Ariba
Senior Member
- Joined
- Feb 8, 2004
- Professional Status
- Certified Residential Appraiser
- State
- Colorado
IMHO, it is very simple for an investor or agent to manipulate the market. I came across two of them in just the last 60-days.
For example, investor buys several properties at or below market value. The investor or agent then buys one to three properties in the same market above market value with cash. Appraisers will now use these properties as comparables in their appraisal report. The investor waits a month or two and sells all the properties at a hefty profit.
I had a cash sale last month, property was bought for cash, I received an appraisal order for the property 2-weeks after the cash sale had closed and appraised the property $75,000 below closed sale price listed in the MLS. So the property is currently listed in the MLS at an inflated price. However, appraisers are unaware and will use this property as a comp in their report and thereby driving up the whole market.
Another example, 28-unit condominium complex, highest price paid in the complex was $125,000. There are 4-comparables that sold in the complex in the previous 12-months, topping out at $125,000. All of a sudden there is a unit that closed at $185,000. All units are the same in GLA, Bdr, Bth, and condition. This is good for all the owners in the complex. How is that possible? Several owners own more than two properties in the complex. Is there possible collusion involved?
Any experiences that you have come across?
For example, investor buys several properties at or below market value. The investor or agent then buys one to three properties in the same market above market value with cash. Appraisers will now use these properties as comparables in their appraisal report. The investor waits a month or two and sells all the properties at a hefty profit.
I had a cash sale last month, property was bought for cash, I received an appraisal order for the property 2-weeks after the cash sale had closed and appraised the property $75,000 below closed sale price listed in the MLS. So the property is currently listed in the MLS at an inflated price. However, appraisers are unaware and will use this property as a comp in their report and thereby driving up the whole market.
Another example, 28-unit condominium complex, highest price paid in the complex was $125,000. There are 4-comparables that sold in the complex in the previous 12-months, topping out at $125,000. All of a sudden there is a unit that closed at $185,000. All units are the same in GLA, Bdr, Bth, and condition. This is good for all the owners in the complex. How is that possible? Several owners own more than two properties in the complex. Is there possible collusion involved?
Any experiences that you have come across?