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Active listings and reviewers

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Renee Borne

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Jan 5, 2005
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Licensed Appraiser
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Arizona
Has anyone else been seeing this trend that active listings are low but when you go back and see what they sold for they sold at a higher price. I spoke with several brokers and this is what they told me: They are listing them low, then they get multiple offers a type of bidding war happens, same with REO, etc. The reviewer wanted me to use active listings to support my value and then make an adjustment for SP:LP which happen to be 1%. He insisted that active listings prices are the "ceiling" and I tried to explain to him what was being reported. He didn't want to hear it.

Was I wrong? what are people doing with active and pending listings, are you using them to suport value? and how do you explain that even though you came in at this value but it is really this based on the prices agents are setting with actives and pendings. now I am really confused and I would love to hear from seasoned appraisers that went through this the last go around and how they delt with the active/pending listings.

Thanks
 

xmtpedprl

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Dec 6, 2005
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General Public
State
Florida
Fun with money, that's what that is. In this market a bidding war is a silly notion, IMNSHO...

$199,000 list price, but $204,000 sale price, generally means they bumped the appraisal up 5K so the buyer got some cash under the table.

I'll generally try to confirm that, will usually get nowhere in do doing, and make the assumption they're messing with money and make the adjustment on the grid to reflect it.

But that's just me.

Dave...

P.S. In thinking it through a tad more, IF the property was listed below market value, and IF it wasn't in wretched condition, and IF it wasn't in an area that was tanking faster than the Titanic after hitting the iceberg, then *maybe*, just maybe, there was a "bidding war."
 
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bart nathan

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Jun 9, 2005
Professional Status
Certified Residential Appraiser
State
California
Just goes to show that closed comps are the best comps.

I started to notice this about 6 months ago. It seems the a good majority of Reos are selling under 30 dom sell above list price when the avg marketing time is around 60 dom. I also have noticed trustee's sale and the market sale are sometimes less than 2 months. It used to be close to a year. Wait until Nov a Dec when banks decide to slash prices for quick sale to get even more debt of the books.
 

The Warrior Monk

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New York
Has anyone else been seeing this trend that active listings are low but when you go back and see what they sold for they sold at a higher price.

I used to see this all the time when I was reviewing. I would insist on seeing the contract for any property that was being appraised for a sales transaction. And, as expected, concessions were the cause. Most concessions didn't mean anything in real dollars; it was simply a way to get the sales price, and thus LTV, up to a certain level to get financing.

I would be very, very suspicious, especially in this current market, if I came across a property that sold higher than list price.
 

VolcanoLvr

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Oct 30, 2003
Professional Status
Certified Residential Appraiser
State
Washington
"property that sold higher than list price"

Yep............a concession, probably. (Could be a bidding war, but that's a different situation.)

Just had one. Listed for $225.5K after being on the market with another listing at a higher price for several months. No activity. So logic says it "idn't wurth the hier amount."

Contracted for $235K. $9K in concessions were added in, per the contract.

Well guess what.........comps did not justify the higher $$, and $226K was the OMV reported.

Got to that figure by appraising the characteristics...not the sales price....using appropriate comps, and deducting the concession amount from each comp. Read that again, Mr. Texas. Concession was deducted from ALL the COMPS, in compliance with the Def. of Mkt. Value instructions.

I found it interesting that the review appraiser understood and fully accepted this correct process when he called me today. But he also said very few appraisers follow the Def. of Mkt. Value directive. Bad karma, folks.
 

jay trotta

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Feb 8, 2004
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Certified Residential Appraiser
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Connecticut
DT

did you adjust the comps on a dolla for dolla basis ? for the concession

Here is an article from a CA Realtor I found, thought it may add too the chat;
This can, and does significantly reduce the amount that the Seller nets at the end of the escrow period. For example: A house is listed for $480,000. The Home Buyer offers to pay $470,000. Also, the Home Buyer asks the Seller to pay $15,000 toward his/her Closing Costs.

As you can see the Home Buyer has just reduced the $470,000 by another $15,000. More and more of the Home Buyers are writing offers like this, since it is a Buyer’s Real Estate Market.

Now, the kicker here, is that the price that the property shows as the SOLD price is $470,000 not $455,000. The reason is quite simple, it’s not that we are all trying to hide this fact from the public, but the Lender is loaning money based on $470,000 and the Home Buyer is expected to come to the table with the closing costs which have nothing to do with the money being borrowed on the loan (the seller is paying for those costs in order to sell his/her house).

The taxes and tax base is reported to the County as $470,000. The main reason that I share this information with you, is so that you are completely informed when looking at SOLD prices in the paper, postcards or Internet. Remember that Sellers in today’s Real Estate market are making concessions and that the price does not always reflect a true picture.


That is just another reason why some of these websites like Zillow and How Much Is My House Worth … are off considerably when they post a home sale. Plus these same websites price a house that is in total disrepair the same as the house that has been remodeled. Definitely, a discrepancy.
 
