Are properties really selling over market value?

[J Grant]

J.G., please step back and study "normality" for a moment (although others have given up on the argument).

Normality​

Behavior
Normality is a behavior that can be normal for an individual when it is consistent with the most common behavior for that person. Normal is also used to describe individual behavior that conforms to the most common behavior in society. However, normal behavior is often only recognized in contrast to abnormality. In its simplest form, normality is seen as good while abnormality is seen as bad. Someone being seen as normal or not normal can have social ramifications, such as being included, excluded or stigmatized by wider society.

 

[residentialguy]

I always presumed that the purpose of comp(s) from a competing development was to determine whether the entire subject development might be over- or underpriced, although by narrowly defining the neighborhood as the subject subdivision would addess that issue.

Agreed. The price could be too high and it could be too low. I always like to look at competing developments because something may be going on in that development. Helps me learn about the subject. I have also uncovered issues affecting those 3 holy grail comps next door that affected the sale price.

 

[J Grant]

So Jg
When I had undo stimulus affecting a comp, I adjusted for it. So are you adjusting for undue stimulus because of supply & demand?
And when the market comes tumbling down, are you going to adjust for it again, appraising it a much higher value than the sales that are happening?

Undue stimulus due to supply and demand becomes baked into prices of overall market...

If an individual sale price of a comp shows AFFECTED by undue stimulus higher or lower than prevailing level, either I won't use the comp, or if I use it would weight it less ...I rarely adjust for it though

 

[residentialguy]

Undue stimulus due to supply and demand becomes baked into prices of overall market...

If an individual sale price of a comp shows AFFECTED by undue stimulus higher or lower than prevailing level, either I won't use the comp, or if I use it would weight it less ...I rarely adjust for it though

Ok, I agree with individual sales... but you have been replying with this to posts talking about whole market situations.
Just to clarify, My original post is on a market situation, not an individual situation.

 

[J Grant]

Ok, I agree with individual sales... but you have been replying with this to posts talking about whole market situations.
Just to clarify, My original post is on a market situation, not an individual situation.

I don't appraise a whole market, I appraise a one property within the context of the market at that time.

 

[Evincere]

When I had undo stimulus affecting a comp, I adjusted for it. So are you adjusting for undue stimulus because of supply & demand?
And when the market comes tumbling down, are you going to adjust for it again, appraising it a much higher value than the sales that are happening?

and your methodology for applying an undue stimulus adjustment to a comparable would be???

 

[Alsie35]

*SNIP*

However, when this "market value" sale closes, the next day it will be used as a MV comp in a lot of appraisals but that's another issue.

Umm ... Mark ... that's ... sort of how the RE market works ...

 

[The Bob]

I don't think it is as black & white as some believe. If you have a house with multiple offers over list, but clustered together, then that's probably a very good indicator of VALUE. I had a recent one with offers of 395, 405 and 410. No mystery there. I've also seen some where there is an outlier offer way above the others. Someone is just throwing money on the deal. IMO, this is just someone trying to secure the deal without regard to the real value of the real estate. It's more of a "transaction" price that represents some $$ for the real estate and some $$ to secure the deal.
We've seen this before with concessions. Someone makes an offer but the "price" includes $$ to be paid on his behalf by the seller for his closing costs. I'm talking about deals where the concessions are added to the list price.
To me that's a "transaction" price...some $$ for the RE and some $$ for the non-realty concessions. That said, I don't think this can be described as "undue stimulus". In both cases both buyers are acting in what THEY believe is their best interest.

 

[George Hatch]

"Undue" is when a court orders a sale, or when a seller is otherwise compelled to sell (like in a divorce) or where there isn't an arm's length transaction, or when the buyer isn't putting together an assemblage and is more motivated than most to acquire at any price.

The prevailing market conditions for all such properties is not "undue" to any of them. Period.

 

[Mark K]

"Undue" is when a court orders a sale, or when a seller is otherwise compelled to sell (like in a divorce) or where there isn't an arm's length transaction, or when the buyer isn't putting together an assemblage and is more motivated than most to acquire at any price.

The prevailing market conditions for all such properties is not "undue" to any of them. Period.

Please cite your source for this definition of 'undue'. Maybe some of us will be more inclined to accept your opinion. Period.