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Arm's Length Sales With Short Exposure Time

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Train66

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How do you support and explain an adjustment for a comparable with atypical conditions of sale for the area but is verified by the parties to be arm's length and typically motivated?

For example, the property sold after only ## days on market, and based on other sales in the area would likely have commanded a higher selling price with more exposure time.
 
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Michigan CG

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Sale #2 was under contract for $222,000 after only being on the market for six days. Typically homes in this market are listed for an average of 57 days before going under contract. It is possible that this home was aggressively priced for a quick sale. This comparable sale adjusts lower than any of the other comparable sales used in this report and is given the least consideration in the reconciliation of value.
 

Meandering

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If it was listed below the list prices of the comps = price confirmation.

If it was listed at a price similar to the comps = seller motivation with failure to negotiate

If sold for cash = market value and your financed comps have financing favorable to cash. How you deal with that one will be argued in the next 20 pages.

.
 

bnmappraisal

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Sale #2 was under contract for $222,000 after only being on the market for six days. Typically homes in this market are listed for an average of 57 days before going under contract. It is possible that this home was aggressively priced for a quick sale. This comparable sale adjusts lower than any of the other comparable sales used in this report and is given the least consideration in the reconciliation of value.
Pretty much what he said (y)
but is verified by the parties to be arm's length and typically motivated?
I would just add your above (my bold) verification to the comments
 

Sid Holderly

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underpriced, wanted a quick sale, fast-moving market, fitted the requirements of an in the wings buyer to a tee are some of the possibilities.

In this area, the average market time is generally on the high-end because of many agents who list at way above market. Pocket listings are also a problem in some areas where the agent enters it in the MLS after they have an offer.

MLS's try to limit this by watching listing contract date and MLS posting date. Some agents renter the property as a new listing regularly to make their statistics look better. MLS's try to limit this by having minimum spreads between the listing dates of the same property by the same agency.

If the verification is appropriate, state and go; if you feel or see something fishy investigate further, they keep or discard the comp.
 

J Grant

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Covered well by above posters how to address it , Keep it simple, as post # 2 suggested verbiage.

I'll add when I have a "weak" comp, aka one that sold substantially above or below prevailing prices/ days on market/other, I like to use it as a fourth comp, ...if possible. Not all markets offer 4 decent comps but if I can find it, I'll add a comp over a year old ( very easy to make a time adjustment if needed ) or one that sold in competing area so there are 3 solid comps in prevailing terms , with the weak comp[ #4. listing or pending comp plus analysis of listing pending activity frames the picture.

For example, the property sold after only ## days on market, and based on other sales in the area would likely have commanded a higher selling price with more exposure time.

The saying, "show, don't tell" .I'd add a comp to shore up my argument above. The above would likely....with only 2 other sale comps, is shaky, with 3 or more sale comps it's solid. It's important to " tell" in narrative, but narrative is best "shown" by including more facts. ( closed sale prices or listings in pending contract are facts ) It's a harder to challenge facts vs theoretical explanation...

How do you support and explain an adjustment for a comparable

The explain is verbiage others suggested, the support comes from the facts. That said, I would not typically make an adjustment for such a comp. If the low price is so far out of range I'd drop it as a comp. If the low price is relatively reasonable for the DOM, it is what it is, use it as a fourth comp with a brief verbiage why it sold lower. If you can't find other good sold comps to support your theory of would likely have sold for more, it's a weak appraisal.
 
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Tom4value

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Massachusetts
How do you support and explain an adjustment for a comparable with atypical conditions of sale for the area but is verified by the parties to be arm's length and typically motivated?

For example, the property sold after only ## days on market, and based on other sales in the area would likely have commanded a higher selling price with more exposure time.
Sounds like you explained it perfectly. I would add that you gave it less weight than the other comparables for this reason.
 

leelansford

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Illinois
How do you support and explain an adjustment for a comparable with atypical conditions of sale for the area but is verified by the parties to be arm's length and typically motivated?

For example, the property sold after only ## days on market, and based on other sales in the area would likely have commanded a higher selling price with more exposure time.

How to "adjust"? I would not. It is what it is. Now, if the question is "Should this be a matter for comment and weighting in the reconciliation of the Sales Comparison Approach?", my answer is a definite YES.
 

Gobears81

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Illinois
MichiganCG has the most likely scenario, but I've seen several cases where brokers underprice a property because they aren't familiar with it. I've seen that happen multiple times where residential brokers have listed a property that isn't 1-4 family residential and don't know what types of metrics these properties sell for, but the owner takes their advice as they are regarded as the real estate experts. When I sold my house, the broker wanted to put it for sale at a listing price that was less than what it ended up selling for (in a stable market where sale prices are typically less than the listing). He did specialize in residential, but brokers occasionally have BPO's that are too low or high. It sounds like the OP has already verified the sale with at least one party, but it might be worth giving the broker for the other side a call if you haven't already.
 
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