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I think I just need someone else to look at this.

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Chelley Bahner

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Sep 26, 2006
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Colorado
Okay, median sales for the past year are as follows:

09/01/08 - 12/01/08 - $188,000
06/01/08 - 09/01/08 - $228,000
03/01/08 - 06/01/08 - $220,000
12/01/07 - 03/01/08 - $200,000

It looks like the market is declining, right? So, what would this rate of decline be? Would you take the sharp summer increases into overall consideration or would you just calculate it based on the most recent two periods?

The best comps I found are dated 11/07/08, 07/31/08, and 06/26/08. Surely I wouldn't make time adjustments to the last two for 17.5%, right? That would put their adjusted values ridiculously lower than my most recent sale.

I'm probably thinking too hard, but I'd rather double-check with someone first. Your help is appreciated!
 

Deadbusiness

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State
Virginia
Just Curious

How many sales are in each pool? It seems bizarre to have an increase in that period (but possible). Check average sale price and sale price/sqft as a back up. If your pool of sales is small for each segment it may lead to erratic numbers. If my "neighborhood" doesn't have enough data I'll switch to a radius search and filter out by similar age and sqft sales in an attempt to normalize. If your rural, you'll probably need to filter for acreage also. I'll also pitch out any waterfront sales if my subject is not since that may really skew numbers. It's good to have at least 30 sales in each time period to get a trend (I pulled 30 from the arse, stats was many moons ago. Some math weenie can tell you what a statistically significant amount truly is). Does the increase at the front end of your time period make sense? Some swear by median alone but median alone can be misleading. Good luck.:D
 

Mr Rex

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What are your search parameters? If its the overall market, a few 1 million plus sales or lack thereof could make the data irrelevant. If its subject oreiented, GLA, comparable neighborhoods etc. it might be meaningful.

From Wiki: "Lies, damned lies, and statistics" is part of a phrase attributed to Benjamin Disraeli and popularised in the United States by Mark Twain: "There are three kinds of lies: lies, damned lies, and statistics." The statement refers to the persuasive power of numbers, the use of statistics to bolster weak arguments, and the tendency of people to disparage statistics that do not support their positions.
 

Mztk1

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Certified Residential Appraiser
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Florida
Let's pretend you did everything right, you had enough data, and the statistics were 100% accurate...well, the rate of decline cannot be determined because you have nothing that shows a period of period decline, i.e., 1st quarter over 1st quarter, 2nd over 2nd, 3rd over 3rd, 4th over 4th, year over year. The only way you can account for seasonal differences is to show those type of figues.
 

Chelley Bahner

Thread Starter
Sophomore Member
Joined
Sep 26, 2006
Professional Status
Licensed Appraiser
State
Colorado
How many sales are in each pool? It seems bizarre to have an increase in that period (but possible). Check average sale price and sale price/sqft as a back up. If your pool of sales is small for each segment it may lead to erratic numbers. If my "neighborhood" doesn't have enough data I'll switch to a radius search and filter out by similar age and sqft sales in an attempt to normalize. If your rural, you'll probably need to filter for acreage also. I'll also pitch out any waterfront sales if my subject is not since that may really skew numbers. It's good to have at least 30 sales in each time period to get a trend (I pulled 30 from the arse, stats was many moons ago. Some math weenie can tell you what a statistically significant amount truly is). Does the increase at the front end of your time period make sense? Some swear by median alone but median alone can be misleading. Good luck.:D

There's about 20-30 sales in each period. It's a tract neighborhood, so what I'm seeing definitely looks weird to me. I think I'm going to double-check the average and narrow it down to more similar properties like you suggested. Man, data can be rearranged and interpreted in so many different ways. Curse lenders and their need for perfect little numbers. :eek:)
 

Chelley Bahner

Thread Starter
Sophomore Member
Joined
Sep 26, 2006
Professional Status
Licensed Appraiser
State
Colorado
What are your search parameters? If its the overall market, a few 1 million plus sales or lack thereof could make the data irrelevant. If its subject oreiented, GLA, comparable neighborhoods etc. it might be meaningful.

From Wiki: "Lies, damned lies, and statistics" is part of a phrase attributed to Benjamin Disraeli and popularised in the United States by Mark Twain: "There are three kinds of lies: lies, damned lies, and statistics." The statement refers to the persuasive power of numbers, the use of statistics to bolster weak arguments, and the tendency of people to disparage statistics that do not support their positions.

I'm definitely going to check more comparable sales. Thank you.
 

Chelley Bahner

Thread Starter
Sophomore Member
Joined
Sep 26, 2006
Professional Status
Licensed Appraiser
State
Colorado
Let's pretend you did everything right, you had enough data, and the statistics were 100% accurate...well, the rate of decline cannot be determined because you have nothing that shows a period of period decline, i.e., 1st quarter over 1st quarter, 2nd over 2nd, 3rd over 3rd, 4th over 4th, year over year. The only way you can account for seasonal differences is to show those type of figues.

As in checking the year before, right? Maybe that's another thing to look at. But if I use sales from differing seasons, the year before shouldn't matter in regards to time adjustments, right? I should adjust between seasons, it seems like.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
Normally market condition adjustments are made based on a yearly rate of decline. Not always, and every market is different. But yearly rates of decline are what most of my clients prefer to be reported and they make most sense. For instance, if you compared the first quarter to the 2nd quarter and then the 2nd quarter to the 3rd quarter, then even a stable market, and sometimes a declining market, will look like a market on the rise. The third quarter is traditionally stronger than the 2nd, and the 2nd traditionally stronger than the 1st. When you compare the 3rd quarter to the 4th, the opposite is just as likely, as the 4th quarter is often the slowest.

Because of this dynamic many lenders are preferring to see comparables within 3 months of the effective date of the report. Difficult in many instances. But if you have enough data and you compare the 4th quarter of 2007 to the 4th quarter of 2008 you will get a better idea of the actual rate of depreciation/appreciation. If you do not have enough data, then going year over year, or YTD over the same YTD the prior year will get you there as well.
 

Chelley Bahner

Thread Starter
Sophomore Member
Joined
Sep 26, 2006
Professional Status
Licensed Appraiser
State
Colorado
Normally market condition adjustments are made based on a yearly rate of decline. Not always, and every market is different. But yearly rates of decline are what most of my clients prefer to be reported and they make most sense. For instance, if you compared the first quarter to the 2nd quarter and then the 2nd quarter to the 3rd quarter, then even a stable market, and sometimes a declining market, will look like a market on the rise. The third quarter is traditionally stronger than the 2nd, and the 2nd traditionally stronger than the 1st. When you compare the 3rd quarter to the 4th, the opposite is just as likely, as the 4th quarter is often the slowest.

Because of this dynamic many lenders are preferring to see comparables within 3 months of the effective date of the report. Difficult in many instances. But if you have enough data and you compare the 4th quarter of 2007 to the 4th quarter of 2008 you will get a better idea of the actual rate of depreciation/appreciation. If you do not have enough data, then going year over year, or YTD over the same YTD the prior year will get you there as well.

Dammit. That's what I used to do, compare the current year to the year prior. Then lenders started asking for extravagant explanations of this, that, and the other and I think I started confusing myself somewhere along the way.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
I find that if you throw everything at them and then pick a number out of it all, you confuse the heck out of them right back and they don't bother asking questions :)
 
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