declining market but short marketing times

[Proactive]

Did you check for cumulative days on market? Around here the MLS CMA will often show much shorter marketing time since many realtors start with unrealisticly high list prices and that listing expires or is withdrawn without selling. They then create a new listing with an appropriate list price and the property sells rather quickly.

You can't trust the MLS calculated marketing times or list to sale price ratios. I just finished one where the MLS reported average DOM was 72 days; a random sampling of neighborhood sales shows that the actual DOM is closer to 180 days. I find many listings have 3, 4 or even 5 listings/cancellations/relistings prior to sale. MLS reported average list/sale ratio = 99% and is calculated from the LAST list price. Appraiser calculated ORIGINAL list price to sale price ratio = 89%.

Don't believe the MLS lies and the lying liars who tell them!:new_2gunsfiring_v1:

 

[Riick]

Don't believe the MLS lies and the lying liars who tell them!

You're mostly preaching to the choir ... but the newbies amongst us may need a wake-up call.
Big time liar is the NAR, but also there's the FED, Dept of Labor, OTS, ......
---- it's alphabet soup time!
{{ We're from the gubermint, and we're here to help you.}}

 

[Mike Boyd]

This is where EXPOSURE time and marketing time can differ. You need to show the cumluative time it has been listed then the length of time since the price was reduced.

I think. Brad might correct me.

 

[Jungle Boy]

If your market area is large, and the number of sales is high enough to produce as decent sample, it is impossible (with the fees we are currently getting) to count the cumulative dom of each closed sale.

 

[Ken Youngkrantz]

George; that situation is quite common in much of California right now. We are seeing shorter DOM, increasing sales and prices declining. The average total DOM in some of my markets right now is under 30 days, with prices declining and sales increasing.

In this type of market you want to be careful with you list to sales price figures. It is becoming popular in my market for the lenders to list REO properties for sale at 10% to 15% less than the appraisal or BPO says the value is. Due to many offers most of these properties will sell for more than the value established by the BPO or appraisal. I did one last week that was listed for $245k and sold for $275 in 8 days with 24 offers.

However, we are still seeing 10% to 20% of the properties on the market being completely over priced and having no hope of selling. One active listing a pulled was listed for $350k, same model on same street. When I look into these listings I find that most of them are listed by and owner by people of one particular national heritage and if they do sell at that price they are purchased by someone of the same national heritage. Also if you look back in time at these types of sales most of them are in foreclosure within 9 months.

Just some ramblings on a Saturday morning. Reports take a lot more work and time now.

 

[Marcia Langley]

If your market area is large, and the number of sales is high enough to produce as decent sample, it is impossible (with the fees we are currently getting) to count the cumulative dom of each closed sale.

Jungle,

Yes, MLS statistics for many items are totally useless on a macro scale. I do not report those types of items for my whole MSA or large subregions. I limit my remarks regarding those undependable items (DOM, L/S%, etc) to the micromarket of my short list of actual comparable sales and do individual sale by sale research for it.

About the only thing my MLS has good macro data on are the sales/listing price and the volume of sales/listings. Everything else is contaminated.

Conversely, MLS statistical reports regarding sales prices are more acurate on the macro scale than on the neighborhood scale. This is because agents are increasinly using the option of not reporting the sales price and instead entering the last list price in the sold price field. Statistically on the macro level, there are not enough of those to skew the numbers. But in a smaller neighborhood statistical report, it very well could. So I have to spend time sorting that out on my micromarket data, as well.

 

[xmusienb]

The lower the price (declining market) the faster the sale. I don't see an anomaly here.

 

[ZZGAMAZZ]

Based upon my limited experience and in my personal opinion, residential market analysis is either the crux of the appraisal process, or a totally pedantic exercise embraced by pedantic professionals pursuing perfection in a non-precise world.

Most folks on the Forum agree that appraisals are more difficult in the current environment because the forces of 'change' are buffeting markets in ways that require significant due dilgence to understand.

Nobody, however, comes close to agreeing upon a semblance of a formula that might have widespread application.

If the SOW is predicated in part upon the desires of the intended user--the need of the appraiser to determine in his or her opinion a credible product notwithstanding--it would be intersting to determine whether collaterization is based even to a minor extent upon lender's perception of the market analysis that is included in a typical residential appraisal report, any more so than the result of the check-box on page 1 of the report.

A thorough and diligent residential market analysis might be compared to the chef who insists upon making all products from "scratch" rather than purchasing convenience sauces or seasonings. To do so requires a lot more labor, and it's possible only when the customer is willing to pay much more for the final product.

AMRA [another marginally relevant antedote]

 

[EVAUSA]

I've only seen this in markets that are REO driven. Usually ALL sales were REO, and all were priced for a quick sale. If any non REO sales exist, they are competing and also priced in line with foreclosures. If all sales are priced aggressively, your value based on reasonable exposure time and clients imposed restricted value could in-fact BE THE SAME, or only a slight reduction for the quick-sale. If that is the case, it really needs to be spelled out for the client. Something to the effect that "The market is REO driven. The majority of sales in the market area have been priced aggressively for a quick-sale, as reflective in 30-60 day exposure time on average. The subject market is distressed, both the typical marketing time and client imposed marketing time are the same. As indicated in time adjustment (-4% per month), the client imposed 60 day value was estimated 4% below the lowest adjusted listing utilized in this report."

 

[Frederick]

I know this multiple re-listing question at first glance causes us to think that we should include the marketing time for all prior listings but if you analyze it; why would we want to include a marketing period when the home was not competitively priced? It seems to me that the last listing at a competitive price that was eventually successful is the most relevant marketing time for a home that is competitively priced rather than including the whole period when the seller had unrealistic expectations that were not market supported.

I think the client is asking; what is the expected marketing time for a property like the subject when it is competitively priced and typically marketed?

If we include that whole period when the home was not competitively priced, where the agent and seller did not analyze the market trend and price it appropriately we are not answering that question correctly.

Furthermore, in a declining market, "your first loss is your best loss". Market and price aggressively and sell quickly. Time is against you. Many sellers and agents are beginning to realize this and are acting accordingly. BTW, I learned that when I worked in the neighborhood grocery store as a kid when pricing produce that was aging.