Do you adjust listings in the grid?

[Mike Kennedy]

PE, in selecting comparables consideration of the OLP, Adj LP, and Final LP v SP, as well as DOM, is an integral element in determining demand for the most similar properties. If the range of closed sales demonstrates, for example, typical DOM 90 days, FLP$ v TT$ (-5%) then a prudent buyer would reasonably expect a truly competitive Active to sell within the market LP/SP range and DOM range demonstrated by the Closed Sale Comps. If not, IMO, the Active Listing does not belong in the Report. IMO, LP to Final TT Price would be perceived by typical local buyers (and Lenders) no differently than a 3-5% sellers' concession for closing costs (for example).

IMO, sellers reduction in LP for either (extracted from the comparables) should be adjusted for in the SCA Grid.

 

[PropertyEconomics]

How is that any different from a reviewer disagreeing with your value by 10k. The value and adjustments can be argued by anyone. You almost never see two two appraisers agree on a value to the dollar. You must simply back up your adjustments with data and market support.

The point is the reviewer can prove you wrong if you have not guessed correctly on the sales price of a listing you have forcasted. Its not about disagreeing about a value .. its about him having proof you were wrong in your forcast.

Mr Rex ... I would agree with you. I suppose we all have to do it as we see fit. Im cannot predict the future therefore I wont adjust for L/S ratios as they cannot with 100% certainty be relied upon. I will adjust for physical features, disclose that the property is not closed and I have not adjusted for probable selling price as I cannot predict the future and state the listings would tend to set the upper end of the market indication for these reasons. Where is that misleading?

 

[David Dietz]

Actually if you are conduction a Fannie MAE Appraisal it is the most probable price the subject would bring if sold in an open market as of an effective date. That sounds like a prediction to me because the subject has not sold yet and may never in fact. Adjustments to listings for L/S is based on actually market occurrences if they are supported by market data.

 

[PropertyEconomics]

PE, in selecting comparables consideration of the OLP, Adj LP, and Final LP v SP, as well as DOM, is an integral element in determining demand for the most similar properties. If the range of closed sales demonstrates, for example, typical DOM 90 days, FLP$ v TT$ (-5%) then a prudent buyer would reasonably expect a truly competitive Active to sell within the market LP/SP range and DOM range demonstrated by the Closed Sale Comps. If not, IMO, the Active Listing does not belong in the Report. IMO, LP to Final TT Price would be perceived by typical local buyers (and Lenders) no differently than typical 3-5% sellers' concession for closing costs (for example).

IMO, sellers reduction in LP for either (extracted from the comparables) should be adjusted for in the SCA Grid.

Your shorthand is confusing, but be that as it may, sellers reductions cannot be predicted with complete accuracy. To state so is simply false. I think false is against USPAP. Even if you disclose what youve done, you have forcasted a future event, UNLESS, you issue the hypothetical condition that the listings have sold at the price you have predicted. Then I suppose you could do so and be in compliance.
Again we will all do it different it seems.

 

[David Dietz]

The point is the reviewer can prove you wrong if you have not guessed correctly on the sales price of a listing you have forcasted. Its not about disagreeing about a value .. its about him having proof you were wrong in your forcast.

Again what if the reviewer thinks the price per square foot adjustment should be $35 sf based on his research but yours reflect $40. To get a L/S you pool closed sales analyze the L/S of sales and reconcile the same as you would for other adjustments. I do not see any difference as long as it is not plucked from the air.

 

[PropertyEconomics]

Actually if you are conduction a Fannie MAE Appraisal it is the most probable price the subject would bring if sold in an open market as of an effective date. That sounds like a prediction to me because the subject has not sold yet and may never in fact. Adjustments to listings for L/S is based on actually market occurrences if they are supported by market data.

What if your subject is a sale? It kinda throws the prediction thing out the window doesnt it????

 

[David Dietz]

No not really the fact a contract has been signed is irrelevant. Haven't you ever appraised below the contracted sales price.

 

[Mike Kennedy]

Your shorthand is confusing, but be that as it may, sellers reductions cannot be predicted with complete accuracy. To state so is simply false. I think false is against USPAP. Even if you disclose what youve done, you have forcasted a future event, UNLESS, you issue the hypothetical condition that the listings have sold at the price you have predicted. Then I suppose you could do so and be in compliance.
Again we will all do it different it seems.

"predicted with complete accuracy", I agree, neither is an Opinion of Value.

:icon_lol:
OLP - original list price
LP - current list price
ALP - adjusted list price
FLP - final list price
DOM - days on market
L/S - list price to sale price

no HC required as the comp is reported as ACTIVE

 

[PropertyEconomics]

No not really the fact a contract has been signed is irrelevant. Haven't you ever appraised below the contracted sales price.

You missed the point and thats fine. We can just disagree on this point. Your example of $35 vs $40 per square foot doesnt compare to a reviewer with a closed contract that can PROVE you were wrong.
I just think its dangerous practice to forcast sales prices.
Apparently many here are involved in the practice. Its just not something my office is going to do. We cannot predict the future even with supporting market data because we are not in the position of either making an offer or making the decision to sell.
Just as easily the list price could be reduced the day after our analysis, and we would be wrong, my point is simply that using list to sale price ratios borders on making a false report.

 

[David Dietz]

Look the point is you can make any adjustment you want as long as you have market data to support that adjustment. Appraisers I work with make adjustments for things I would never adjust for simply for that fact I can not prove it with Market data, like a fence or shed. A L/S ratio adjustment I can prove with market data. Will the result be 100% accurate, no but neither is the opinion of value. As I stated before no two appraisers will value a property at the same 100% value. Personally the value should reported as a range and not a single number IMO.