Current listing comparable

[Lee SW IL]

Im doing a home in a higher end of value for its market, with no sales within the subdivision. However there is a current listing.

I have used current listings before, but, I'm curious what other appraisers do when using a listing.

Do you mention the listing on an addendum and describe the home.
Do you list the listing as comp #4,
If you list it in the grid, do you adjust? for square footage, site, ect or just mention, equal, superior, inferior?
Do you adjust the listing price?

Thx Lee

 

[Tim Hicks (Texas)]

I never put a listing on the front page (first three comps). I generally make it the last comp. I adjust it just like the other comps unless the market shows dramatic drops from the list to sales price. I try not to give listings too much weight. I can point out many, many listings that never sold because they were over listed. However, occasionally there is a current listing that is very comparable to the subject that reflects the market competion for the subject. Beware, just because a property is listed for a price does not mean it will sell for that price. Example: WE have manufactured home/land package listings all the time. After they over paid for the property, can't afford the high mortgage payment, they try top sell a year or so later. It is not until do they realize how much they overpaid for a property. These properties are listed for six months without a bite and the next thing you know they are in foreclosure. List price may not always mean market price.

 

[Dee Dee]

I agree with everything that Tim has told you.
When it comes to using listings as comps, especially in a slowing market area, you shouldn't give it much weight.
Many times homeowners wanting to sell will choose the listing realtor who claims that they can get the highest price, only to find that it won't sell until they drop down to what the market will realistically bear.
This same practice can cause some real grief with neighbors. They always seem to know what the house was listed for, and when it finally sells they run to get a refi on their own home thinking that the sold home went for the inflated listing price. One guy I had to deal with ran with this assumption (neighbors house sold for $25,000 under what the listing price was), went and bought a new truck thinking he'd quickly refi and get his money back out. The dim wit even went and pounded on his newly moved-in neighbor's door and asked them what they paid for the house because he didn't believe me. What a pain....

 

[George Hatch]

I will occasionally throw in a listing if there are insufficient 'good' closed and pending sales. I grid them out and make all the adjustments, but I don't automatically adjust downward for being a listing. That said, the only weight I give to them in this market is to assume that as a listing, they represent the upper limit of value for the subject. I would have to have a really good reason to ever come in higher than an adjusted active listing; I can't remember ever doing it. I never use a listing as one of my primary sales.

 

[Ross (CO)]

Yes, I will occasionally use an active listing, but never would it appear in the 3 primary (sales) positions of the grid. If my sales are a little older in sale date than preferred then a listing helps bridge the gap of time, especially as we might have pre-Sept. 11 sale dates and a listing today reveals some element of the local trend in pricing. I now research my listing histories thoroughly, looking for that first list price, perhaps having dropped price a time or two, expiring and coming back on as "new" listing the next day ! I mention the full, reasonably continuos term of days-on-market as well as the % of final selling price to that original listing price. If I have 4 or 5 good, solid sales to grid, I will observe the average %-of-list they show and apply that % to the Active Listing "comp" in the grid in the Concessions line and call it, for example, "-5% price negot." and put (take away) that dollar amount from the current list price. At top of column in the line item for Sales Price I enter "List $zzz,yyy". If your market area performs with some measure of consistency, I have found that an occasional Listing Comp or two on second grid page works wonderfully at supporting the estimate I conclude with sales on page 1. All aspects of adjustment would be same for listing or a sale. I do not use active lists regularly, but know that I will also prefer to use an "under contract" or "pending" sale for it's (verified) data instead of any active listing where no demand is being made.

 

[Caterina Platt]

I'm having to use a couple of current lists on a report I am working on. The major reason I will use these is to illustrate similar improvements in the immediate neighborhood when my only sales are detached from the area. My value will still be weighted on the closed sales, but the discussion in the addenda will point to the current listings to show that the subject is not unusual, overbuilt for the area, etc. I will never use current listings as one of the first 3 comps.

 

[David S. Roberson]

Like most of the previous posts, I'll sometimes use a listing as a fourth or fifth comp just to show market activity. But be sure you identify it boldly as a listing. I did a review a couple of weeks ago that had a listing as a fifth comp; the underwriter hadn't noticed it was a listing & not a sale.

 

[Tom Hildebrandt]

Forum members

I often use listings, especially for the unique properties for which good quality data is not availble for quantitative analysis. As several posters have noted, these usually show an upper limit of value which is often useful in narrowing a range.

I seldom show a listing in a sales grid and when I do, I never make adjustments. More often, I write a paragraph describing the salient features of the property, and discuss what is known about the sales history. The follow on paragraph places this discussion of the listing
in the context of the other sales data and concludes with a reconciliation of the sales data.

Regards

Tom Hildebrandt GAA

 

[Mike Garrett RAA]

Fannie Mae says you can use a listing IF there are no closed sales. This is quiet common in some of the more remote areas. Thank God we don't have to do it in this market.

If you are used to do doing REO and RELO work, then you would be used to doing at least 3 closed sales as well as three listings. The thing to remember is that most listings do not sell for list price. Do a CMA to determine the percentage of list the sales are bringing and then discount the listings by that amount. Typically, this will be from 2 to 6%. If you are doing a RELO (just got one this afternoon $550) remember they expect trending too...in other words, what do you THINK the property will sell for in, say, 90 or 120 days.

Gosh, does this sound like real appraising? There was a time in this market, when we were considered foreclosure capital of the world, I never did an appraisal without 3 sales and 3 listings. Paid off too...was appointed by the FHA to re-appraise their REO inventory every 90 days until sold. Did the same house as many as 4 times.

 

[Richard Carlsen]

I never use a current offering in a report except on Relos and REO's where they want them addressed. To me, only sales are success stories and that is the only real indication of Market Value. To give and credibility to the listings makes no sense in value other than to establish an upper end of the Fair Market Value. But I can do that with sales.

I would rather use a sale 5 miles away than a listing within the same development.