Quality of the neighborhood

[Tom D]

it is our job to know about why people do what they do. Appraisal 101.

Long after i had my r.e. brokers license i visited back to my 1st office. It was like i never left, same issues, same problems, same everything. Since most appraisers may not have had that experience, you need to know it once, cause why people do what they do in r.e. has never changed, now or 40 years ago. People don't change, neighborhoods do.

 

[NC Appraising]

People may not change, but their preferences do.

We have a large population influx of Russian and eastren Europeans. Granite is out, marble, quartz, etc. The also prefer contemporary or modern designs.

When I sold my home, I learned that lesson...wasted 6 grand on granite counters. The market wanted quartz.

We have a large influx of people from India moving into the market. This population will go into a new PUD and around 80% will be from that group.

After doing some refis and speaking with them, I found out what drives value and their preferences.

For example, I had several owners to specially point out that their home was west facing. I had to do some researching.....

I also found out that bedroom/bathroom counts are very important and GLA is very important.

The number of bedrooms/bathrooms are important becuse most will bring their parents to live with them.

GLA is important mainly due to it being a status symbol. Almost every owner wanted me to know how big their home was.

NOW, I never bought up any of this.I just listened and learnt from them. I never asked.

Now, I would never bring this up in the report, but I do keep in mind the bedroom count now....most appraisers would easily say that bedroom count doesn't matter....WELL maybe you do not know your market and the preferences has changed for that neighborhood.

This is one of the reasons I hate waivers and hybrids. I learn so much from speaking with agents and owners.

 

[TerryRohrer]

Man, I usually agree with 95% of what you say...I think you are wrong on this.

it is our job to know about why people do what they do. Appraisal 101.


I guess you have never used the survey method to support your comps? Or never contacted the re agent to ask what the feed back was on a comp or the subject property?

Just like when you make that condition adjustment, you have to explain why. Just making the adjustment is no longer good enough. Why.....same for the neighborhood.

Sure, you can have data showing there is a difference. But are we no different than an AVM? If we are to make adjustments, but not explain why....just use an AVM.

I wonder how well that would hold up in court. Why did you make that adjustment? Because the data said so? But why? Dunno, that's what the data said.

Why? Schools, amenities, airport, employment centers, public utilities, etc.

So, your feelings rule? If you ignore the data and what it reveals, you can't even get on the target much less approach the bullseye. We are supposed to measure the impact people's collective decisions have on sales prices. What you can know is the sale price and the physical characteristics of the property they purchased. Those constrain our answers.

I'm not sure what you think data is? So your going to interview countless people and report what they tell you and adjust accordingly, regardless of data? If schools matter, their impact on prices can be measured from data. If amenities matter, their impact on prices can be measured from data. If employment centers matter, their impact on prices can be measured from data.

As far as "standing up in court", I can assure you, adjustments and opinions based on analysis of data are going to get you further than your or others feelings. In the end, it really doesn't matter a bit why people did what they did. If two buyers and two sellers didn't have anything in common regarding their motivations and feelings, but trade two identical properties for the same price, what are your adjustments going to be? Or, if two buyers and two sellers don't have anything in common regarding their motivations and feelings, but trade two identical properties for a different price, what are your adjustments going to be? Made up? The record is the price they paid for what they got. And unless you have a team of attorneys, forensic accountants, tax specialists, and psychologists and medicine men, you are never going to "know" why a particular buyer or seller did what they did. You will have the price they agreed to and the property they traded.

 

[alebrewer]

it is our job to know make informed hypotheses about why people do what they do. Appraisal 101.

Fixed it for ya.

 

[George Hatch]

I can't support some of these "why" factors in an appraisal report but I can support the "what" of the buyer/seller actions.

 

[Terrel L. Shields]

t is our job to know about why people do what they do.

but we do so by analyzing

the fact that properties in a given neighborhood command higher (or lower) prices than another neighborhood.

We can think we know why based upon mostly sketchy information, as few of us have the time to run consistent and truly random polling to determine the actual motivation. What did the agent think, who were the people looking, etc.

