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How Much Stock Do You Put Into Agent Talk?

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KJR2017

Freshman Member
Joined
Dec 16, 2017
Professional Status
Certified Residential Appraiser
State
Texas
I have an agent who put it on paper why a unit next door should not be considered a benchmark for my estimate of value. This is a town home unit, identical to the subject in almost every aspect. His statement to me is that the owner was distressed and very motivated. My research of DOM indicated several price changes and was listed within the DOM typical for the area, I don't see motivated. The sale next door with no adjustments necessary adjusted to the lowest of the five comps utilized. Having said that, weighting this sale the most in the final estimate of market value seems the most logical, three of the other sales supports the selling price. Am I incorrect in not giving this sale most weight and estimating the value of the property within the adjusted value range that supports the sales price. There are no other obvious differences between the subject and the remaining comps. Property is about $430,000, differences in value range of the adjusted sales is $400,000-449.000. Thanks
 

Meandering

Elite Member
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Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
What do the listings say?
Are the listings overly optimistic?
Typically optimist?
Reducing their list prices?
Languishing on the market?

As of the day, the listings are the competition, what does your competition suggest is more supportive of today's opinion, of what happened yesterday?

.
 

Mike Kennedy

Elite Member
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Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
OP "The sale next door with no adjustments necessary adjusted to the lowest of the five comps utilized."

1. Why??????

2. terms of sales on the "five"?
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
A couple of points/questions:
1. I agree with Marion on the listings (although she may think the following analogy is a stretch :ohmy:!)...
Your value is like a roast in the oven. You think it is done. The listings/pendings are like a thermometer; stick it in the roast and they'll give you an indication of the roast being under-cooked or overcooked based on what is happening "now" (with all the caveats of the listing dynamic Marion pointed out).

2. Which agent relayed the information about the unit next door: An agent involved in the sale of your subject or the agent involved in the sale of the comparable? If from the agent next door (a party to the transaction; that type of confirmation is typically held to be the best) I'd give it significant consideration. If from the agent involved with your subject, then simply call the agents involved in the transaction next door and see what they have to say.

3.
Having said that, weighting this sale the most in the final estimate of market value seems the most logical, three of the other sales supports the selling price. Am I incorrect in not giving this sale most weight and estimating the value of the property within the adjusted value range that supports the sales price. There are no other obvious differences between the subject and the remaining comps. Property is about $430,000, differences in value range of the adjusted sales is $400,000-449.000. Thanks
Purchase contract is $430k; you have five sales; three of which support the purchase price, the one next door (I assume) at $400,000. What to do?
Your subject may or may not be worth $430k in your opinion. While the expectation is that the next-door model match is the best comparable, the market dynamics (both transactional and general; ergo, look at listing/pending activity) have to be considered. Once you are satisfied that you understand the market dynamics, then you can conclude a value with confidence.
The expectation, for a mortgage-finance appraisal, would be to provide an explanation of why the subject is worth $30k more than the apparent model-match next door if that is what you think it is worth. Market conditions or transactional circumstances could be a reason why that is the case.

4. It sounds like the majority of your data points to a price above $400k. If that is the case, while I might not conclude a value of $430k, it is doubtful I'd conclude a value at $400k. The model-match next door cannot be ignored, but based on your data sample (with three above $430k and two below $430k, and $400k being the lowest) it is the outlier in that group.


When I call on the sales, asking if there are any special motivations in a case like this would be something I'd ask even if the agent involved in my subject's sale (assuming that is where you are getting your information) didn't say anything about the next-door sale. Not knowing the market conditions, I have a sale at $400k and everything else is higher. My subject is in contract for $430k; why is that? I have the information regarding the subject... I don't have the information (other than what was reported by the agent) on what looks to be the best comparable. I'm going to call the agents involved in that sale and find out, if I can, if there was anything happening with that sale? Let's assume your subject was listed for $435k and is in contract for $430k. I'd certainly call the agents of the next-door sale and ask them what they think about my subject's list price compared to what that unit sold for.
Now here is a lesson I learned the hard way: When speaking to the agents, be sure consider which side of the table you are interviewing: What I don't want is to imply to the seller's agent that they sold for less than they should have; that's insulting. But a neutral question like,
"I'm appraising the property next door for its sale; are you familiar with it? Good! I'm looking at your recent sale as a potential comparable. Were there any circumstances regarding your sale that impacted its sale price (repairs, etc.)? Anything else you think an appraiser should know?"​
Call both the buyer and seller's agent (if they were represented by different agents/brokers), take what they told you and report it in the appraisal. What they tell you may or may not provide a reason why there is a $30k gap between the subject's contract price and that unit's sale price; but, you've done the expected level of due diligence. Also, this way, by documenting it in the report, you've taken care of the first agent's information: "I was informed by the buyer's agent of X regarding the sale next door. I called and spoke to Him and Her, the agents involved in that transaction. They indicated [insert here], and I've considered that in my reconciliation."

Good luck!
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
In my opinion the final reconciled value would rarely be based on a single sale especially if it was extremely lower or higher than the range of comparables used in the report. In your case the range of value was $400,000 to $449,000 and the model match that sold at $400,000 may be considered somewhat of ( an-outlier ) The same would be true if the model match sold for $475,000 - Would you place the most weight on it ? We use multiple Comps so we aren't doing unsupported 1-Comp- Appraisals.

