Market condition analysis

[HarveyWallBanger]

Hi everyone, first time on the forum. I have been in various discussions with many appraisers inside and outside of Indiana regarding methods utilized to establish market conditions in areas around Indianapolis, more specifically new construction neighborhoods. The only consensus that I have found is that there is none. Could some other appraisers please discuss methods that are being currently utilized and approved through underwriting, and also the variety of tools that are available to use. I am not convinced that the information on the BLC is very reliable (for many reasons) but more specifically as I have noticed that a great deal of new construction home sales finianced from within the builders financing companies are not listed as for sale, pending or sold at all on the BLC, thus eliminating this data from the equation. Thanks for the discussion!

 

[Jim Manley]

Welcome to the forum. You have found a great resource for information. I'm sorry you're not getting a reply from me that will answer all of your questions though. If I can can offer you any advice at all it would be the following;
1) Do what your supervisor says. If the reason you are in various discussions around the country with other appraisers regarding this issue is because your supervisor isn't able and/or willing to help you out...I would suggest locating another one.
2) If you don't trust the info from the BLC...double check with your local government offices to verify ( you should be doing that anyway ). Also...a call to the listing/selling agents is helpful ( I personally have a boilerplate form that I e-mail to them with questions regarding condition...concessions...foot traffic...etc...I get about a 95% response rate ).
3) Don't use pre-sold new construction sales as comparables. You can contact the Planning Dept. or the builder(s) for all other needs of the new construction sales data.

Good luck,
Jim

 

[HarveyWallBanger]

Thanks Jim,
Fortunately, my supervisor has provided great direction throughout my training. I am simply trying to assemble the most consistent, reliable, and accurate "hard data" tools to justify the determination of market conditions in a given area. My supervisor has encouraged my research on this issue to improve my own professional competence as well as to bring my independent observations to the table as micro and macro area of Indianapolis are changing on what seems a daily basis. As underwriting and necessity requires more statistical data be included to back up market condition findings, I am still not satisfied that anyone is truly getting to the bottom of the issue, due to a variety of variables. I am seeing a wide array of reasoning being utilized to justify "stable" or "declining" market conditions. It seems that everyone utilizes different criteria, and everyone seems to feel that their way is the correct way (imagine that).

OK, let me pose this question for further discussion: In regards to statistical data, how would any of you weigh the following methods to determine market conditions in a given area for single family residential appraisals. (1 - Average quarterly sale prices found on the BLC from within a given radius from the subject property (2 - NAR quartery trend index of median sales price of existing single family homes for the Indy metro area (3 - OFHEO index of metro statistical percent change in home price, quarterly data (4 - S&P index (5 - 1004MC tool from Fannie Mae.

I certainly have my opinions on the use or exclusion of these tools, I would simply like to hear other opinions on the matter.

Thanks everyone!

 

[HarveyWallBanger]

Does anyone have an opinion about the usefulness of the 1004MC form utilizing MIBOR's BLC search data? It looks like we are going to have to use this form starting April 1st.

 

[L Squared]

I personally don't prefer relying on the BLC statistical data. Instead, I download listing details and copy and paste them into my own excel spreadsheets. I ususally organize the sheets on a per quarter basis so I can compare apples to apples, i.e., 1st quarter 2006/1st quarter 2007/1st quarter 2008 because of the seasonal fluctuations in the market. Excel is also really useful for making charts and graphs which, in my opinion, really provide a useful picture of the market to the reader. Sometimes it's easier to show it rather than explain it.

Looks like the lenders are going to start expecting that with the 1004MC form. Oh boy, trouble is in store for those form fillers! They might actually have to learn how to research and understand the market,