relocation sale as a comparable?

[Debra]

Is it o. k. to use a relocation sale for a comparable? It's not for a relocation appraisal but for a conventional refinance report. The property is very comparable to my subject and sold within market range. Sales are very limited for this rural subject property.

 

[Lee Lansford]

Maybe.

I don't know how close you could come to discovering what hidden motivations and incentives (i.e., the transferring employee's employer may be giving incentives--$$--that you will probably never be aware of) are associated with the transaction.

Be careful in general and be careful how much weighting you give to this sale.

 

[Paul Isolda]

With relo sales and estate sales I always look at the sale in the context of the other data I have. Was it listed on the MLS? Did it sell in a similar amount of time to the other comparables? Was the price in line with other comparables? What about sale/list price ratio? Relo companies are not in the business of selling properties at below market rates but they do make business decisions sometimes to sell below market so as not to carry an expensive property. It is also usually helpful to speak with one of the agent involved. I find that they often are usable sales but there is no one answer to your question.

 

[sputnam]

Sure. But depending on the details, you might want to give it less weight since relo companies sometimes sell a little below market.

 

[mark hurlock]

Is it o. k. to use a relocation sale for a comparable? It's not for a relocation appraisal but for a conventional refinance report. The property is very comparable to my subject and sold within market range. Sales are very limited for this rural subject property.

Read the definition of market value and then determine if this sale is adequate, like Paul said.

 

[Terrel L. Shields]

I use sales for rural property that I might otherwise reject for use in a more urban setting. The question arises just how does the location of the subject impact its value. In a deeply rural area, the closer sales may be more reflective of market even with a somewhat out-of-the-ordinary sale condition than an equally similar house sitting 20 miles away in town.

 

[Ken B]

Relo properties are rarely prepared for market and sell "as is". So a buyer is going into a vacant house and every bit of scuffed paint, carpet wear, and dirty cabinet is there to see.

At one time, I did a study of relo sales and could prove that, at that time and in that market, relo properties sold, on average, 6% below non-relo properties.

Just like any other sale, you need to do the analysis before you can call it a comp.

As an aside, the definition of market value applies to the subject property. Sale prices for potential comparables may need to be adjusted for financing or buyer and seller motivations. Just because a buyer or seller of a potential comparable was unduly motivated, the sale should not be automatically rejected. Too many appraisers do not consider adjustments for condition or seller motivation. This is why there is such an uproar about the use of REO sales. The problem isn't in their use. The problem is not making appropriate adjustments for factors that affect their sale price when performing a market value appraisal and using REOs as comparables.

 

[Webbed Feet]

<.....snip...>Too many appraisers do not consider adjustments for condition or seller motivation. This is why there is such an uproar about the use of REO sales. The problem isn't in their use. The problem is not making appropriate adjustments for factors that affect their sale price when performing a market value appraisal and using REOs as comparables.

Agreed. But that takes extra work and gets in the way of turn times.

m2:

 

[residentialguy]

Is there a significant price difference?

 

[mark hurlock]

Relo properties are rarely prepared for market and sell "as is". So a buyer is going into a vacant house and every bit of scuffed paint, carpet wear, and dirty cabinet is there to see.

At one time, I did a study of relo sales and could prove that, at that time and in that market, relo properties sold, on average, 6% below non-relo properties.

Just like any other sale, you need to do the analysis before you can call it a comp.

As an aside, the definition of market value applies to the subject property. Sale prices for potential comparables may need to be adjusted for financing or buyer and seller motivations. Just because a buyer or seller of a potential comparable was unduly motivated, the sale should not be automatically rejected. Too many appraisers do not consider adjustments for condition or seller motivation. This is why there is such an uproar about the use of REO sales. The problem isn't in their use. The problem is not making appropriate adjustments for factors that affect their sale price when performing a market value appraisal and using REOs as comparables.

Are you saying the definition of market value does not apply to comparable sales and that relocating is undue motivation?