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Boom Times are gone ERC Appraisal

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Ray Miller

Thread Starter
Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
I have a subject that is 2500 GLA. Subject sold for $358,000 two years ago. Sales now include a 5300 GLA for sold for $363,000 that was listed for $450,000 and was on the market 927 days and much superior to the subject property. Three acres on the Golf Course.

# Listings 11 Avg List Price 277,645 AvgAskingPrice 276,545 Avg Price Diff 1100 Avg Days


# Listings 8 Avg List Price 297,100 Avg Sell Price 267,750 Avg Price DiffAvg 29350 Avg.Days 304

Across the county stats:

Criteria for report is Property = RESIDENTIAL - Area = N/A
Price range of 1,000 and 900,000 - Bedrooms = 0 - Baths = 0

Summary for Sold Properties# Listings 81 Avg List Price 118,194 Avg Sell PriceAvg 106,396 Price Diff 12,136 Avg Days 197


Summary for Active Properties# Listings 68 Avg List Price 148,649 Avg Asking Price 146,540 Avg Price Diff 2109 Avg Days


The subject has been on the market now for 57 days at $359,000 no showings. Common rural sub-division with two high end homes taken off the market. One that is being completed.

Next county south the stats are:

# Listings 17 Avg List Price 257,400 Avg Sell Price 252,171 Avg Price Dif 8441 Avg Days 174

# Listings 28 Avg List Price 303,400 Avg Asking Price 266,439 Avg Price Diff 6961 AVG Days 180

But most of these are in what I would consider a different market. They are nearer to madison by four lane, they are UW college town. Many different types of industry to support jobs.

The subject towns main employer is coming up short as it is a modular home construction company has a 19 month inventory of homes completed and waiting to be sold.

Cobellas is the other large employer in the area. It is an older river town and great for second homes and retirement homes.

In the subject sub-divison there are two homes that have not sold and have been taken off the market in the past year.

Historic trend for the past year is showing a marked decrease for these larger homes. There is not much of an employment base to support the payments on such a home. The area lends itself to more moderat price homes.

Criteria for report is Property = RESIDENTIAL - Area = N/A
Price range of 1,000 and 900,000 - Bedrooms = 0 - Baths = 0
Summary for Sold Properties# Listings 253Avg List Price 123,051Avg Sell 109,938 PriceAvg 13,861 Price Diff 13861 Avg Days


Summary for Active Properties# Listings 166Avg List PriceAvg 144,930 Asking PriceAvg 136,381 Price DiffAvg 8549 Days 129

Most of the high end homes that are selling are on larger acreages for country estates. 10, 20, 30, 40, 50, 60 and 70 acres, which has a value of raw land of around $3000 to $4000 per acre. Minus the land value and the high end homes are selling for $200,000 +/-.

My caculations indicate a value out to sell with in six months on this 2300 GLA with finished basement on .5 acres is between $225,000 and $250,000.

Stats indicate across the board decrease of 5% from 720 days back, in the two county area.

Current Listings are showing a decrease as well.

If I use the sales from the college town and county seat. Sure I could get a better deal for the seller. But that is not what I am here for.

My calculations from three data bases indicate to sell this subject in 180 days you are going to need to be in the $225,000 to $250,000 if you want the $350,000 Value then you may need to wait a year or two to sell it and then it still might not sell depending on what the future holds for the area.

This is one of those homes that, yes I like the area, no I don't make my living from the area, I have employment that takes me away from the area. But I can afford this type of home in this area if I want to.

To find someone else like this in this type of market at the present time with the number of large home and high end homes in the market. It is a buyers market.

What say you to all this giberish. I know I am going to hear it no end when I send this in tomorrow. Homeowner made it plain he need $350,000 made it plain that the other appraiser told him that would not be a problem. Here I go rocking the boat. Heck he even gave me ths list of sales the other appraiser was going to use to make his case. Nearer to Madison by some 60 miles sold new in 2005. Another One sitting on top of the Bluffs of the Mississippi with 6 acres of Bluff views, a one acre stocked bass pond, 3100 GLA. Another one on 10 acres nearer to Madison on a four lane. Another one with 6 acres of Mississippi River views and hardwood wood lands, Water views from three sides of the river. Sold in early 2006, brick and stone consturction not vinyl siding.

