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Current listings better than recent sales ? ?

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Lee SW IL

Thread Starter
Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Im Doing an exterior inspection of an older 2 story frame home appearing in good/above average condition.

Current sales gridded indicates $132,000, $ 145,000 & $150,000. 1st two sales are within 2 blocks of the subject. 3rd is in an similar neighborhood. All sales within the past year, one within the past month.

3 Homes currently for sales within the same block of the subject property (gridded as the sales0 $175,000, DOM 133, $165,000 DOM 57, $132,000 43. MLS shows homes selling at about 95% of listing price. $132,000 home is in inferior condition to the subject and comps.

With the little information I have about the home, I would have to believe that the subject were to put on the market it would be $165,000-$175,000 range.

Since this is a drive by and lender wants a cheap appraisal, should I just base my opinion on the sales only, and just explain that the listings are listings and sales are sales.

Other suggestions ? ? ?

Thanks
 

Dave Smith

Senior Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Wisconsin
Quote: "Since this is a drive by and lender wants a cheap appraisal, should I just base my opinion on the sales only, and just explain that the listings are listings and sales are sales."

A "drive by" doesn't decrease the requirement to do a thorough job. The lender may want a cheap appraisal but you may not be able to accommodate him/her. If you don't have enough information on the subject you need to do an interior inspection, whether the lender wants you to do so or not. And a listing is not a sale until its a sale. In my book ya gotta go with the sales. :D
 

Joker

Elite Member
Joined
May 28, 2002
Professional Status
Certified General Appraiser
State
Ohio
Lee,
Surely you jerking our chain :!: Using listings as sales :?: Sounds like the $175,000 home is listed too high, given the DOM. Take 95% of the listing price of the $165,000 home and you are in range with your actual sales. A sale ain't a sale until it's closed. Even if it's under contract.

Also scary :arrow: Appraising an old home without an interior inspection. Have the electrical, HVAC, and plumbing systems been upgraded? How about the kitchens and bathrooms? If so, when? To what extent? Your risk is high on this one. Require an interior inspection or give your client your competitor's phone #. It has worked for me to price "drive-bys" the same as appraisals with interior inspections. To this point, the client always opts for the interior inspection.
 

jtrotta

Senior Member
Joined
Jan 16, 2002
Doug & Dave

think you guys have expressed quite well and would tend to agree; I will however, stand a little closer to Dougs thought with regards to the Fee; price em the same; the works the same and if you don't go in they should pay to play anyway. If a problem comes up your going to be the first one they'll call on.

8)
 

Dave Smith

Senior Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Wisconsin
We all know the 2055 doesn't save enough time to make a hill of beans difference. The work's the same :!: The overhead's the same :!: Up the fees :!: Up the fees :!: Up the fees :!:
 

bradellis

Member
Joined
Jan 16, 2002
Lee,

Let me play contrarian once again.

1. No problem with the drive-by. Make sure you use an extraordinary assumption about the subject's condition, features, etc.

2. Your fee is between you and your client. sometimes these drive bys are easier than full blown deals- sometimes not- sometimes even harder. Only you will know that.

3. Listings: This is what really gets me going. Why are listings not good indicators? If the market is strong and folks are getting full asking price- or near full asking price, can you not figure out the typical discount? Any good MLS gives you the ratio of ask to sell price, and you can generally specify the property features right in your search parameters. This whole thing of waiting for closing, by itself, has always been ludicrous.

It is particularly true when it is a pending deal and you can find out the contract price. Look at the definition of market value- it begins with the words, "The most probable price that a property should bring...".

Contracts are based upon a "meeting of the minds". So, when they buyer finds out that the furnace is not working and the seller credits $1500 at closing, does that now mean the price was overstated by $1500? So how does this $1500 affect your subject that has a working furnace 2 years old? It does not and should not.

Now, is an asking price NOT a piece of market data? Do listings NOT set the upper limit of value? In a market where deals are being made within 1% of asking price, or even with multiple offers exceeding asking price, would you ignore a model match on the same block in an increasing maket just because it is listed 5% above the last sale of that model 6 months ago?

There is NOTHING wrong with using listings along with your other data. In fact, I encourage you to do so. Give them the 3 closed sales that their guidelines require and then use whatever other legitimate data you have to form your opinion. It is YOUR opinion.

I'll just tell you that, right now, in Southern California, if you DO NOT use and consider listings, you will blow it. Values are increasing so fast that historical sales cannot keep up at all. A quadraplex in my suburb went on the market at $365K. By the next day there were 12 competing offers- all above list and the seller accepted one at $390K. Last sale was at $325K- 3 months ago.

In stable or flat markets, the historical data is fine. But in decreasing markets, you gotta use the listings too. Just like in increasing markets.

Consider all the data you have, form your opinion, and in your report, 'SPLAIN yourself.

Have fun.

Brad Ellis, IFA,RAA
 
A

Anonymous

Guest
Lee,
I only use listings to illustrate the upper limit of value. A buyer will not pay $100,000 for your subject property when he can buy a similar house in the area for $90,000. Using listings as indicators of value may look logical but a listing is only a dream, a closed sale is a fact.
 

Rlong

Member
Joined
Jan 31, 2002
Professional Status
Certified General Appraiser
State
Colorado
If I see a "trend" where the listings appear to be indicating a significantly higher value (greater than 5 - 10 % in a market where most sell at or 5% below listing) I call the brokers and NICELY ask them how they priced em and have they gotten much activity. I recently called one who said the owner insisted on pricing it at X but he/they would be dropping it that week.

That said I did do one resently (REO) where the Listings tended to be significantly higher. Of note, all of the sales happen to be older (slow market between Nov. to March in Colorado) AND had days on market/to offer of less than a week. It appeared that the brokers in that area UNDERESTIMATED sales prices last summer/fall. So I reconciled (can't spell) to the upper end of the indicated range of my Sales and sent it down the road. I haven't heard from the realtor involved with the REO, I'm sure he knows more than us dumb appraisers. (he was kind of a strange one)
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
If the market's increasing, the sales should be chasing the listings, with listings selling quickly. You should be able to forecast the probable sale/list ratio and cite a listing for your upwards time adjustment. Conversely, they want $175,000 but can only get $135,000, no matter how long they list it. So look at the listing dates - how long on market? Remember, what you want ain't always what you'll get, especially in real estate.
 
B

Bemis Pownall

Guest
remember numbers can lie
once realtors WITHDRAW a listing and enter it as a NEW listing, lower price,,there goes 5-10% off the REAL original price. I wouldnt pay too much attention to the figures published by the MLS.
Nother example. Once under contract the REALTOR withdraws the listing and re enters it. They show their prospective clients that THEIR marketing time is 1 day 2 days..
wouldnt you want to sign up with a REALTOR who always has a marketing time of less then one week?
just tricks with numbers. smoke and mirrors
and a sale aint a sale till its sold and the loan details are known..
 
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