell Ratio PLUS a second adjustment (also extracted) for "over-listing" should it be necessary. Full explanation in comments.

Alternatives - select a different Listing or do not grid that listing but report it in COMMENTS and explain why a. no other listings which would directly compete were currently available b. why it WOULD require additional downward adjustment for "over-listing" which reflects solely the aspirations of the seller and listing agent which are apparently UNsupported by relevant comparable data.

 

[Lloyd Bonafide]

so you think its better leaving it without adjusting it right?

I normally adjust at the percentage indicated on the MC form, just so I have something to substantiate the adjustment.

But if a listing is a short sale, with multiple offers, and/or obviously is priced below market, I may make no adjustment, (with comments.)

 

[VegasWayne]

You are not doing an appraisal on the listing to try to determine the most probable selling price. When a property is priced higher than the highest recent sale use of market extraction to determine an adjustment becomes extrapolation. If the list price is out of the range of the prices of closed sales your best choice is to find a better listing.