Active and Pending Sales

[Lee Lansford]

Do you let the active sales or pending sales in your area influence your estimated market value. some folks say "we are historic" and thats that...

Todd, I do want to add that The Principle of Substitution is alive and well! So, yes, I DO allow "active (listings) or pending sales" to influence the opinion of market value...because that's the way the market operates!

 

[moh malekpour]

Pretty strong language for a declining market area. What if the active listing or pending sale do not support your market value conclusion of the subject property? In a declining market you have to look at active listings and pending sales or you are not doing your job.

I differentiated between the pending and active listings. The pending is half way sale and I use it. The active listings in the slow market are those that are usually overpriced. If they were priced correctly based on the market demand/supply, they should be either pendings or closed sales. Your pendings and closed sales that you can use are those active listings that were priced and marketed correctly based on your market demand and supply. Needless to say that you may get new listings that are lower than your pendings or your closed sales. If there are such listings, they should be new listings and I think they should be looked at and get an idea about what is going on in the market but not base your value conclusion on them because they are not transactions although they give you a hint on what is going on in your market. That is why I use listings as a support for the low-end value in a declining market but I don't use them as my main comps if I have most recent closed sales. There is much different when you look at the listings and when you base your value conclusion on the listings. The main problem to base the value conclusion on the listings is that the listings may never get closed or their listing prices may change or their sale prices might be different than what were listed. I always use good listings but I don't base the value on them for those reasons.

 

[hastalavista]

I give significant weight to the actives in many of my market and have no problem making downward market condition adjustments to the closed sales based on the active listings.
I will typically call two or three agents per assignment to get a feel of the market from those participants' perspective in addition to what the MLS data indicates.

 

[moh malekpour]

Denis,
If you still use closed sales and adjust them down to get the value conclusion, you have based your value on the closed sales but you have used active listings to support your value conclusion. If you don’t use closed sales and get a value conclusion based on active listings, I don’t think it is going to be acceptable.
As I said, I always use good active listings for support of my value conclusion but I don't base my value on active listings. You can have all kinds of supports for your value conclusions and each of them gives strength to your conclusion but in the final conclusion, it is the adjusted closed sales that indicates the value and your active listings are there to support it.

 

[Couch Potato]

I find it sad this discussion is even taking place. The essence of the question is "do we consider all available market data in forming our opinion of value?" Anyone that cannot see the obvious answer to the question needs help, and possible should consider another career.

 

[moh malekpour]

I find it sad this discussion is even taking place. The essence of the question is "do we consider all available market data in forming our opinion of value?" Anyone that cannot see the obvious answer to the question needs help, and possible should consider another career.

Couch Potato,
I don't think the discussion is sad at all and I don't think the question is "do we consider all available market data in forming our opinion of value?". That is a very general question. The question is "Do you let the active sales or pending sales in your area influence your estimated market value" This is very specific and legitimate question. What do you do with your active listings and pendings in your area? Do you let the active listings dictate your value conclusion or do you use them as support for your value conclusion from your adjusted closed sales? How about pending sales? Which one you use? Each one of us has different interpretation and opinion on the use of active listings and pendings. I don't know why it makes you sad to discuss about these important issues.
Are you saying anyone who asks this kind of question or anyone who discusses about this question should find another career? What is wrong with this question and what is wrong with discussion about it? I don't get it.

 

[Karl]

Look at top of page 2. HOW can you fill out the new form without looking at comparable listings??

 

[toddmallard]

Interesting as always. Everyone seems to see things different. On my state exam one of the questions was directly linked to this thread. The answer being “we are historic in nature”

Some appraisers go strictly by this guideline “rule”. When the market was going up, we were told not to look at the next pending sale that was higher, only what has closed. So we could not set the market value higher. Now we are told “look at the next pending” to see how much lower the maket has declined. I am in favor of this and do it all the time. All data should be used to obtain a credible estimated market value.

CC- You have misunderstood the question asked in this thread. Our appraisal is no historic, the comparables are.

Moh- I have seen pending sales that are much higher than active sales. A pending sale in my opinion has only the same weight as an active sale. We do not know the final selling price, seller concessions, or creative financing.

As I see it, you had better consider active sales or pending sales or even xpired sales. If you are doing a condo or house that is much like the the neighboring units, Which is to say we are trying to compare apples to apples.

If I am doing an appraisal for a 2,2 condo that is selling for $200,000 and the only sales I have are 3,4 and 5 months ago that sold for $200,000, $210,000 and $210,000 respectivly, but there are 2 active sales for $180,000 and a pending sale for $175,000, with an xpired listing of $205,000. I don’t think I am coming into value. I try not to look at the sales contract untill after I choose my comps. This way I can’t be swayed by the “needed value”

I guess to each his own. One thing I am sure of, I can defent every one of my appraisals.

But that’s me

 

[Riick]

Old, Old, OLD Story -- Appraisal 101:
Generally - active listings define the upper limit of value for a highly similar property in the same locale/neighborhood.

If you tell me you'd ignore the Active Listing of a virtualy identical house 3 doors down,
I expect you'd also ignore the Sale of a virtualy identical house 2 doors down - made last week.

 

[Couch Potato]

Couch Potato,
I don't think the discussion is sad at all and I don't think the question is "do we consider all available market data in forming our opinion of value?". That is a very general question. The question is "Do you let the active sales or pending sales in your area influence your estimated market value" This is very specific and legitimate question. What do you do with your active listings and pendings in your area? Do you let the active listings dictate your value conclusion or do you use them as support for your value conclusion from your adjusted closed sales? How about pending sales? Which one you use? Each one of us has different interpretation and opinion on the use of active listings and pendings. I don't know why it makes you sad to discuss about these important issues.
Are you saying anyone who asks this kind of question or anyone who discusses about this question should find another career? What is wrong with this question and what is wrong with discussion about it? I don't get it.

Do you not think active and pending sales are data in your market? To not consider them in one's analysis is to ignore market data; ignoring data is never appropriate. It just doesn't get any more basic.