Do you adjust listings in the grid?

[TJSum]

In those areas, with plenty of listings and so little contracts, the listings are only telling us what the properties are not worth.... Just make sure the lowest listings are used and the declining box is checked.

How many reviewers out there see appraisals with the two added listings to comply with the new guidelines from many lenders, only to discover they cherry picked the two highest listings to go along with the cherry picked settled sales, well at least they are consistent.

If I were reviewing a report I would be much more concerned about the choice of listings, to make sure they are picking the proper ones as I described above. If the appraiser picked an "overpriced" one with a "average" LP to CP adjustment, it looks like they are showing the value ceiling when they really aren't.

 

[BlueDog007]

TJSum........hahahaha......

 

[Elliott]

I wished I could cite the source, but last week some AMC
was spelling out how they wanted listings to be adjusted
by the local list/sale ratio. Undoubtedly we are in new
territory.

 

[Kevin A. Spellman]

I do not adjust listings. I have and continue to provide listings in my reports in all market conditions. I have and will continue to refuse to adjust a listing.

The term I use for a listing is an alternative purchase within the subject’s market segment. If you have just started this practice of using listings within your reports from the request of a lender, I would state this is a request from the client and is not your daily practice.

The use of list price/sale price ratio as a beginning of an adjustment with just one or two listings could easily be creating a misleading report without the analytical data from the MLS displaying the average and the median list price/sales price ratios for several years. The report is stating MLS listings and the sales is the activity for this market. Here in MA it is quite often for non-MLS sales to be anywhere between 10-35% of the market. If you are only using MLS listings to adjust I believe you have to qualify the reason and the purpose of the listings and this practice is not reliable to support a market value. The listings are a future event. The closed sales are a historical event. I rather write about history than the future.

 

[PropertyEconomics]

I do not adjust listings. I have and continue to provide listings in my reports in all market conditions. I have and will continue to refuse to adjust a listing.

The term I use for a listing is an alternative purchase within the subject’s market segment. If you have just started this practice of using listings within your reports from the request of a lender, I would state this is a request from the client and is not your daily practice.

The use of list price/sale price ratio as a beginning of an adjustment with just one or two listings could easily be creating a misleading report without the analytical data from the MLS displaying the average and the median list price/sales price ratios for several years. The report is stating MLS listings and the sales is the activity for this market. Here in MA it is quite often for non-MLS sales to be anywhere between 10-35% of the market. If you are only using MLS listings to adjust I believe you have to qualify the reason and the purpose of the listings and this practice is not reliable to support a market value. The listings are a future event. The closed sales are a historical event. I rather write about history than the future.

Very well said Kevin. No one ..and I MEAN NO ONE ... can forcast the sales price of a listing. To do so would be very misleading as you are not the seller or the buyer (since none exists) and forcasting a sales price would indeed be misleading as it has not occurred.

 

[Jeffrey Cale]

Certain banks these days REQUIRE me to put atleast one active listings and make adjustments to it, I put in a disclaimer in my report that it was gridded for the lender due to the scope of work and was adjusted for list to sales price averages based on MLS data for list to sales price. Plus I add that many properties in our market area are over priced so it can tend to slant an opinion if it is weighted in the estimate of value. Just because a house is listed does not mean it is priced correctly for the market. The sad part is too many people listened to REALTORS during the greatly increasing market and got stuck paying WAY TOO MUCH for a house and now they are stuck with it until the market goes up considerably again if it does. Furthermore I also state and do not weight the active listings in the valuation, so basically it is there for them to look at but does not affect my OPINION of value!

 

[Mike Kennedy]

Unless the field of closed comparables are confirmed as having closed at 100% of the Current List Price (as of the TT date), failing to adjust an Active Listing by the List/Sell Discount EXTRACTED from the most recent, competitive, Sales utilized in the grid would automatically inflate that comparables' adjusted market value resulting in a misleading O$V per the SCA.

 

[PropertyEconomics]

Mr Cale .. I think you can adjust the listing but you should not adjust for probable selling price. Its a forcast that you simply cannot make. I know of no one that can forcast with 100% accuracy a future event and if you forcast a selling price from any analysis there is a very strong chance you will still be wrong and the report would be misleading.
You can adjust for physical differences but not for selling price in my opinion.

 

[PropertyEconomics]

Unless the field of closed comparables are confirmed as having closed at 100% of the Current List Price (as of the TT date), failing to adjust an Active Listing by the List/Sell Discount EXTRACTED from the most recent, competitive, Sales utilized in the grid would automatically inflate that comparables' adjusted market value resulting in a misleading O$V per the SCA.

If you place no weight on listings and say they set the upper end of the value range .. I dont think it would be misleading. We cannot predict a future event that hasnt happened Mike.

 

[Richard Carlsen]

In the past, I did not like putting listings in a report as I thought they tended to raise the expectations of the reader as to value and were therefore misleading.

However, based on the current declining value market, I find that the inclusion of one or two very relevant listings does two things: 1.) It demonstrates to the reader what the present competition is in the market as of the effective date if the subject were offered to the market and priced using the opinion of value as the offering price. 2.) It tends to support the estimate of value contained in the report based on the Principle of Substitution.