Quantifying stigmatization

[Deleted member 142783]

Within the market area, typical marketing times are 5-90 days.

Homes that start with a high list price and end up on the market extended DOM and multiple listings (agents pull them off the market and put them back on), often times end up selling below the most probable price if the property was originally priced competitively.

I am occasionally engaged in order to establish an opinion of value for such listings. I provide my opinion of value for the subject, although I wonder if I should be accounting for the 180+ DOM with 9 price reductions?

Based on an analysis of sales in the market over the years, the discounts seem to range from 0% to almost 10% in some circumstances.

It is common knowledge within the market that the 1st week on the market is the most important. This is when the property gets the most attention and often times may receive multiple offers. When a property is priced too high, a portion of the market may not see it due to being outside of their price range causing a trickle effect with buyers seeing it as the price is reduced into their search range. Once they see it, the property has been reduced 3,4,5 times and the mindset is "how much lower will it go" and "can I get it lower", rather than the typical market participant thinking "what do I need to offer in order to be competitive" when a property is listing during the first week...

Thought?

 

[The Bob]

Most of the appraisals I did that came in significantly above the contract price suffered from "market fatigue".
IMO, it's the original sin of listing agents.
I classify it as a marketability issue versus a value issue.
Both agents and buyers may view extended DOM and price drops as a symptom of a larger problem(s).

 

[DWiley]

I have seen this play out many times. I recall a home that I appraised for $900,000. It was listed at the time for $1.6M. It stayed on the market for over 2 years, with a couple of changes in listing agent, and finally sold at $850. I really felt that if they had just priced the home correctly to start with they could have sold it rather quickly at +/- $900K. But, priced at 1.6M, no one looking to spend 900K was even looking at it.

 

[J Grant]

This is why market value opinions must have a market exposure estimate as a component.

The few times I have done listing purpose appraisals, I often offer three values, or three analyses of the main value opinion. List it for X$ $ mid range for a 30-60 DOM, or list it lower end at Y$ for a 10- 30 DOM estimate, or list it higher at Z$ $ for a DOM of 6-10 months. Their choice.

If it is relevant, I comment that overpriced listings often get a price reduction after extended DOM and can then sell for less due to the owner's fatigue of carrying the property.

 

[jay trotta]

This is why market value opinions must have a market exposure estimate as a component.

The few times I have done listing purpose appraisals, I often offer three values, or three analyses of the main value opinion. List it for X$ $ mid range for a 30-60 DOM, or list it lower end at Y$ for a 10- 30 DOM estimate, or list it higher at Z$ $ for a DOM of 6-10 months. Their choice.

If it is relevant, I comment that overpriced listings often get a price reduction after extended DOM and can then sell for less due to the owner's fatigue of carrying the property

When offering (3) values, are your fee costs above typical appraisal fee?
Just curious

 

[shrubberyvaluation]

It can have an effect if its adjustment lower I'd just take it into consideration in the final reconciliation most likely.

 

[J Grant]

When offering (3) values, are your fee costs above typical appraisal fee?
Just curious

Not for a listing purpose appraisal because they are more like one MVO and the other two are list prices possibityies riding off the main value, which has an average estimated marketing time. I write one value as the MVO, assuming average DOM and will offer 2 alternate possibilities of a higher or lower list price at DOM estimate of X--or Y

 

[Mark K]

Within the market area, typical marketing times are 5-90 days.

Homes that start with a high list price and end up on the market extended DOM and multiple listings (agents pull them off the market and put them back on), often times end up selling below the most probable price if the property was originally priced competitively.

I am occasionally engaged in order to establish an opinion of value for such listings. I provide my opinion of value for the subject, although I wonder if I should be accounting for the 180+ DOM with 9 price reductions?

Based on an analysis of sales in the market over the years, the discounts seem to range from 0% to almost 10% in some circumstances.

It is common knowledge within the market that the 1st week on the market is the most important. This is when the property gets the most attention and often times may receive multiple offers. When a property is priced too high, a portion of the market may not see it due to being outside of their price range causing a trickle effect with buyers seeing it as the price is reduced into their search range. Once they see it, the property has been reduced 3,4,5 times and the mindset is "how much lower will it go" and "can I get it lower", rather than the typical market participant thinking "what do I need to offer in order to be competitive" when a property is listing during the first week...

Thought?

When analyzing the current property and its listing history, you can say for certainty that you know what its NOT worth.

 

[Tom D]

This has been forever. When a listing goes over the typical marketing time it literally becomes invisable on the MLS. Main problem was over priced. Then they panic and lower it, or stay hard headed price.

Either way, it's ghosted.

Nobody shows it. I don't know why, but it was like that in 79 when i got my r.e. sales license.

 

[ZZGAMAZZ]

Most of the appraisals I did that came in significantly above the contract price suffered from "market fatigue".
IMO, it's the original sin of listing agents.
I classify it as a marketability issue versus a value issue.
Both agents and buyers may view extended DOM and price drops as a symptom of a larger problem(s).

It's likely that agents who list a property above market do so reluctantly after being unable to convince the seller that the property isn't worth what the seller thinks.

A similar question: what DOM should an appraiser report in the SCA "Data Source" row IF MLS reports two distinct values? It would be logical and meaningful to some extent to report one number and explain the true status in the addendum, but the "Prior Sales" addendum [for example] requires fg hours of meaningless drivel and I personaly get sick n tired of reporting ostensibly impt info that has little if any bearing on the Opinion of Value. [Tuesday must be venting day...]