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Tom4value

Senior Member
Joined
Dec 4, 2016
Professional Status
Certified Residential Appraiser
State
Massachusetts
Most of my clients want current listing comps as well as sold comps. For the listings in the SCA, if the 1004MC is showing that the sales price/listing price ratio is less than 100, I make an adjustment to the asking price to reflect the probable sales price of the listing. For an appraisal, I am using a pending sale as a comp that I just appraised (for that sale). The price/listing ratio for my other compass is less than 100 but I know for a fact that the comp I appraised is a full price offer. It hasn't closed yet.

My question is, do I use the actual price with no adjustment and disclose that it is a full price offer or do I not disclose what I know for confidentiality reasons and make an adjustment even though I know it is wrong? BTW- both appraisals are for the same client.
Thanks
 

Howard Klahr

Senior Member
Joined
Oct 4, 2004
Professional Status
Certified General Appraiser
State
Florida
Have you never verified the contract price on a pending sale? How would this be any different?
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Most of my clients want current listing comps as well as sold comps. For the listings in the SCA, if the 1004MC is showing that the sales price/listing price ratio is less than 100, I make an adjustment to the asking price to reflect the probable sales price of the listing. For an appraisal, I am using a pending sale as a comp that I just appraised (for that sale). The price/listing ratio for my other compass is less than 100 but I know for a fact that the comp I appraised is a full price offer. It hasn't closed yet.

My question is, do I use the actual price with no adjustment and disclose that it is a full price offer or do I not disclose what I know for confidentiality reasons and make an adjustment even though I know it is wrong? BTW- both appraisals are for the same client.
Thanks
I would apply the list to sell ratio, and then make a comment in narrative that per conversation with the RE agent, it has a pending sale contract at full price. Imo, making a list to sell adjustment is not "wrong", it shows the market read on that comp list to sell ratio, rather than what an individual buyer decided to pay ( the full asking price ) .How many days on the market till the offer might shed light on why a full ask price -sometimes a brand new listing gets a full price offer, or one that was higher priced but then gets a price reduction.
 

Tom4value

Senior Member
Joined
Dec 4, 2016
Professional Status
Certified Residential Appraiser
State
Massachusetts
Have you never verified the contract price on a pending sale? How would this be any different?
Noooo!
Back in the day a realtor would. However, in recent years here in MA realtors have cracked down. A pending price is considered confidential information and if the broker reveals the price to anyone outside of the transaction, the seller could sue them. The reason, of course, is that if the sale falls through, another buyer knows how low the seller will go. Got to the point where the realtor would give me such a useless answer I stopped asking. The only way I know the pending price is if I am doing the appraisal.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
In response then to confidentiality, if you feel only way you know the pending price is because you were retained to do the appraisal, then apply list to sell ratio and say that due to confidentiality, you can not disclose the result of a conversation wit the realtor however you can confirm it has a pending contract of sale.
 

Gobears81

Senior Member
Joined
Nov 7, 2013
Professional Status
Certified General Appraiser
State
Illinois
As a disclaimer, I think I've completed one home appraisal in 2017. But, can't you use the listing price, acknowledge that it is pending sale, AND acknowledge that based on data retained in file, the asking price is market oriented?
 

Tom4value

Senior Member
Joined
Dec 4, 2016
Professional Status
Certified Residential Appraiser
State
Massachusetts
In response then to confidentiality, if you feel only way you know the pending price is because you were retained to do the appraisal, then apply list to sell ratio and say that due to confidentiality, you can not disclose the result of a conversation wit the realtor however you can confirm it has a pending contract of sale.
That sounds like it would cover my bases.
Thanks!
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
I recently as asked to do reconsideration of value(VA) the highest sale in the new condo development(Closed sales) ws less than $300,000 but the builder has jacked up the price to $15,000 o $30,000 over the highest sale. I used 3 closed sales in subdivision and 2 in a similar but much higher quality condominium. That did not meet what they were looking for, The builder produced 5 pending sales some that will not close until next may. I don't know who id the appraisals but all are $20,000 to $0,000 higher tahn any current sale in subject neighborhood. I hd already given them a TI. They were denied a ROV by the VA since I had already given them one opportunity to provide data. Pending sales are not a true reflection of the market, in my opinion.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
I would apply the list to sell ratio, and then make a comment in narrative that per conversation with the RE agent, it has a pending sale contract at full price. .
If you know that a pending sale has a full price offer, then why on earth would you apply an adjustment based on the typical list to sell ratio? That is completely misleading even if you do make a comment in the addendum.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
If you know that a pending sale has a full price offer, then why on earth would you apply an adjustment based on the typical list to sell ratio? That is completely misleading even if you do make a comment in the addendum.

It is not misleading, because the full price offer is disclosed in commentary and it states the sell ratio shows the market read on the property as the typical list to sell ratio noted; the pending sale contract price is what one buyer is paying.In addition, it has not closed yet- those of us actively appraising see from our own practice that a pending sale price can change prior to closing or the deal not close at that price/be put back on the market .

The list to sell ratio is a market analysis tool, and one can say applying it at all is misleading, since every property will not close at exactly that list to sell ratio. I always state the list to sell ratio is an average or typical amount noted, and that actual list to sell ratios can vary per individual negotiation,
 
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