matched paired analysis

[agedaprsr]

Let see if I got this right ! All the houses in the neighborhood sold for around $200,000 (of course they're all the same.... it's my example) in less than a thirty day marketing period. Two recent listings have been put on the market for $175,000 (because A: its a short sale situation B: a Realtor scared the bejesus of the seller and told them that is all they can hope for; or C: They're moving to Florida where they're giving stuff away !). Ergo all Sales should be depreciated by $25,000.

Sounds good to me ! That way all the residences will be selling for less than $100,000 in no time at all and appraisals will be much easier.

I know about people that can add; I'm one, two !

 

[Kali the Boston Terrier]

I have a serious question to ask the math wizzes around here. Do either of you 3 think using listings as a marker for depreciation is viable? Banks are requesting this theorum more and more, I think it's faulty. http://ercappraisaltraining.org/resources/

There are 3 kinds of people in this world, those that can add and those that can't.

What kind of depreciation? Physical or economic?

 

[Kali the Boston Terrier]

Let see if I got this right ! All the houses in the neighborhood sold for around $200,000 (of course they're all the same.... it's my example) in less than a thirty day marketing period. Two recent listings have been put on the market for $175,000 (because A: its a short sale situation B: a Realtor scared the bejesus of the seller and told them that is all they can hope for; or C: They're moving to Florida where they're giving stuff away !). Ergo all Sales should be depreciated by $25,000.

Sounds good to me ! That way all the residences will be selling for less than $100,000 in no time at all and appraisals will be much easier.

I know about people that can add; I'm one, two !

Three listings is not enough data to extract a trend, plus list prices should only lend a test of reasonableness for a trend that was extracted using sales and future forecasting...IMO, typing a post on an iPhone

 

[Jeffrey T. Couch]

One who can add

Please keep your discussion on point. The discussion is about the proper adjustment for closing costs that have been tacked on or folded back into the price of a home. The orderly subdivision example is used to make a MATHEMATICAL point. A point of logic. We all know the Florida market has tanked, a fact that is way off point.

If you want to start another thread, a good title might be: how useful are appraisals at all in an erratic recessionary market where one can offer support for fifteen different values in the same ******* up subdivision, replete with bank foreclosures.

 

[fifteen]

no sorry, it's matched paired analysis OP, but if we're going to diverse anything is possible. Did you peruse my ERC link? The guy wants to base trends on listings in a slow market. All of his conjectures are subjective, but he insists they are within the scope of reasonable risk and therefore viable. Calculated reasonable risk is not fine imo, but subjective risk is worse. Sad thing is the market jumps all over these overly market reduced properties and that says if they're selling he must be right. Ok .40 on the dollar, they sell, am I a genius? Or would .60 on the dollar be more long term beneficial and due service. My prob is I see AMC's pushing for depreciation that might not reflect the market. WAMU/LSI in particular. Lets see, Chase owns eappraisit, B of A owns LSI, Fargo owns RELS. Why is there a push for low valuations and steeper depreciation than can be justified? Bail out money tells the whole story? No. I'm very concerned that median prices are used for depreciation by the ingenue.

 

[Jeffrey T. Couch]

for aprazur

The initial discussion was matched pair analysis and in my response I indicated that if the appraiser does not adjust for seller concessions properly, the indications of matched pair analysis would be off and sometimes considerably off. It should be obvious that a large concession aspect in a sale can be larger than many adjustments that are to be made. I will say it again and all you younglings should pay very close attention. If you don't propery reflct seller paid concessions in your matched pair analysis you will get bad numbers. Do the math.

Despite your rambling, you did bring up a very relevant point regarding the ownership of the AMCs by large banking groups. It's a whole new thread but one worth pursuing.

It is beyond belief that after all of the economic debacle we have witnessed that our illustrious leaders can't comprehend that having the lender OWN the AMC is a prescription for disaster. Look at Countrywide. It is only right that most of BoAs losses ove the last 3 quarters have come from the bottomless pit called Countrywide.

The leaders simply don't get how paying appraisers $240 for a $400 job is dumbing down the industry. Especiall when it costs $240 to do an appraisal. Zero profit imo. That's why I will never work for an AMC.

 

[Abester]

Its pretty frightening that somebody who does that is actually teaching USPAP

The Realstat program has an adjustment grid where the 5 best sales are adjusted based on the regression output. The last adjustment makes all the ootherwise adjusted values equal the regression output, so perhaps the USPAP instructor is not so scary after all.