comps from auction

[JoanS]

An appraiser used auction comp to come up with value for our home we are selling. There were plenty of other comps available and this comp brought the price way down (15000 less). My question is: is this ethical, and if there are no restrictions on doing this, would it not be the same as using a foreclosed property? These types of properties sell for way less than a 'normal' sale and bring the comps way down. What are your thoughts? Thanks

 

[RSW]

If all that is available are foreclosre and auction properties that have sold, Then the appraiser has to use was is available. That is the market.

 

[JoanS]

Better comps

That is my point...there were sufficient other comps available!

 

[Randolph Kinney]

An appraiser used auction comp to come up with value for our home we are selling. There were plenty of other comps available and this comp brought the price way down (15000 less). My question is: is this ethical, and if there are no restrictions on doing this, would it not be the same as using a foreclosed property? These types of properties sell for way less than a 'normal' sale and bring the comps way down. What are your thoughts? Thanks

The appraiser should note in the appraisal why he chose the auction comp over other available MLS listed/sold comps that represent a market sale.

The problem may be that the auction was not really market exposure with the same buyer-seller motivation. Was this a trustee/foreclosure sale?

 

[JoanS]

the property was owned by a woman who died. Family did not want to sell the home by listing it therefore auctioned it off.

 

[Ray Miller]

the property was owned by a woman who died. Family did not want to sell the home by listing it therefore auctioned it off.

There is a lot of misconception about the auction method of selling. The following is taken from my web site www.raymiller.ws from real estate auctions:

Fair Market Value the Day of the Sale​

There are more and more homes selling at auction these days that are not distress property. The auction method brings buyers and sellers together on a given day and time. That is the market value at that point in time.

The auction method of selling is more in depth and covers a greater araea then the traditional method of just marketing through a real estate broker and the MLS system. I have several properties that are coming on the auction market and the auction promotion cost from $5,000 to $25,000 per property.

So unless this was a distress property it in all likelihood received fair market value on that day. If the property was a comparable to yours I also would have used it as well.

For more in depth information on the Auction method of selling and terms and conditions that both the buyer and seller agree to please visit my web site www.raymiller.ws and click and read all the auction links. You may also want to visit www.auctioneers.org and read about real estate auctions at our NAA web site. You may also want to visit one of the auction compaies that I am associated with http://www.williamsauction.com/ This should help you understand the auction method a bit better.

Just my thinking.

 

[RSW]

JoanS,

I would suggest you provide adequate sales which have sold within the last 12 months, are very similar in terms of design, quality, age, and appeal when compared to your home to the original appraiser asking that appraiser to re-consider the value of your property. The appraiser should review the comparable sales you provided and give an explaination as to why these sales were not used or re-adjust the appraisal using the comparable sales you provided with an adjusted estimated value opinion.

 

[Brockway]

There is a lot of misconception about the auction method of selling. The following is taken from my web site www.raymiller.ws from real estate auctions:

Fair Market Value the Day of the Sale​

There are more and more homes selling at auction these days that are not distress property. The auction method brings buyers and sellers together on a given day and time. That is the market value at that point in time.

The auction method of selling is more in depth and covers a greater araea then the traditional method of just marketing through a real estate broker and the MLS system. I have several properties that are coming on the auction market and the auction promotion cost from $5,000 to $25,000 per property.

So unless this was a distress property it in all likelihood received fair market value on that day. If the property was a comparable to yours I also would have used it as well.

For more in depth information on the Auction method of selling and terms and conditions that both the buyer and seller agree to please visit my web site www.raymiller.ws and click and read all the auction links. You may also want to visit www.auctioneers.org and read about real estate auctions at our NAA web site. You may also want to visit one of the auction compaies that I am associated with http://www.williamsauction.com/ This should help you understand the auction method a bit better.

Just my thinking.

Thanks for reminding us, Ray. I have used auction sales in a rural area because there were no other comparable sales. I have found that they typically sell at or even slightly above fair market value because the bidders tend to get caught up in the excitement and overbid.

Joan, Mr. Whaley gave you great advise. Most appraisers would be happy to review your sales, if they are recent sales and are truly comparable to your property.

 

[Howard Klahr]

JoanS,

I would suggest you provide adequate sales which have sold within the last 12 months, are very similar in terms of design, quality, age, and appeal when compared to your home to the original appraiser asking that appraiser to re-consider the value of your property. The appraiser should review the comparable sales you provided and give an explaination as to why these sales were not used or re-adjust the appraisal using the comparable sales you provided with an adjusted estimated value opinion.

Who is the client? The appraiser may not be allowed to communicate with the seller.

 

[Ray Miller]

Who is the client? The appraiser may not be allowed to communicate with the seller.

Excellent point.