Across The Board Time Adjustment?

[J Grant]

I know...there are times when after x months of appreciation prices plateau and stabilize. Clients like everything neat and consistent but markets don't always work that way.

Sometimes I only make market condition adjustments to sales over 6 months or 9 monts old, for example, if market stabillized after that. More explainint to do then.....

 

[PushinValue]

Or leave the county and go into a different market for a recent sale and adjust for location/market differences?

Why in the world would you do that, when you have plenty of local data?

No sales in the past 6 months is plenty of data?

 

[Meandering]

Maybe you're running out of old people.

Have there been any listings in the last six months?

 

[PushinValue]

Or leave the county and go into a different market for a recent sale and adjust for location/market differences?

Why in the world would you do that, when you have plenty of local data?

No sales in the past 6 months is plenty of data?

The below pasted from Fannie Market conditions form: since FHA and other 1004 /1073 assignments (typically) include the MC form

"Instructions: The appraiser must use the information required on this form as the basis for his/her conclusions, and must provide support for those conclusions, regarding housing trends and overall market conditions as reported in the Neighborhood section of the appraisal report form. The appraiser must fill in all the information to the extent it is available and reliable and must provide analysis as indicated below. If any required data is unavailable or is considered unreliable, the appraiser must provide an explanation. It is recognized that not all data sources will be able to provide data for the shaded areas below; if it is available, however, the appraiser must include the data in the analysis. If data sources provide the required information as an average instead of the median, the appraiser should report the available figure and identify it as an average. Sales and listings must be properties that compete with the subject property, determined by applying the criteria that would be used by a prospective buyer of the subject property. The appraiser must explain any anomalies in the data, such as seasonal markets, new construction, foreclosures, etc. Inventory Analysis Prior 7–12 Months Prior 4–6 Months Current – 3 Months

How much clearer can they get? They want market condition adjustments ( time adjustments) from 12 months to present, NOT 2 years back or 3 years back to present. They want properties that compete with the subject that subject buyer would consider, not dis similar properties that happen to be in the same zip code, county or across the street for that matter, if the property does not compete with subject.

Comment in narrative about larger area non competing sales activity, or prior year market condition changes, but for trend section and market condition adjustments, they want relevant to subject properties and past year activity to avoid misleading results from basing trends on dis similar properties or dated activity.

Forgot to mention I was using one model match as comp 4 that is 1.5 years old. I am assuming they don't mention 1+ year old sale time adjustments because they are so rare...

 

[Michigan CG]

Maybe you're running out of old people...................

Not likely.

 

[J Grant]

You said 2 sales that are six months old, those took place within 6 months, correct? And you have pending...find your comp data from where it exists.

If you would use sales as comps from from another county, then it is appropriate to get information for a market condition adjustment from those sales...but if you are not using any of those sales as comps, why are you relying on them for a market condition adjustment ? (I don't know your area, some market areas straddle two counties, its' all about where the buyer for the subject would purchase as a substitute choice) Its your report do what you want...you came here for input!

As far as applying a time adjustment to a 1.5 year old sale, the directive though is to derive the trend information, such as the time adjustment % itself, from the past year activity. (then apply it as needed to older comps)

 

[Don Clark]

You may disagree,

But for me,

I consider sales outside of the 55 community, because, for the "typical buyer" in a 55 plus community, they have a choice of being in or outside the community. So what's outside can directly compete with what's inside, so long as the "typical buyer" for the subject property qualifies to buy within the community.

.

I agree Marion. At 80+ I would not want to live in a 55+ community. Too many "Old Farts" there. I prefer to live in the general population. I believe by doing so one lives longer. I have lived in my neighborhood since 1968, moved once, 2 blocks away when I needed a bigger house for my kids, back in 1974.

 

[J Grant]

I agree Marion. At 80+ I would not want to live in a 55+ community. Too many "Old Farts" there. I prefer to live in the general population. I believe by doing so one lives longer. I have lived in my neighborhood since 1968, moved once, 2 blocks away when I needed a bigger house for my kids, back in 1974.

That's fine, that's you. But since there are many buyers over 55 who choose the age restricted communities, when appraising we step outside ourselves.

I find golf boring, I would not buy in a golf community. But there are buyers who want those communities specifically, so when I appraise a golf country club community, I recognize that fact . Any buyer is free to choose any property, but; when they choose a specific type to subject community, be it age restricted or luxury condo or a golf club subdivision, it was a driving motivation motivation of choice. A buyer for the subject would make an alternate substitute choice in the same or competing community, not some random house in the general area. And the sellers in these specific communities compete with each other for the identified buyer.

The buyer for a specific type of community has already eliminated the bulk of properties outside that type of community; the appraiser needs to do the same.

 

[Deleted member 134708]

@op

That's crazy low turnover for a retirement community. I see more estate sales with that data than you have in conventional.

I do 55+ ~2x's a month. I would only use the whole PUD for market conditions. Are you pulling all sales and not using any criteria besides delineated PUD?

I'll assume yes by reading your post.

I would not make any adjustment as you do not have enough data samples to prove anything. State everything you told us, and say you can not make an adjustment due to low sample rate. The sample data rate available does not allow for credible results.

 

[J Grant]

Good advice above....

When I don't see enough clear evidence for a "time adjustment ", I won't make a market condition adjustment, but may reconclie to a higher or lower side of the value range depending on what indicators the market relevant to subject is showing...in OP case, no clear evidence of a market condition adjustment of past sales, but the 2 listings in contract in subdivison are higher price, so that gives support for reconciling at higher range, assuming those listings are not a fluke, there is low inventory etc.