I just blew a deal

[Caligirl]

Thank you, too, Cali. I read Pam's before I found yours.

I was just lifting the best part of Pam's response. Funniest thing I've seen in a long time, love to be a fly on the wall kind of thing.

 

[mwbode]

I blew a deal last week by 8k. Used 6 sales 2 of which took place in the past 30 days, adjusted range was within $500. Realtor went nuts and hired another appraiser that not only made the deal work but came in 10k above the purchase price. Used 3 sales all from November and December with an adjusted range of $15,000. Indicated the market is in a decline with an oversupply, did not adjust for time, did not address why the subject is under contract 10k below his conclusion. Fun times!

 

[Webbed Feet]

I blew a deal last week by 8k. Used 6 sales 2 of which took place in the past 30 days, adjusted range was within $500. Realtor went nuts and hired another appraiser that not only made the deal work but came in 10k above the purchase price. Used 3 sales all from November and December with an adjusted range of $15,000. Indicated the market is in a decline with an oversupply, did not adjust for time, did not address why the subject is under contract 10k below his conclusion. Fun times!

And if it were me and my State involved that report would already be at the State appraisal board for the lack of market adjustments on five month and older comps in a declining market.

Webbed.

 

[panappr]

I blew a deal last week by 8k. Used 6 sales 2 of which took place in the past 30 days, adjusted range was within $500. Realtor went nuts and hired another appraiser that not only made the deal work but came in 10k above the purchase price. Used 3 sales all from November and December with an adjusted range of $15,000. Indicated the market is in a decline with an oversupply, did not adjust for time, did not address why the subject is under contract 10k below his conclusion. Fun times!

OK, here in-lies the problem..... and I assure you this guy has no defense.

 

[CANative]

Mr. Boyd (LOL.. 52 years and that's the first time I called him that)...

Correct me if I'm wrong but if you use 1% per month on the notion that pricing has declined 24% in 24 months doesn't that incorrectly demonstrate how the market has actually performed. It implies an even decline over the period and hides the reality that that it moved up and down a little from mid 2006 to late 2006, started moving downward a little faster from early 2007 until mid 2007 when it started free falling at a terrrifying rate until early 2008 when it almost disappeared because almost nothing was selling.

Your way might make a lender think that there is a steady, even decline (soft landing) and they might perceive that the risk is manageable. The real story is what has happened in the last 5 months which could probably be better demonstrated with a better graph.

Your math may be simpler and less time consuming to deal with but I don't think it accurately portrays the reality.

What I try to do is establish a benchmark of median price as of the effective date of the appraisal and then adjust each comparable sale based on the median price in that market or of that property type as of the date of the sale. And before anyone says anything like trying to make adjustments for small periods of time is futile, my market is so weird and sales are so few that I'm having to use 1 to 2 year old sale comps.

Just thinking. I'll take my lumps if I'm full of it.

 

[Michigan CG]

Just thinking. I'll take my lumps if I'm full of it.

There is a dad somewhere in California that is going to take his son to the woodshed....."Boy, go find me a switch and meet me behind the woodshed, and make sure it is a THICK switch"....

 

[WadeKoutnik]

I am with the group that questions the use of 1% per month based on 24 month analysis. Isn't the basis of the time adjustment to find out how much the market has declined since the date of sale of your comp?? If you comp is 4 months old, why does it matter what the market did 20 months prior?

I am certainly not in the "just hit the numbers" crew, but if I was the agent or mortgage broker I would certainly question that.

 

[c w d]

Mike "The Deal Killer" Boyd

 

[Mike Boyd]

Mr. Boyd (LOL.. 52 years and that's the first time I called him that)...

Correct me if I'm wrong but if you use 1% per month on the notion that pricing has declined 24% in 24 months doesn't that incorrectly demonstrate how the market has actually performed. It implies an even decline over the period and hides the reality that that it moved up and down a little from mid 2006 to late 2006, started moving downward a little faster from early 2007 until mid 2007 when it started free falling at a terrrifying rate until early 2008 when it almost disappeared because almost nothing was selling.

Your way might make a lender think that there is a steady, even decline (soft landing) and they might perceive that the risk is manageable. The real story is what has happened in the last 5 months which could probably be better demonstrated with a better graph.
Just thinking. I'll take my lumps if I'm full of it.

You are right but I do not like working for 50 cents per hour. I am using averages in this very active market.

 

[ockyappraiser]

I am also in the group that would question your time adjustments. If you have comps 4-6 months old. . .and average days on the market is 90-120 days. . .why would you make an adjustment. Also. . .why would you not use current listing activity to see if values are declining. Using your scenario. . in 5 years the house would be worth practically half of what it is.

This is why underwriters are insisting on 3-6 month old comps. No need for time adjustments.

Also. . .if the house sold in November in my market, it would sell for less and be on the market longer than in May. Would you then take a time adjustment. . .even knowing that sales activity picks up in the spring?

I would not want to defend your report in court