New market conditions requirement

[DWiley]

The requirement to analyze market conditions is not new. It has been in USPAP a very long time. The only new thing is the GSEs are requiring some level of documentation of what was already a required element for all MV appraisals.

 

[Zoe]

The requirement to analyze market conditions is not new. It has been in USPAP a very long time. The only new thing is the GSEs are requiring some level of documentation of what was already a required element for all MV appraisals.

View attachment 99957

Yeah, I prefer remaining economic life vs remaining physical life opinion. Useful life is good also in some situations.

 

[Zoe]

I have a new construction assignment, all are builder sales, no info on MLS. Even expanding to 5 nearby towns there are only 5 similar and competing new homes. I have no idea how to do analytics for this. Any ideas most appreciated. Thanks. Lynn

You can't make the market. You just have to report the market based on your sources. You can explain exactly what you did here. You don't have to use all new construction. I would say go back at least 10 years on year built. But some people renovate homes today where they are older than 10 years and are like C2 condition. I would definitely use price as a parameter in my search for market conditions. Go as much as 20% lower than the price of these new construction sales you have. Make sure you look at any older than 1 year new construction sales near the subject.

Jumping to another town is fine for a new construction, but you can get into location differences and jurisdictional differences, etc.

Condition or effective age adjustments are fine. Don't worry about making greater than 10% line item adjustments or 15%net or 25% gross adjustments for the subject appraisal. The subject is brand new. You have to take that into consideration in your adjustments. There may be no adjustment necessary between a C1 and C2 in the analysis.

 

[Joe Flacco]

The requirement to analyze market conditions is not new. It has been in USPAP a very long time. The only new thing is the GSEs are requiring some level of documentation of what was already a required element for all MV appraisals.

View attachment 99957

I'm pretty sure "market area trends" is not talking about market conditions and price trend. With it being mentioned with effective age and remaining life, I interpret it to be talking about possible tear town and rebuild activity trends. Or maybe renovation or updating trends.

What would apply to market conditions analysis from the above would be "economic supply and demand".

 

[Terrel L. Shields]

Just try to get the info normally found on the MLS from the builder(s). It requires actually talking to someone and you get more information when you do it in person and not try to email or phone. If they have an office (and apparently, they sell these houses somehow) go to that office with a list of the sales you found on the public record. Then also go pull the mortgages at the courthouse. Find out the kind of financing. No mortgage - cash. FHA or FNMA is written at the bottom of the pages. VA rider is checked in the check off list. Otherwise, non-conforming conventional bank loan- probably 10-15 year note.

If you had to testify in court, you would do those things because your opponent will, and you'll look like a fool. So, it is not impossible. Not everything has to go through the MLS. New Jersey is not a non-disclosure state like Texas so you can get those numbers from the public record and interviews.

 

[Zoe]

Just try to get the info normally found on the MLS from the builder(s). It requires actually talking to someone and you get more information when you do it in person and not try to email or phone. If they have an office (and apparently, they sell these houses somehow) go to that office with a list of the sales you found on the public record. Then also go pull the mortgages at the courthouse. Find out the kind of financing. No mortgage - cash. FHA or FNMA is written at the bottom of the pages. VA rider is checked in the check off list. Otherwise, non-conforming conventional bank loan- probably 10-15 year note.

If you had to testify in court, you would do those things because your opponent will, and you'll look like a fool. So, it is not impossible. Not everything has to go through the MLS. New Jersey is not a non-disclosure state like Texas so you can get those numbers from the public record and interviews.

Yeah. Our MLS is sweet but they also have a link to public data also where houses are not sold on the MLS. We have one of the largest residential brokers in the USA. Crye-Leike. The local NAR board always keeps an appraiser on the board as member.

 

[Zoe]

Just try to get the info normally found on the MLS from the builder(s). It requires actually talking to someone and you get more information when you do it in person and not try to email or phone. If they have an office (and apparently, they sell these houses somehow) go to that office with a list of the sales you found on the public record. Then also go pull the mortgages at the courthouse. Find out the kind of financing. No mortgage - cash. FHA or FNMA is written at the bottom of the pages. VA rider is checked in the check off list. Otherwise, non-conforming conventional bank loan- probably 10-15 year note.

If you had to testify in court, you would do those things because your opponent will, and you'll look like a fool. So, it is not impossible. Not everything has to go through the MLS. New Jersey is not a non-disclosure state like Texas so you can get those numbers from the public record and interviews.

Mississippi is non disclosure state. You need local connections just south of Shelby County, TN. I knew a woman well that lived that area and also worked Shelby county TN. She was great appraiser and builder and selling agent. She subscribed to something local. But she still had to go to local tax assessor and/or register's office/trustee's office sometimes. And also contact other locals involved.

 

[Zoe]

I have a new construction assignment, all are builder sales, no info on MLS. Even expanding to 5 nearby towns there are only 5 similar and competing new homes. I have no idea how to do analytics for this. Any ideas most appreciated. Thanks. Lynn

New construction can be difficult sometimes but again, you don't have to use new construction sales. Terrel gave you good advice on talking to the builder that is selling the house. How long has it been on the market? Some houses in the town the subject is located in have to be comparable to the subject. I am not saying don't jump to another town for a new construction. I am just saying something in the subject town has to be comparable.

Always consider what is competing with the subject property. Always focus on the subject property. It is actually the real property rights you are appraising.

 

[Zoe]

One more point. We don't know your market (subject's market). You do. Whoever you send the appraisal to won't know it as good as you most likely. Very doubtful they will.