Listing history indications

[Netherwood]

Hi everyone,

I am getting more and more pressure from AMC's/clients to use listing history and listing data to justify coming in with appraisal values far lower than sales supported values because "they" say the value should be where the list price is. I have been doing default for years but it seems that because listing DOM are lengthening lenders are using that as a mechanism to push for lower values because the asset that they are trying to dump isn't selling. Some periodicals do report that listing data is an indicator of where the market might be going but at this point I just don't see the decline that lenders are claiming. Do any of you put more weight on listing data and if so how are you supporting that use for consideration in the final estimation of market value? Would like to hear what others are doing. Thanks

 

[Fernando]

My market is different. Most agents list their properties below market, sometimes way below market to generate interest and multiple offers with DOM less than 2 weeks.
Thus, the list price for my comps would be not indicative to market value.
Sometimes comps that have been the market for long time like 90+ days have a history. Upon researching, I would see that the agent listed too high and gradually keep lowering until finally selling.
My Sales Price/List Price is generally near and over 100% thus I can state that my active and pending sales are listed below my appraised value.
So in your market with DOM over a long period, the listing prices are too high to attract buyers.

 

[alebrewer]

Not sure I understand the question, but my mantra has always been that listings cannot help, but they can sure hurt. This is due to the principle of substitution. If the identical property next door is listed for sale at $175k, then my property can't be worth more than that - regardless of what the (already dated) closed data indicates...

Caveat: The EA is that the identical property next door is listed at market - and one way of determining that is looking at DOM.

 

[J Grant]

Hi everyone,

I am getting more and more pressure from AMC's/clients to use listing history and listing data to justify coming in with appraisal values far lower than sales supported values because "they" say the value should be where the list price is. I have been doing default for years but it seems that because listing DOM are lengthening lenders are using that as a mechanism to push for lower values because the asset that they are trying to dump isn't selling. Some periodicals do report that listing data is an indicator of where the market might be going but at this point I just don't see the decline that lenders are claiming. Do any of you put more weight on listing data and if so how are you supporting that use for consideration in the final estimation of market value? Would like to hear what others are doing. Thanks

What do you mean by you have been doing default for years- is this an REO appraisal?

I always look at listings and pending sales because they indicate the leading trend of the market. I may or may not grid one, but I look at them. If DOM is increasing and more inventory coming on and or list prices are being reduced, it is a market indicator. It is a reason to opine at the lower range of value among your comps, even if there is no trend yet of sold price decline.

 

[Netherwood]

Thank you all for the replies. Yes these are all REO default appraisals, used by clients to determine list prices. So now if the asset stays on the market and the list price continues to drop I now get ROV's claiming that listing data supports a lower value..... Sales market data is not showing decreases in my market areas but yes listing DOM are increasing. However it appears that asset managers/lenders all think that indicates a declining market trend and that appraisal values should be coming in at list prices and not values based on and supported by recent sales data. Thanks again for the feedback!

 

[Fernando]

Thank you all for the replies. Yes these are all REO default appraisals, used by clients to determine list prices. So now if the asset stays on the market and the list price continues to drop I now get ROV's claiming that listing data supports a lower value..... Sales market data is not showing decreases in my market areas but yes listing DOM are increasing. However it appears that asset managers/lenders all think that indicates a declining market trend and that appraisal values should be coming in at list prices and not values based on and supported by recent sales data. Thanks again for the feedback!

Never did REO appraisals but wouldn't the client/lender want a value in which they can sell quickly at the right price.
Lenders want point value but there is a narrow range in value.
Thus USPAP put importance to know the user and its intent.
Point value changes depending for user.

 

[George Hatch]

I always look at sale/list ratios. If all my comps are selling above their list that says one thing about my current actives. If most/all are selling below list that says something else about the list pricing of the actives.

In a declining market the leading edge of the pricing trend will be lower, opposite of what happens in an increasing market trend.

 

[J Grant]

Thank you all for the replies. Yes these are all REO default appraisals, used by clients to determine list prices. So now if the asset stays on the market and the list price continues to drop I now get ROV's claiming that listing data supports a lower value..... Sales market data is not showing decreases in my market areas but yes listing DOM are increasing. However it appears that asset managers/lenders all think that indicates a declining market trend and that appraisal values should be coming in at list prices and not values based on and supported by recent sales data. Thanks again for the feedback!

For REO listing purpose appraisals, one needs to have their pulse on the market.

It is a denial to think that a listing having a long DOM and not getting offers is priced correctly. It is overpriced if it is not getting offers within X days of a list price - despite what sales data shows. Markets change and we need to be current to, or slightly ahead of the change for list purpose work, not behind it.

 

[Tom D]

On my printout of sales, in my report that i looked at, it shows the sale price to listing ratio of each one. Makes it easy to determine if still the same, or perhaps starting a new trend. But starting a new trend can't be determined with some minimal listing data. Just the possibility of a change. Maybe can't be proved, but a warning given. You need to give them more visual aids to calm them down. The 1004mc does the same thing in a more grouping way. Look around the MLS print menu of the types of printouts you can get from your data.

 

[sputnam]

Do any of you put more weight on listing data and if so how are you supporting that use for consideration in the final estimation of market value? Would like to hear what others are doing. Thanks

No. If you are doing GSE work, your value must be based on and supported by closed sales. Whether you include listings in your appraisal report or not, you should be reviewing listings and analyxing them to help look at trends.

Secondly, it is wholly inappropriate for AMCs or Clients to be trying to tell the appraiser what the value should be (or a direction of value). You have to make your own decisions about how professional you want to be. I'd tell them, politely, to stick to making loan determinations and leave the appraising to appraisers.