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Need help of long time experience

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Pamela Crowley (Florida)

Thread Starter
Elite Member
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
I currently working on a builders model that was built earlier this year. It's in the King & Bear project which is one of the newer sections of the World Golf Village and in the section within that are the smallest lots and houses. This one is one of the smallest houses also.

It's been listed since at least April 10th for $252,485. Contract is for $237,400.

Up until this past year, this whole project was moving along slowly but steadily and prices were increasing. What I'm seeing now is a possible decrease and I'm not sure how to handle this. The builders are still building spec houses and they are sitting on the market with few sales now. As my subject shows, they are discounting them. So far, I've not been able to get any of the builders to give me the information regarding the newest sales and still working on that. The sales I have enough information on are from this past spring and even with those I'm having trouble making this sale price.

I will bring this in where the statistics tell me to, but I'm looking for some advise on what to say and opinions of the best way to handle this. This is the first one that is proving what I've been thinking was happening. (been almost a year since I did one in this project)
 
F

FrankA

Guest
They never want to give you the data you need, such as pending sale prices.

I would do this, run sales for the a six month period say a year ago. That will show for example that 12 sales ocurred and at that time the avg DOM was 45 days with a sales to list ratio of .98 to 1 or 98%.

Now run a current inventory of active listings, say for example the result is 20 current listings, this shows that you now have 10 months worth of inventory as before 2/month were selling. Run sales for the last six months and figure the sales to list ratio of the ORIGINAL list price, not thhe last dscounted price. Bet you'll see it's say 92% and DOM from original list price is 180 days plus.

So, you can mkae the case that the market is nearing saturation as currently 10 months of inventory are on the market. Prices are declining given the longer marketing time and lower sales ot list ratio from original price and you expect price to remain lower with possibly more downward pressure given the market saturation of 10 months of inventory.

Does that answer your question, I wasn't really clear if this was what your are looking for.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Grid some active listings and comment on the increasing number of listings, DOM, concessions typical in the market, etc. like an ERC appraisal.

Document the heck out of your position, turn it in, and go have a good weekend without the phone.
 

Pamela Crowley (Florida)

Thread Starter
Elite Member
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
All good ideas but these builders rarely have any listings in MLS. They count on putting 1 or 2 in MLS and the rest you can see when you get there. There are about 2000 building sites there in various projects within the project, about 350+/- are sold, most in 00 & 01; my guess is that there are at least 100 built or being built that are not sold and there are about 20 in MLS during the past 2 years - most had previous expired listings. I did find 2 resales and am using 1 of them since it just closed 10/31. The on-site real estate office doesn't use MLS.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
geee

almost sounds like they need an appraiser....

to tell them what works and what doesn't work and how to keep themselves from turning turtle 8O
 

Bill_FL

Senior Member
Joined
Aug 23, 2002
Professional Status
Certified General Appraiser
State
Florida
Pam,

Does Spec mean Speculation? Perhaps it isnt going to return what they speculated.

Can you do a public records search in the area? If you can, you could get the total number of sales, perhaps by month, in a previous year, then this year. This might help you with showing a slow down.
 

Pamela Crowley (Florida)

Thread Starter
Elite Member
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Thanks Bill, I'll do that. Lots of time to do that but..... I already have most of that info, I'll just have to sort through it to make it into viable statistics.

Lee Ann, They probably won't like it, but that's what they're going to get. Can't tell me they all don't know this already.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Maybe more work than you want to do for a URAR, but you could go to the clerks office and do a search by the name of the seller builder/corporation. Compare the number of sales in each year to the number of lots developed for an absorption rate.

That is what we do for subdivision appraisals.

:arrow: Oh, hehe..... didn't see Bill's post above.
 

Jim Bartley

Senior Member
Joined
Jan 20, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
I would be careful to call this a "declining" market. From what you describe, it looks like builders may be discounting prices to keep cash flow up. Builders do some really stupid things. One is to go whole hog on production and then they will sell at any price because they get in jam. Seen this a hundred times. I agree with the other posts. Just state facts and maybe comment that, over the shorter term, there is some dicounting due to seasonal slow down, excess builder inventory, pullback from peak levels or whatever the case may be. Another question I think you should adress is, is this happening market wide, or just in this development. Of cource if this was occuring in the entire market area, you would have a good case for a declining market.
 

Pamela Crowley (Florida)

Thread Starter
Elite Member
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
I'm seeing this in most of the projects with new houses now. World Golf Village has been slower than most so far. I won't be calling this a 'declining market' yet. I do think that it's on the way though. What I am seeing is higher FSBOs, some areas with longer DOMs, skewed statistics that I posted about earlier this week.

There are so many BIG houses sitting in this project for sale, some of them are now 2 years old and still vacant.

:?: :?: :?:
 
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