Bracketing subject

[Judy Whitehead (Florida)]

To throw a little monkey wrench in here.....I have underwriters that state they require a sale that is "higher" than the appraised value of the subject...in other words, if the sales are 630,000, 640,000 and 650,000 and after adjustments I conclude the subject is valued at $660,000...they want a higher end sale to support that. In fact, that is a very common request I get if that situation happens. Their belief is apparently that the subject cannot set the high end of value. What say you all?

 

[xmrdfghap]

My take (perhaps a little arrogantly) is that if they didn't want my opinion they should not have asked (and paid) for it. I have done an inordinate number of unique properties.

Some time back I did a MH that was more than any comp....site built and all. Over 3,000 feet, 4 br, 5 bath, with a site built four car garage, on 20 acres, with horse pens, a 36 X 60 horse barn complete with manufactured 12x12 stalls, a 30' round corral, a 50' round corral, an in ground pool, fenced and cross fenced with vinyl fencing and fabric hotwire. Did I mention the roping arena? Did I mention the arena was under a roof?

Just made sure I grided the various facets and supported it well with facts, data, and tons of comments (it ran cloer to 10 pages of comments than it did to 1 1/2 pages).

Started getting calls (do you have to include.........?). Response: do you want a report on what is there or what you would like to be there? Value is well supported by the cost approach. Reason you wanted me is because I recognize the value of unique properties......but braketing is not possible.......it is not an option.

 

[MARKETVALUE]

Lee and I agree.

Find a bracket sale even if not the best comp as comp#4.

If the market has not produced a sale equivalent or in excess of what you are providing as your indicated value, then you are telling me that no market has been established for a home at that price or presently market data does not support an arms length most probable transaction at that price point.

No where does it say you have to bracket but my belief is that if you apply the principles then you can draw the conclusion that in effect bracketing is crucial if not mandatory.

my 2 cents.

MRM

 

[Mike Garrett RAA]

Bracketing of the adjusted sales price of the comparables, not raw sales price! Or are you saying you can never have a sales above the highest reported sale in the neighborhood??? Hogwash!

 

[Terrel L. Shields]

Mike-

Agree. There is a real high and real low value in any given data set. To argue that these end points cannot be appraised because they cannot be bracketed is nonsense. You can extrapolate beyond the end points, bracketing is just a nice mechanism for refining a value estimate. Pulling a non-comparable but higher value from somewhere far off is equally unrevealing and pointless.

There was a beautiful home with a bright blue roof south of Fairplay near the Weston Pass road that was obviously multi-bucks more than anything near at the time it was built (94-95±)?. Would you compare it to houses in Breckenridge? Evergreen? Would that be meaningful?
ter
ps- heard that house burnt..when built it was a real turnkey job, it contained furniture, dishes, rugs, pictures on the wall, Jeep in the garage, and clothes in the closets I was told. Maybe some of you Parke Co. folk know the place I am talking about.

 

[MARKETVALUE]

I interpeted it as he needed a bracket sales price not a bracket adjusted sales price.

If that is the case, then with this price home there may be plenty of room for ammenity or upgrade adjustments if warranted that would support the value. IF NOT warranted then I would tend to believe it definately is not worth the $660k based on the fact that if the proper adjustments were made and the adjusted sales prices did not support a $660k value then what do we need comps for.

As far as valuating a home in excess of neighborhood sales. I would say it depends. What is the stability and value indication of the overall market for similar and like property? What have we defined our neighborhood as? Etc, etc...

I would have a problem getting too crazy and extending a value greatly exceeding historical property values in a specific neighborhood. If a buyer hasnt been willing to pay $660k in our neighborhood in the past are we crystal balling it and assuming they will in the future? Why pay $660k in our neighborhood which hypothetically say has a 12 month sales range of $400-$600k, when other (superior at this point based on sales price) neighborhoods my have values/sales ranging from $500-$700k? Your average buyer obviously is looking to spend that money in OTHER neighborhoods not ours.

My point is this, the foundation of our skills is based on fact (physical data) and infused with educated interpetation (which is always the trump card), if you have no buyer (see sales history) willing to pay a certain price in a specific neighborhood, how can we possibly come to the conclusion that the MOST PROBABLE sales price is in excess of historical data? Go by another house at that price in an established market.

I respectively tend to disagree with you here Mike.

Your input is always welcome.

MRM

 

[Mike Garrett RAA]

You don't need to be respectful or agree....I think you are wrong because you are telling me....

"there can never be a sale above what ever the last highest sale was in the neighborhood".

The real estate market is an imperfect market. It is what it is and we can't control it...only report what we see.

 

[Anthony Blackburn]

it is a common technique, to use the concept of bracketing, however, I think it needs to be used more in the process of gathering your comparables and bracketing thre physical aspects of the subject with the comparables, rather than utilizing prices as a primary was of bracketing. As a matter of fact, I belive HUD requires bracketting whenever possible.

 

[Mike Garrett RAA]

Tony, the discussion is "raw sales price" vs "adjusted sales price" bracketing. And your take is?????

 

[Anthony Blackburn]

My experience is that bracketing in all aspects, including original sales prices, adjusted sales prices and physical characteristics of the subect is always the way tio go. For unique properties, or areas where data is very limited, this is not always possible. In these cases....comment, comment, comment. Acknowledge the fact that one or more aspects could not be bracketted, explain why they could not be bracketted and explain how this impacts the quality of the report and how it affects your conclusions.