Knowing pending sales price

[CGinMN]

The appraiser can always just ask the listing agent of the property he's appraising if the contract price can be disclosed, same as if the appraiser was contacting the agent of any pending sale.

In this case since the lender is the appraiser's client the appraiser's duty of confidentiality supersedes. If the lender oks, then it’s probably good practice to get the agent’s approval.

As to what a market participant would know, there's no standard for what "well informed" is. A well-informed market participant might try to obtain the contract price. If I was making an offer on a property, and was previously outbid on a similar property now pending, I might try find out what the winning bid was to help gauge where my next offer would need to be. The point being, what information is accessible may be less than what a well-informed market participant might have.

Which brings to next question, should I mention ADU for the pending sale in my refi appraisal?

Yep, another example of how market participants might have more info than what is accessible on the MLS. Personally, I’d also use your measurements, notes on condition, updates, etc.

 

[ZZGAMAZZ]

In this case since the lender is the appraiser's client the appraiser's duty of confidentiality supersedes. If the lender oks, then it’s probably good practice to get the agent’s approval.

As to what a market participant would know, there's no standard for what "well informed" is. A well-informed market participant might try to obtain the contract price. If I was making an offer on a property, and was previously outbid on a similar property now pending, I might try find out what the winning bid was to help gauge where my next offer would need to be. The point being, what information is accessible may be less than what a well-informed market participant might have.

Yep, another example of how market participants might have more info than what is accessible on the MLS. Personally, I’d also use your measurements, notes on condition, updates, etc.

Doesn't the definition of a "well informed market participant" imply that a hypothetical seller or buyer is represented by a licensed agent?

 

[CGinMN]

Doesn't the definition of a "well informed market participant" imply that a hypothetical seller or buyer is represented by a licensed agent?

Again, I’m not aware of an industry standard definition for what “well informed” is. Maybe there is one? However, the Fannie Mae definition of MV also cites words like knowledgeable, prudent, well advised, etc.

Personally, I don’t think employing an agent automatically makes one well informed and well advised. And just the same, Throwaway12345 might not need an agent and could meet the definition all by himself. So I think it speaks more to the level of knowledge than who is employed. Truthfully, I don’t think well informed = knowing the contract price of all the pending sales. That’s absurd. However I feel good enough about my rationale to use it when I have it.

 

[Tom4value]

The appraiser can always just ask the listing agent of the property he's appraising if the contract price can be disclosed, same as if the appraiser was contacting the agent of any pending sale.

HOWEVER, maybe Fernando's perspective could be flipped, so appraisers could use the appraised value of any pertinent property as a comparable, because theoretically there shouldn't be a difference between the appraised value of a residential property,and the selling price of that property on the effective date--if it was for sale--although this is obviously contrary to prevailng industry protocol, although the sheer quantity of re-fi's would reveal data that would smooth itself into Market Value more accurate than Market Value based on tangible, open-market, arms-length transefers...

Maybe that is true in CA but here in MA, that is a no no for brokers so I don’t even bother ask. Their reasoning is if the deal falls through, it is now common knowledge (theoretically) how low the seller is willing to go.

 

[Fernando]

I decided it's too "complicated" to ask and get lender and agent involved in confidentiality issue.
I will state something like subject is anticipated to sell over $100,000 from list price based on 1004MC indicating Sales/List Price ratio has been XX% over list price.
I didn't indicate I know the actual price but in reality I do and my anticipated price is an estimate in the report.
And when the pending sale closes, I come out as best appraiser ever having estimated so accurately.

 

[Fernando]

I decided not to use the pending sale. It didn't help my appraised value.
I thought everything was going up?

 

[Tom4value]

I decided it's too "complicated" to ask and get lender and agent involved in confidentiality issue.
I will state something like subject is anticipated to sell over $100,000 from list price based on 1004MC indicating Sales/List Price ratio has been XX% over list price.
I didn't indicate I know the actual price but in reality I do and my anticipated price is an estimate in the report.
And when the pending sale closes, I come out as best appraiser ever having estimated so accurately.

Hey, you supported it with market data so, it works!

 

[Fernando]

I couldn't use the pending sale. Listing agent for my subject pending sale admitted she sold it below market because she accepted offer with least contingencies.
First time in awhile I can remember that contract price is below market price. Wished I could have purchased subject at that price.

 

[George Hatch]

Excuse me, but if the meeting of the minds occurred and that seller picked as the winner the offer with the least contigencies then that sale is still an arm's length transaction. You can't say otherwise. All you can say is that it wasn't the highest offer.

 

[Fernando]

If listing agent admitted the sales price is low then the sales price is low which I suspected.
Those are the deals I'm looking to buy. Easy work for agent with no contingencies. Easy commission over best interest of seller.