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Neighborhood vs property specific market condition adjustments

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Michael Martin

Thread Starter
Junior Member
Joined
Jan 21, 2005
Professional Status
Certified Residential Appraiser
State
New Hampshire
Not sure if this has been touched on in any other threads but just wanted to get some feedback.

I got a request from an underwriter asking why I checked off declining market on page 1 and there are no time adjustments for the comps in the appraisal.

For the appraisal in question, the overall values do appear to be declining modestly in the neighborhood. But the subject is a high end property and after doing a market analysis, the high end properties appear to be stable. There is a wide range of values in the neighborhood with relatively few high end properties.

I did explain this in the addendum but am wondering if anyone had any suggestions? Has anyone run into a similar situation and what do you think the best/easiest way to deal with the underwriter is?
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
Your should explain in detail what your subject and comparables are doing relative to the overall market. You should be able to demonstrate with data and graphs over time how the subject's sub market is performing.

The problem becomes when all sales of every home in a zip code or a radius is used; it may not represent buyers for your subject.

If you have comparable sales within the last 3 months and active listings, you should be able to make a statement whether time adjustments are warranted.
 

Michael Martin

Thread Starter
Junior Member
Joined
Jan 21, 2005
Professional Status
Certified Residential Appraiser
State
New Hampshire
The problem becomes when all sales of every home in a zip code or a radius is used; it may not represent buyers for your subject.

On page 1 of the URAR, we are reporting on all sales in the neighborhood, no?
 

Joy Price

Sophomore Member
Joined
Dec 2, 2006
Professional Status
Certified Residential Appraiser
State
Florida
Not sure if this has been touched on in any other threads but just wanted to get some feedback.

I got a request from an underwriter asking why I checked off declining market on page 1 and there are no time adjustments for the comps in the appraisal.

For the appraisal in question, the overall values do appear to be declining modestly in the neighborhood. But the subject is a high end property and after doing a market analysis, the high end properties appear to be stable. There is a wide range of values in the neighborhood with relatively few high end properties.

I did explain this in the addendum but am wondering if anyone had any suggestions? Has anyone run into a similar situation and what do you think the best/easiest way to deal with the underwriter is?

The comparable market might be much less in decline than the overall one unit housing market. Disclose that in detail. Give them numbers that you have in your work file to back that up.

I go back one year and check statisitics. Then, in my market, six months. If the decline is so insignificant then mention it. Or make the time adjustment.
 

Joy Price

Sophomore Member
Joined
Dec 2, 2006
Professional Status
Certified Residential Appraiser
State
Florida
Your should explain in detail what your subject and comparables are doing relative to the overall market. You should be able to demonstrate with data and graphs over time how the subject's sub market is performing.

The problem becomes when all sales of every home in a zip code or a radius is used; it may not represent buyers for your subject.

If you have comparable sales within the last 3 months and active listings, you should be able to make a statement whether time adjustments are warranted.

Thank you. I am looking and using active listings.
 

Kevin A. Spellman

Senior Member
Joined
Aug 30, 2003
Professional Status
Certified Residential Appraiser
State
Massachusetts
Review the original list price sale/sales price ratios and the days on the market. I typically use monthly reports for the past twelve months with ratios; define the inventory along with the median and average pricing.

Our H3MLS system her in MA allows the review of expired or withdrawn listings. I then seek if they have sold with or without a third party. Measuring market performance is the best tool and I would not use county, statewide or national data. I use the term evidence rather than data to describe the market conditions.
 
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