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How Useful are Listings in this market?

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Terrel L. Shields

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Joined
May 2, 2002
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Certified General Appraiser
State
Arkansas
Another thread dwells on providing additional listings/comps to UWs. I know the old platitudes about listings setting the top of the market blah blah blah but how useful are listings to you really?

In our market, which OFHEO says is declining but really is hovering around zero growth in most catagories, we saw an increase in listings for a time, and many are now well over 365 days. A relatively small portion are selling and some that sell are 'short sales'....hardly market sales. The withdrawns and expires are often left 'on the market' verbally in fear that the property may become stigmatized for being on the market too long. So there are "listings" that are not "listed"....

Further, the sales data are so spotty in the more rural areas there is a huge difference in pricing and in closed sales. And, even among the sales the variation is high, and among the listings you may have any number of listings of similar homes say, $80 a SF to $130 a SF.

Under such conditions I wonder how (why) a listing can provide you with much information in regard to actually valuing a subject property. The range of listings is often from well below market (desperation sales) to above the market (we don't giva hoot)...you gonna divine the amount of desperation from the lister? Are they going to honestly say they over-priced it deliberately? What's it really telling you? Just because I find 2-3 listings that are below the closed sales value hardly means it is a given the market has fallen. The paucity of sales suggests a wide dispersion of pricings are possible, maybe even likely.

So I know the range is from seller in denial high to "get me outta here" low...that helps me how 99 times out of 100?
 

Lax1

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Jan 4, 2007
Professional Status
Certified Residential Appraiser
State
Florida
I find the listings to be a necessity as well as pendings, they tell me where the market was, is and hopefully, where it is going. In our declining market in many parts of Central Florida, many if not all, recent sales are short sales/bank foreclosures. Which then, if those are the only recent sales, I feel becomes your market and are market sales.
 

DonRico

Senior Member
Joined
Nov 26, 2002
Professional Status
Certified General Appraiser
State
South Carolina
Listings are as useless as bicycles to a boarhog in establishing a value. I can find similar houses with list prices varying within a plus or minus 20% window. The list price depends on the whim of the homeowner or the listing presentation skills of the realtor.

That being said, underwriters are asking that a current listing be included in the appraisal. So I look for a pending sale which supports the opinion developed using the best comp sales. If there are no verifiable pendings, I'll put in a RECENT listing and explain that it is given minimal weight in the reconciliation of value.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
Listings are essential in my market. By listing I mean both active and pending. Pendings are obviously better. But even using the two or three most competitively priced, active, market listings establishes a market trend. I also analyze all the listings in the market on my addendum and project the average price per square foot and average selling price for the entire pool of listings available using the average LP:SP ratio. This does a lot in showing which way the market is trending. Very often the average price or average price per square foot of the listing pool is lower than the average price per square foot or average price of the closed sales from the prior year.

In a declining market or an increasing market I don't think you can provide a credible opinion of value for a property without including listings/pendings to establish market trends for the immediate area.
 

Dennis J. Black ASA IFAS

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Joined
Mar 5, 2002
Professional Status
Certified General Appraiser
State
Florida
DonRico,

So you are saying that if your closed sales are $100,000 and the same house is listed for $80,000 you would value the property for $100,000?
 

DonRico

Senior Member
Joined
Nov 26, 2002
Professional Status
Certified General Appraiser
State
South Carolina
I'm saying there is a wide window of list prices, both above and below a reasonable estimate of value.

There may be a "distress price" in the market or some other extenuating circumstances that make listing prices a less than reliable indicator. Pending sales would be a better indicator if the agreed upon price can be verified (not all realtors want to give that number away before closing).

But somewhere along the line the u/w was told to ask for a listing.....so ask they do.
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
Dennis makes a good point. Listings should be used to demonstrate the direction of the market and to analyze the percentage of REO and short sale properties in relationship to standard listings. Even if there are few REO or short sale listings it should demonstrate to you that the market is sluggish. And, if a model match in similar condition to your subject is listed at $80,000 your final value of $100,000 would not be credible. Listings provide a valuable double check on your market analysis of sold comps.
 

Metamorphic

Senior Member
Joined
Mar 15, 2008
Professional Status
Certified Residential Appraiser
State
California
I do a lot of non-conforming rural stuff, so the comps are more often than not a fair bit different than the subject. Its much less about adding or subtracting a bedroom or a garage slot, and much more about comparing a usable 3 acre in a valley with a half usable 10 acre on a hill, one with a great view, the other with a so-so view, but some real nice horse amenities. You do your best to find the best comps but its still apples to oranges sometimes.

Since there's usually twice as many listings as recent sales, you're odds of finding a good match to a listing are much higher, and when you do find one its at the very least a good reality check on the how you adjusted the less-comparable comparable sales. Your opinion better be lower than than list price that's a solid match. I suppose that's a long way of saying they provide a upper-limit of value.
 

Chuck Harlowe

Freshman Member
Joined
Jan 5, 2004
Professional Status
Certified Residential Appraiser
State
Virginia
Listings are not valid arms length transfers. I dont see how you can rely on them to estimate market value. Since Underwriters/Investors are requiring them (they are God), I quess appraisers are trying to rationalize an irrational process.
 

Lawrence R.

Senior Member
Joined
Mar 27, 2007
Professional Status
Certified General Appraiser
State
South Carolina
No more than one sale makes a market does one listing.

It is only in the abundance of information can any statistical analysis be accurately applied.

And even then, it can be a crap shoot. Listings help me determine absorption rates. Listing info on closed sales helps me determine a potential ratio of list to sold prices. That can help me determine a likely selling price of a house based on its listing price.

I think you know all of this...I wonder what you are getting at, Terrell.:shrug:
 
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