1004MC Question

[metapp]

The search criteria I used for my 1004MC returned 123 properties (active, pending, closed, withdrawn, expired). I dumped this data into the 1004MC to determine overall trends, etc. I then started filtering out the truly comparable properties to out on the 1004MC and at the top of page 2. My question is this, at what point (if any) does manually reviewing each property for inclusion on the form exceed what the typical appraiser is doing?

Personally, I think that providing the search criteria used and not filtering any of the results is less misleading than picking and choosing randomly what properties are included and what properties are not. But since this is contrary to what the form dictates I filter the results. Back to my question, at what point do you have too many properties to manually filter?

 

[Meandering]

The 1004MC is only for comparables. It is not designed to be your overall market condition report for every sale in the market area. It should only include what is truly comparable to your subject.

 

[metapp]

The 1004MC is only for comparables. It is not designed to be your overall market condition report for every sale in the market area. It should only include what is truly comparable to your subject.

Thanks for the reply. I understand that the 1004MC is only for truly comparable properties. My question is when your search criteria returns 123 properties (including sales, listings, pendings, withdrawn, and expired) when is it no longer feasible to manually filter the results? If you follow the preprinted text on the form, you are to select comparable properties only. Does this mean that for an arms-length transaction you exclude all foreclosures/short sales as the market participant might not want to have the hassles of dealing with the bank (i.e., longer period to close)? And, if the subject is renovated does that mean you take out all properties that are not renovated? This is where this forms fails to be effective and leaving it up to the appraiser to pick and choose which properties to include can create a misleading report.

I am basically wanting to know what my peers are doing in similar cases. Do you only include truly comparable properties which requires looking at each property returned as part of the search results? Or do you just define your search parameters (square footage, age, etc.) and use all of the results that come up without manually filtering out properties?

I am having an on-going discussion with an UW and need some input/advice.

 

[PDXOregon]

I filter out short sales in almost all occasions, REOs in many occasions, and outliers.

 

[Craig in Oregon]

Metapp,
FWIW

For 1004MC , why use expireds, cancelleds, withdrawns? These are inconclusive.

My stated 1004MC parameters might read like this:
Parameters, MLS area YYY, only those properties within the defined neighborhood in MLS YYY, year built A to B, footage A to B, site size A to B, style (if important) same as subject (leaving out 3 stories when subject is rambler, for instance), date of sale one year back then by increments as per 1004MC, preference for properties with same
external factors (such as busy highway, mountain views, lake frontage, what have you)
and see what that brings up. Less than 123 likely.

Use of short sales and REOs included if these are also at least some of the comps and prevalent, otherwise, no.

 

[Bearslide]

Metapp,
FWIW

For 1004MC , why use expireds, cancelleds, withdrawns? These are inconclusive.

My stated 1004MC parameters might read like this:
Parameters, MLS area YYY, only those properties within the defined neighborhood in MLS YYY, year built A to B, footage A to B, site size A to B, style (if important) same as subject (leaving out 3 stories when subject is rambler, for instance), date of sale one year back then by increments as per 1004MC, preference for properties with same
external factors (such as busy highway, mountain views, lake frontage, what have you)
and see what that brings up. Less than 123 likely.

Use of short sales and REOs included if these are also at least some of the comps and prevalent, otherwise, no.

Ditto. I read through what is returned and toss any that aren't comparable. I may use 2 story search criteria and get back a bunch of split foyers.

 

[Lee Lansford]

The search criteria I used for my 1004MC returned 123 properties (active, pending, closed, withdrawn, expired). I dumped this data into the 1004MC to determine overall trends, etc. I then started filtering out the truly comparable properties to out on the 1004MC and at the top of page 2. My question is this, at what point (if any) does manually reviewing each property for inclusion on the form exceed what the typical appraiser is doing?

Personally, I think that providing the search criteria used and not filtering any of the results is less misleading than picking and choosing randomly what properties are included and what properties are not. But since this is contrary to what the form dictates I filter the results. Back to my question, at what point do you have too many properties to manually filter?

What are the search criteria that results in 123 properties?

 

[metapp]

Metapp,
FWIW

For 1004MC , why use expireds, cancelleds, withdrawns? These are inconclusive.

My stated 1004MC parameters might read like this:
Parameters, MLS area YYY, only those properties within the defined neighborhood in MLS YYY, year built A to B, footage A to B, site size A to B, style (if important) same as subject (leaving out 3 stories when subject is rambler, for instance), date of sale one year back then by increments as per 1004MC, preference for properties with same
external factors (such as busy highway, mountain views, lake frontage, what have you)
and see what that brings up. Less than 123 likely.

Use of short sales and REOs included if these are also at least some of the comps and prevalent, otherwise, no.

I use all of them (expired, withdrawn, etc.) as they represent a listing during the 12 month period. Can you give me some more details on why you think they are inconclusive? If a property was withdrawn the day before your effective date do you think that property could be a good indicator for the current market? Just as a sale the week prior I think a withdrawn or expired listing can be as well. Not always, but they can be.

Based on your comments, it sounds like you use specific criteria but then will also manually filter the properties for the most relevant.

Thanks for the response.

 

[metapp]

What are the search criteria that results in 123 properties?

When you factor in all properties (closed, active, pending, expired, withdrawn) for a 12 month period you can get that many properties...at least for some of the markets I work in.

For example, there is an area that has high demand for the elementary school zone. So, I use this school zone as the primary factor in my search criteria. This area includes homes built in the 60s as well as new construction. The typical market participant is just as likely to buy an older home as they are a newer home. For an area like this, I am not able to filter out by age as much. The square footage, site area, room count, stories, etc. works fine. A search like this often times returns a high number of properties.

It sounds like most of you filter out the results manually for the most similar (which is what I am doing). My example above brings me to my next question...using properties otherwise similar (except for age) fits (in my opinion) the basis for the 1004MC which is properties that would be considered by a prospective buyer of the subject property. Would this situation also work for the top of page 2 where it says comparable properties?

Thanks to everyone for the responses.

 

[residentialguy]

Metapp,

You are to use comparable properties (hence the title "comparable")...properties that you would have no problem using in the sales grid. This is important in that it is support to show why you many have gone out of the neighborhood or extended time frame for comps in your grid. Kinda hard to support you doing that if you have 123 comps. You are correct in using all expireds cancels etc as, as you said, at one point, they represented a listing during the 12 month period.

Typically comps won't give you enough data to establish a trend. I include overall trends within the neighborhood market conditions comments, as pg one want a broader trend of all single fam det properties.