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Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
Renee:

I'm seeing the "bidding war" thing here, too. And not just on REOs. I'd say 1 out of every 10 or so, with the most hardest hit markets seeing more than the stable markets.

The one thing noted is that the houses in a bidding war were purposefully priced low to grab the attention of buyers.

Six months ago, or a year ago, this situation happened so little that I could go to the lowest, most competitively priced market listings and use them as a cap on value.

Today, however, the choice is not as easy. In addition to being the most competitive with a low list price, any listing used to express a cap on market in my area should as a general rule, i.e., not etched in stone, have been on the market for 60 days or more, and any price changes have to be incremental (slow).

Also, I will not use short sales as a listing. Their sale prices fluctuate too much from the list price, both up and down.
 

Calvin the Airedale

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Aug 17, 2004
Professional Status
Certified General Appraiser
State
Ohio
Whether a SP higher than the LP was a result of a "bidding war" or "sale concession" can be indicated by a close analysis of the transaction.

Verification is ideal but not always possible. True verification happens when you have a copy of the sale agreement or closing statement and can confirm the price with either the buyer or seller. It seldom happens. (One rarely has access to sale agreement or closing statement but efforts are being discussed by consumer groups to make closing statements recorded documents that are subject to public scrutiny.)

More often the sale is confirmed with a RE agent. Agents, however, are not always reliable truth tellers. (I'm not suggesting that agents purposely lie, it's just that after a sale, their attentions go elsewhere and they don't always remember details as precisely as we would like.)

"Days on market" is a key indicator of a bidding war. Consider the original list price, DOM and any prior listing periods & LPs. Such price fights seldom break out after the property has been more than 30 or 60 days on the market.

Dave at Adept is right in making a concession adjustment when the facts indicate the likelihood of such a concession, even if it can't be verified with one of the principals or agents.

The old rule, "If it looks like a duck, walks like a duck, and quacks, it probably is a duck!" applies.
 
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hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Has anyone else been seeing this trend that active listings are low but when you go back and see what they sold for they sold at a higher price. I spoke with several brokers and this is what they told me: They are listing them low, then they get multiple offers a type of bidding war happens, same with REO, etc. The reviewer wanted me to use active listings to support my value and then make an adjustment for SP:LP which happen to be 1%. He insisted that active listings prices are the "ceiling" and I tried to explain to him what was being reported. He didn't want to hear it.

First, IMNSHO, a price difference of 1% between list and sell is trivial. Even if I thought I could discern such differences in value (which I don't) I wouldn't require anyone else to do so.

Next, as to lists selling above the list price and how common is that? It depends.

My observation is that if the lists are priced at the floor of the market, they may trade slightly higher (emphasis on "slightly"). Or, if a particular property is priced low and there are no other substitutes on the active market, it may also sell higher.
On the other hand, if there are a number of similar properties available, and there is a group at the low end, why would the typical buyer purchase a listing at the mid- to higher-level?

As a reviewer, I consider listings and sometimes give their list price-level significant weight in my value-point placement. The question is this; if enough similar homes are being offered at $X, why would a buyer pay more than $X? What typical buyer bids higher than the ask when they don't have to? Now if a lot of buyers were competing for the same house, I can see bidding up. Without that dynamic, it is not a reasonable presumption.

I think if you can show that the listings close in excess of list price, there is an argument not make any adjustment.
I'd also consider the marketing time of a property; if the typical DOM in your area is 90, and the house has been listed for 150, without any other reason being discovered, it would be reasonable to conclude the market has determined that house is priced too high- and a market adjustment may be warranted.

Good luck. :new_smile-l:
 

SANDY

Senior Member
Joined
May 17, 2007
Professional Status
Appraiser Trainee
State
Florida
First, IMNSHO, a price difference of 1% between list and sell is trivial. Even if I thought I could discern such differences in value (which I don't) I wouldn't require anyone else to do so.

Next, as to lists selling above the list price and how common is that? It depends.

My observation is that if the lists are priced at the floor of the market, they may trade slightly higher (emphasis on "slightly"). Or, if a particular property is priced low and there are no other substitutes on the active market, it may also sell higher.
On the other hand, if there are a number of similar properties available, and there is a group at the low end, why would the typical buyer purchase a listing at the mid- to higher-level?

As a reviewer, I consider listings and sometimes give their list price-level significant weight in my value-point placement. The question is this; if enough similar homes are being offered at $X, why would a buyer pay more than $X? What typical buyer bids higher than the ask when they don't have to? Now if a lot of buyers were competing for the same house, I can see bidding up. Without that dynamic, it is not a reasonable presumption.

I think if you can show that the listings close in excess of list price, there is an argument not make any adjustment.
I'd also consider the marketing time of a property; if the typical DOM in your area is 90, and the house has been listed for 150, without any other reason being discovered, it would be reasonable to conclude the market has determined that house is priced too high- and a market adjustment may be warranted.

Good luck. :new_smile-l:

I like your thinking-makes sense to me
 
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