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Declining Market or Overpaid?

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sosappraisal

Thread Starter
Freshman Member
Joined
Dec 4, 2007
Professional Status
Certified Residential Appraiser
State
Illinois
Hello

I am completing a refinance assignment of a property that
was purchased in December of 2005 at a sales price of $350.
The property had just been sold in June of 2005 at a sales
price of $ 315 as a one story new construction ranch.
My current opinion of value is $ 330. New construction of similar
ranch homes have sold and are selling in the $ 330 to $340
range with supperior upgrades. It is my opinion that the owner of this property overpaid significantly in 2005 and the opinion of market value
is not caused by declining property values.

LoanPerformance which tracks the nations housing market
reported that Chicago had a 0.06% positive home price
appreciation as of September 2007.

My question is how do I go about correctly stating my opinion
as to why this property has negative appreciation as I have
not had a similar problem in the past.

Thank You for any help
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Loan terms and borrower qualifications were better in 2005 than there are in 2007.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
My question is how do I go about correctly stating my opinion
as to why this property has negative appreciation as I have
not had a similar problem in the past.

Thank You for any help

I think you include the research you cite in your post and add a statement that not all homes in any market move exactly with the trend.
 

CURT VAN HOOSER

Senior Member
Joined
Nov 3, 2003
Professional Status
Licensed Appraiser
State
California
Unless I misunderstood what you have written, you have not mentioned what similar homes sold for in December 2005. The house sold in June 2005 for $315 but the deal was most likely made several months prior. The builder's prices at that time, at least out here, were increased routinely as new phases were constructed. Again, out here, depending on how well the devolpment was received by the market, you could have several new phase releases within a few months. So, it's not unrealistic to have the new homes closing in December 2005 selling in the $350 range.
 
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