"one Sale Does Not Make A Market" Conundrum

[Tim Hicks (Texas)]

As usual, I have a 1984 double wide on 2.4 acres that is under contract for $75,000 and all but one sale in the market suggests $10-15,000 lower. Well, the selling agent, listing agent and loan officer all want me to explain over and over how I can ignore that one sale when it more than supports their contract price. Never mind it is further away than all my sales. Never mind it is newer than all my sales. Never mind it is a triple wide. Never mind it sold for $30-40,000 over every other sale in the market area. By god, I should use that sale and have 5-6 sales with an adjusted sales price of $60-65,000 and one sale with an adjusted sales price in the upper $90,000's and hit their contract price. It seems that they fail to understand the underwriter would throw that sale out too. Oh, the selling agent on that sale wants to know why she gets so many calls from appraisers wanting explanations.

What are your one sale does not make a market responses? I am out of ammo.

 

[Tina]

I used this last week......no whining yet

There was a sale of ???? Island Drive that the appraisers analyzed. This sale did not fit the market and was not considered to be comparable.

TB

 

[Willie]

Tell them to have the future owner sign up for a 125% home equity loan, at closing, and have the loan officer and real estate dip shyts co-sign on the note for the difference, if they think it is worth it. See if you have a taker.

 

[Randy Beigh]

I think Tina has the right idea. Just disclose the sale in the original report. That way you have cut any opposition off at the pass, or wherever. That also tells the lender that you aware of that sale.

 

[Joker]

I do what Tina does. I am really just responding 'cause I am impressed you came up with the word "conundrum."

 

[liznindy]

This may be obvious BUT if one sale made a market WHY do we have to use at least three comparable sales in the market analyis?

 

[CANative]

My pair of lows beat your one of a kind.

 

[George Hatch]

This all comes down to the difference between their definition of value and ours.


Ask them to explain why you shouldn't use the lowest sale in your range as the indicator. It's the same concept. No one sale makes or breaks the market. Your job is to identify the most probable trend, not the highest possible sale.

 

[Dave Smith]

I explain that when I am searching for comps I look for a pattern of sales. That is exactly what Fannie/Freddie requires when they ask us for a minimum of three sales. If I have enough comps to work with I will toss out the high and low ends of the market to support my middle of the market value. We are dealing with the "most probably price" not the high end price.

I will sometimes will include a listing similar to the subject if I can find one. If the list price of the "for sale" is less than the price of the "high" sale then I can ask why the listing hasn't sold or why it is listed for less than the "high" sale. They don't usually have a valid answer.

I will also ask why the lending industry won't let the listing or selling Realtor do the appraisal. Because they are not disinterested third parties. They have an agenda and are very prejudiced.

We have to satisfy the UW, not the LO, not the Realtors, not the sellers or buyers.

 

[Karl]

& here we'll go again see how long before those that state the Contract is the best indicator of value jump in. Wonder if they'll respond with that magical "Cut Off number I've asked em to come up with lately.

TIM as far as them asking for Y U don't use that comp PUT IT IN Then adjust it thru the NADA book system on the home & adjust your lot values & that HIGH sale will PROBABLLY bring your Subject down even furture. More than once a Realtor assisted Comp has put the subject lower than it was before they HAD to show thier knowledge. ESPECIALLY on Manufactured Homes.

Throw out the high & the low, guess isn't what they want to hear.