I did some houses in a small town where the last new house built was probably mid-2000s. Maybe even earlier. The builder built 8 new homes, and they have 4 done and all sold in less than 100 days- Selling about 10% above my CA and IA both. Because there were no homes this small (less than 1,000 SF) nor new homes sold in the entire county, I didn't do a sales approach. It would be pointless to try and compare 25-year-old 1400 SF houses with a new small home.

I am now tasked with 6 more such houses by the same builder. Now I have sales. And from the sales I can get a better handle on the cost of new as well as the sales. So, my one question is all the buyers are shown to live elsewhere. Are they moving here? Or did they buy as investments and rentals. Inquiring minds want to know, and I will be asked the agents and the buyer himself. But one thing is obvious. There was a latent demand for new housing in this town.

 

[shrubberyvaluation]

Man, I usually agree with 95% of what you say...I think you are wrong on this.

it is our job to know about why people do what they do. Appraisal 101.


I guess you have never used the survey method to support your comps? Or never contacted the re agent to ask what the feed back was on a comp or the subject property?

Just like when you make that condition adjustment, you have to explain why. Just making the adjustment is no longer good enough. Why.....same for the neighborhood.

Sure, you can have data showing there is a difference. But are we no different than an AVM? If we are to make adjustments, but not explain why....just use an AVM.

I wonder how well that would hold up in court. Why did you make that adjustment? Because the data said so? But why? Dunno, that's what the data said.

Why? Schools, amenities, airport, employment centers, public utilities, etc.

I agree, how can you know how the market is reacting to a location or feature without looking at the typical buyer's reaction, which is a person.

 

[TerryRohrer]

I agree, how can you know how the market is reacting to a location or feature without looking at the typical buyer's reaction, which is a person.

How can "the typical buyer's reaction" be "a person?" Am I the only one who has ever been lied to? Or told someone did something that simply cannot be demonstrated? The whole anti-bias, objective and supported vs. subjective/experience is intent on relying on measurable facts rather than personal attributes. What do you say in reports? Indian buyers predominate this market? Or, Russians and Europeans prefer quartz over granite so I'm guessing $6,000 is the appropriate adjustment?

 

[shrubberyvaluation]

How can "the typical buyer's reaction" be "a person?" Am I the only one who has ever been lied to? Or told someone did something that simply cannot be demonstrated? The whole anti-bias, objective and supported vs. subjective/experience is intent on relying on measurable facts rather than personal attributes. What do you say in reports? Indian buyers predominate this market? Or, Russians and Europeans prefer quartz over granite so I'm guessing $6,000 is the appropriate adjustment?

No need to include race or ethnicity in it. Typical buyers prefer water views over no water views. Then you can look at the market data for the appropriate adjustment. Albeit its a bit more complex in this example as the extent of water views can vary based on elevation, distance, obstruction, body of water, etc. I don't just say properties in these locations happen to sell for more and disregard that these locations happen to have water views.

If for some reason Russians are predominate and they don't care about water views then you can say the typical buyer has no reaction to water views based on the relevant market data.

There might be some house feature a typical buyer likes in Chinatown and there is a measureable market reaction, you don't just overlook it because the typical buyer might be Chinese.

In your example a typical buyer's market reaction to quartz over granite is $6,000 if that is what the market shows.

 

[TerryRohrer]

No need to include race or ethnicity in it. Typical buyers prefer water views over no water views. Then you can look at the market data for the appropriate adjustment. Albeit its a bit more complex in this example as the extent of water views can vary based on elevation, distance, obstruction, body of water, etc. I don't just say properties in these locations happen to sell for more and disregard that these locations happen to have water views.

If for some reason Russians are predominate and they don't care about water views then you can say the typical buyer has no reaction to water views.

But what part of any of that isn't fully encapsulated in price plus property characteristics? I see no need to verify where buyers are coming from. In my market, the data on what type of countertop is in each sale is spotty, at best. Nor can conclusive determinations be made from photos. So, even if realtor and zillow marketing pieces prove that trends changed and granite is out, it is speculative to make an adjustment, or even argue it matters. How do you measure the contributory value of countertops when they are part of the whole (some argue that if you can buy it at Home Depot, and some are buying it at Home Depot, the price at Home Depot is the adjustment amount).