Really at one time the home might have been worth the $359,000, it might still be to the right person, but that time and that person may be a long ways off.

Really how to deal with it?????
__________________
R Miller
www.raymiller.ws
www.saddlefitting.net
www.spartafun.com
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
The first comp you mention is on a golf course.
Is your subject on an actual golf course, or is it on a dry golf course with dead grass, dried-up water hazards & plugged holes?
I'd be more worried about the state gigging you for not adequately analyzing golf-course adjustments for real vs. imagined location differences than over a measly 40% value difference!

:icon_lol:
 

Lobo Fan

Elite Member
Joined
Nov 28, 2004
Professional Status
Certified Residential Appraiser
State
New Mexico
It is what it is. I think I am noticing a resistance to homes that require a longer commute. I think the price of gas is starting to enter into the thought process. I am lucky I guess. Civilization is coming to me. We have a Home Depot and a super Walmart will be open soon. It is still a haul into downtown Albuquerque.

Maybe homes that require a long drive are getting hit? I am just getting ready to send one in at $172,000 where the loan amount on the order is $189,000. I guess I better get ready.
 
Joined
Feb 16, 2003
Professional Status
Licensed Appraiser
State
California
ERC

Were the other guy's "comps" or merely sales? What about the sale dates? Did they take place during a boom and not after the bust started?
Did you take into consideration the locational differences?

I hope you did not quote too low a fee.

ERC appraisals require you to lok into the cryatal ball for Days to Sell. I'm sure they won'y be happy witn "365+". That's why I dont do ERC - too much conjecture.
TN
 

Ray Miller

Thread Starter
Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
The first comp you mention is on a golf course.
Is your subject on an actual golf course, or is it on a dry golf course with dead grass, dried-up water hazards & plugged holes?
I'd be more worried about the state gigging you for not adequately analyzing golf-course adjustments for real vs. imagined location differences than over a measly 40% value difference!

:icon_lol:


poor subject is not on anything. just .5 acres of land in a new subdivison out east of town off a back township road, that is platted for 40 homes and has 6 built or being built in the past three years.

That comp on the golf course is the highest selling thing in the area and that took 409 days and at that it took and $87,000 hit over what it cost to build by the time it sold.

me too, but you got to move forward while draging the state along with you. I also have to worry about the fee's I charge, you know that the state business as well, at least here in Wisconsin.
 

Ray Miller

Thread Starter
Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
I have a subject that is 2500 GLA. Subject sold for $358,000 two years ago. Sales now include a 5300 GLA for sold for $363,000 that was listed for $450,000 and was on the market 927 days and much superior to the subject property. Three acres on the Golf Course.

# Listings 11 Avg List Price 277,645 AvgAskingPrice 276,545 Avg Price Diff 1100 Avg Days


# Listings 8 Avg List Price 297,100 Avg Sell Price 267,750 Avg Price DiffAvg 29350 Avg.Days 304

Across the county stats:

Criteria for report is Property = RESIDENTIAL - Area = N/A
Price range of 1,000 and 900,000 - Bedrooms = 0 - Baths = 0

Summary for Sold Properties# Listings 81 Avg List Price 118,194 Avg Sell PriceAvg 106,396 Price Diff 12,136 Avg Days 197


Summary for Active Properties# Listings 68 Avg List Price 148,649 Avg Asking Price 146,540 Avg Price Diff 2109 Avg Days


The subject has been on the market now for 57 days at $359,000 no showings. Common rural sub-division with two high end homes taken off the market. One that is being completed.

Next county south the stats are:

# Listings 17 Avg List Price 257,400 Avg Sell Price 252,171 Avg Price Dif 8441 Avg Days 174

# Listings 28 Avg List Price 303,400 Avg Asking Price 266,439 Avg Price Diff 6961 AVG Days 180

But most of these are in what I would consider a different market. They are nearer to madison by four lane, they are UW college town. Many different types of industry to support jobs.

The subject towns main employer is coming up short as it is a modular home construction company has a 19 month inventory of homes completed and waiting to be sold.