Rebuttal:

The comparable's indicated a range of $400,000 to $449,000 which ( adequately support ) the Subject's Contract Price of $430,000 but after ( not considering ) the five other sales my final opinion of value is $400,000. I looked for lower sales hoping I could bring it in at $390,000 but all I could locate was higher priced sales. The agents say the market is strong and there is very little available inventory but my mentor told me the agents and brokers are just trying to get me to inflate their high sales prices. My 1004-MC indicates an-increasing market trend but I don't trust the form because it's flawed. In summary I am not reconsidering my point of value so go ahead and file a complaint with my State Board I'm sure them and that Pesky Buyer will come to there senses and realize I am helping keep prices low in this project : LOL :)
 
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J Grant

Elite Member
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Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Believe your own eyes and ears over a RE agent when the two don't match up. If an agent says a lower sale price was because owner was distressed, yet the DOM and list sell etc is in line with prevailing,could be the agent is trying to downplay this sale because they know including or weighting it could mean their own CS price won't "appraise"

Though agents can be good sources of information, they are vested in an outcome of a transaction and thus they can shade information to that end. I used to be a RE agent btw, so I have a pretty good perspective on the way they think-which does not make them liars or horrible people, it means they are sales people and their interest is in getting their deal done, not seeing a price come in at market value.

I had a first hand conversation with a RE agent about this topic and at least she admitted it ( we had a good laugh over it but it was reinforcement that yeah, agents will shade information at times to suit their agenda. I tend to take agents at their word more often if I ask them abut a sold listing for a report I am doing on another property because they are not vested in that deal. When it is the subject property and they are giving me info about comps I am more cautious about taking it at face value...

I have an agent who put it on paper why a unit next door should not be considered a benchmark for my estimate of value.

When I interact with an agent and they are that aggressive aka above flat out telling me what comps to use or not use they lose more credibility. It is up to appraiser to prevent a conversation with a RE agent from going in the value discussion as well. You now have interacted with someone who tried to influence your value , many clients have guidelines about it-be more in control of the conversation in future, -

How did it get that far they are putting on paper for you why a unit should not be considered a benchmark for your estimate of value.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
I have an agent who put it on paper why a unit next door should not be considered a benchmark for my estimate of value.

When I interact with an agent and they are that aggressive aka above flat out telling me what comps to use or not use they lose more credibility. It is up to appraiser to prevent a conversation with a RE agent from going in the value discussion as well. You now have interacted with someone who tried to influence your value , many clients have guidelines about it-be more in control of the conversation in future, -

How did it get that far they are putting on paper for you why a unit should not be considered a benchmark for your estimate of value.

Boy, do I disagree with this!
In my market, assuming the agents I'm dealing with are knowledgeable, they would immediately know the likely sales an appraiser is going to use. If their property is priced and in contract for $30k more than the unit that sold next door, they are going to want to provide a reason for that difference. This is the professional thing to do when you are a real estate agent representing your clients.
So to assume that such a conversation is "aggressive" is an overreaction (in my opinion). It makes perfect sense (and should, to any appraiser).

The question is, is the information accurate or isn't it?

If it is accurate, is providing the information still "aggressive"?
Answer: Of course it isn't.
If it is inaccurate, then the agent is either a liar or misinformed.
Only by verifying the sale with the other agents can the appraiser make an objective judgement on how to consider the information.

I'm all for trust but verify. But assuming the information provided... on a model match next door... is automatically an attempt to nefariously influence my value is definitely over the top (IMNSHO).... unless your market is full of liars and thieves who act as real estate agents. If that is the case, disclose that in the report and use it as a reason why no information provided by any real estate agent/broker is considered reliable.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
An agent providing information about sales is one thing.

An agent "putting it on paper", why you should NOT consider a sale a benchmark for your estimate of value is aggressive imo, over stepping the line and telling you how to do your appraisal.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
An agent providing information about sales is one thing.

An agent "putting it on paper", why you should NOT consider a sale a benchmark for your estimate of value is aggressive imo, over stepping the line and telling you how to do your appraisal.
So it isn't so much what they say but the medium used to convey it?
Are you thinking this through all the way?

If anything, I'd think a crooked, lying agent would be less inclined to put their lie on paper. But since most of the agents I deal with are not crooks or liars, maybe I should defer to you on that one.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I have an agent who put it on paper why a unit next door should not be considered a benchmark for my estimate of value. This is a town home unit, identical to the subject in almost every aspect. His statement to me is that the owner was distressed and very motivated. My research of DOM indicated several price changes and was listed within the DOM typical for the area, I don't see motivated. The sale next door with no adjustments necessary adjusted to the lowest of the five comps utilized. Having said that, weighting this sale the most in the final estimate of market value seems the most logical, three of the other sales supports the selling price. Am I incorrect in not giving this sale most weight and estimating the value of the property within the adjusted value range that supports the sales price. There are no other obvious differences between the subject and the remaining comps. Property is about $430,000, differences in value range of the adjusted sales is $400,000-449.000. Thanks

If this RE agent was not trying to influence you not to use the most similar sale to subject ( unit next door, identical unit ) you would use it and likely give it most weight, , correct?

Did the unit they are trying to discourage you from using sell at a price similar to other units in list to sell ratio and for a price that in your estimation is appropriate for quality and size of the unit? If this agent feeding you information about unit next door, are they the agent for that unit, aka did they list it or sell it? If not, what does the listing or sale agent say?
 
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