Most weight to pending sales!

[Mike Boyd]

I might have to disagree here. I just completed an assignment in a 54 home community with very few sales. Most sales were larger than the subject. There was 1 pending sale that is scheduled to close within 3 days. Realtor provided all information including concessions, so I used that as a sale and included comments as to why. This property was similar to the subject in size and in small areas, in my opinion should be utilized.

You cannot use it as a sale comp if it has not closed. What if the house burned down in those 3 days or if the buyer died? Report it as a pending sale.....or, wait the 3 days until it closes and ask the title company to provide the document number.

 

[Mike Boyd]

I wouldn't base a conclusion on marriage giving most weight to
engagements.

I like this analogy! But, sometimes, ya gotta order the cake, buy the ring and send out invitations. LOL

 

[Mike Boyd]

If we're making changing market condition adjustments based on listings and pendings and otherwise using pending sales to fine tune not-so-great sales comps aren't we really "weighting" pending sales... just not saying it?

Semantics. In my book, giving the most weight to a specific gridded property would mean that your final value is BASED on that specific sale. So, when using active listings or pending sales, they ALL have to be analyzed to develope a market trend. You can give weight to that trend, but not to those specific properties. Therefore, your analysis might develope a date of sale adjustment. Your report should demonstrate HOW you made that adjustment.

 

[moh malekpour]

This is a related story today in LA Times
Be It Ever So Illogical: Homeowners Who Won’t Cut the Price

In most other areas of the economy, this combination of plummeting sales and stable prices would not happen. When demand for airline tickets drop, the airlines cut their prices until they have sold their seats. When stocks become less appealing, share prices fall, sometimes sharply.

Just try to imagine stock prices staying roughly flat over a three-year period while sales volumes sank because investors considered the market overvalued. Bear Stearns is still worth $150 a share, and I’m not selling until someone pays me $150!

Real estate, though, is different. For both economic and psychological reasons, there is no asset more conducive to hopeful overvaluation.

That means real estate slumps tend to grind on for years, until sellers submit to reality and reduce their prices. This week’s batch of economic reports suggest that the adjustment is finally starting to happen. The decline in house prices is accelerating, especially in some of the big metropolitan areas covered by the Case-Shiller index released Tuesday, while the number of home sales has recently risen a bit.

In normal times, buyers and sellers can still come to an agreement because inflation allows sellers to feel that they have made a nice return on their house. People don’t sell houses frequently, so the sale price of a house is almost always higher than it was when the current owner bought it, just as the price of food, haircuts and everything else tends to rise over a five- or 10-year span. Because of leverage — the fact that people buy houses mostly on credit — these inflation-driven price increases turn into true investment gains.

In the wake of the biggest housing boom on record, it’s understandably hard to accept a new reality. Robert Glinert, a real estate agent in the Los Angeles area, said he has recently been saying no to almost half the sellers who have asked him to represent them. Their initial asking price is just too unrealistic.

“People say, ‘I don’t care about the market — my home is still worth what I paid for it in 2006,’ ” Mr. Glinert told me. “And I say, ‘To you. Only to you.’ ”

Doing what Mr. Glinert is asking sellers to do — dropping the asking price below their purchase price — is especially difficult. It’s tantamount to admitting defeat.

 

[moh malekpour]

Don't confuse pending sales with active listings. Pending sale is one step to a closed sale and it can be the most relevant to current market condition. When a listing turns to a pending sale, it means that parties have already negotiated and have reached the agreement and have signed the binding contract. There is even a binding clause in the purchase contract that requires a penalty up to 3% of the contract price if either party balked. There has to be a very good legal reason to break the deal when it is in pending and sometimes it needs lawyer's help.
Active listings on the other hand are something unknown. Some of them are listed based on the current market supply/demand and some are illogically overpriced. It is hard to make a judgment on active listing until it gets at least a tentative offer which is a period prior to pending. In my area it is called back up offer meaning there is an offer but it is uncertain. However, some active listings in a slow market which are in the selling zone are very good indicators of market trends but those which are out of selling zone are just statistics until they are adjusted to the selling zone. It is the appraiser's job to find out which listing is in the selling zone and which one is not.

 

[DTB]

Gee, I wonder what a typical well informed buyer would use? I'm betting they lean on pendings, actives and closed sales in that order.

 

[The Warrior Monk]

Gee, I wonder what a typical well informed buyer would use? I'm betting they lean on pendings, actives and closed sales in that order.

I agree with Mike N. on this one. Appraisers can solve most valuation problems, whether the assignment is complex or not, simply by looking at the market through the eyes of the participants...i.e., using common sense.

 

[Joyce Potts]

You cannot use it as a sale comp if it has not closed. What if the house burned down in those 3 days or if the buyer died? Report it as a pending sale.....or, wait the 3 days until it closes and ask the title company to provide the document number.

How did the destruction of the property three days after the seller and buyer had a 'meeting of the minds' and agreed to sale price not afford a good market indicator?

 

[Chelley Bahner]

It depends where you're from... maybe not in Colorado.... yet....

Change your information to reflect your status, if you want your views to be taken seriously.

I can't quite figure out how to change that, so, until then, I guess you're just going to have to see "general public."

 

[Chelley Bahner]

I'm guessing you're on the western slope, or you're not an appraiser at all.

That's quite the assumption. You know what they say about those.