Cobellas is the other large employer in the area. It is an older river town and great for second homes and retirement homes.

In the subject sub-divison there are two homes that have not sold and have been taken off the market in the past year.

Historic trend for the past year is showing a marked decrease for these larger homes. There is not much of an employment base to support the payments on such a home. The area lends itself to more moderat price homes.

Criteria for report is Property = RESIDENTIAL - Area = N/A
Price range of 1,000 and 900,000 - Bedrooms = 0 - Baths = 0
Summary for Sold Properties# Listings 253Avg List Price 123,051Avg Sell 109,938 PriceAvg 13,861 Price Diff 13861 Avg Days


Summary for Active Properties# Listings 166Avg List PriceAvg 144,930 Asking PriceAvg 136,381 Price DiffAvg 8549 Days 129

Most of the high end homes that are selling are on larger acreages for country estates. 10, 20, 30, 40, 50, 60 and 70 acres, which has a value of raw land of around $3000 to $4000 per acre. Minus the land value and the high end homes are selling for $200,000 +/-.

My caculations indicate a value out to sell with in six months on this 2300 GLA with finished basement on .5 acres is between $225,000 and $250,000.

Stats indicate across the board decrease of 5% from 720 days back, in the two county area.

Current Listings are showing a decrease as well.

If I use the sales from the college town and county seat. Sure I could get a better deal for the seller. But that is not what I am here for.

My calculations from three data bases indicate to sell this subject in 180 days you are going to need to be in the $225,000 to $250,000 if you want the $350,000 Value then you may need to wait a year or two to sell it and then it still might not sell depending on what the future holds for the area.

This is one of those homes that, yes I like the area, no I don't make my living from the area, I have employment that takes me away from the area. But I can afford this type of home in this area if I want to.

To find someone else like this in this type of market at the present time with the number of large home and high end homes in the market. It is a buyers market.

What say you to all this giberish. I know I am going to hear it no end when I send this in tomorrow. Homeowner made it plain he need $350,000 made it plain that the other appraiser told him that would not be a problem. Here I go rocking the boat. Heck he even gave me ths list of sales the other appraiser was going to use to make his case. Nearer to Madison by some 60 miles sold new in 2005. Another One sitting on top of the Bluffs of the Mississippi with 6 acres of Bluff views, a one acre stocked bass pond, 3100 GLA. Another one on 10 acres nearer to Madison on a four lane. Another one with 6 acres of Mississippi River views and hardwood wood lands, Water views from three sides of the river. Sold in early 2006, brick and stone consturction not vinyl siding.

Really at one time the home might have been worth the $359,000, it might still be to the right person, but that time and that person may be a long ways off.

Really how to deal with it?????
__________________
R Miller
www.raymiller.ws
www.saddlefitting.net
[URL="http://www.spartafun.com"]www.spartafun.com[/URL]


Well, I am going to send this in with two values. A short term 6 month sale at $250,000 and a year sale or more at $300,000.

I think that $359,000 is clear out of reason at the present time.
 

Ray Miller

Thread Starter
Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
Do you ever call a subject super adequate for an area and make an adjustment for it?

Or to do you just move to a different market and find higher selling comparables?

I am going to call it super adquate for the area. As there are no sales to really support the value of $359,000 in a declineing market. There are no pending sales and no listing for the value range of $300,000 to $400,000 in the town.

This thing is driving me nuts.
 

Ray Miller

Thread Starter
Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
I am now happy. I can put this one to bed. Found a model match same builder of the subject that sold Dec 6, 2007 for $269,000 been on the market for 243 days. Never lived in.

So I am happy with my value range of $250,000 to $300,000 for over a year.

I will slip a six month value in at $225,000

the owner is not going to be happy with me.

Loss of a hundred thousand + in little over a year.

Found it hiding at the court house. Glad I made that second trip.
 
Last edited:

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
Our job is to render a well supported, unbiased, independant, third-party opinion pursuant to the stated scope of work. Not necessarily one that will please homeower.

Remember, your final value is usually TEST in the real world. That's why ERC and FNMA guidelines are generally completely different.

Something more people should think about.
 
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