Retrospective Appraisal Question

[Jeff Horton]

Just got asked to do two appraisals on a property. One for 1999 and one for now. MLS data is available so no problem. I think it will be interesting to do.

A couple of years ago I was asked to do a farm back to 1966. I could not find a good source for data and since I was still fighting to get my License I declined it. I was thinking about this one and had an idea.

Since there were no sources of reliable sales data available for 1966 what would think of the idea of using classified ads? Granted those are listings but if there were enough of them it could give you an idea of the asking prices and some idea of the selling price. If no other data existed that was more reliable could this not be used?

Another thought would be (if still available) tax accessments value to help backup up your opinion.

I dont have one to do but I am just thinking about what to do if this comes up again. No one in my area will touch one like this and I think for the right fee it could be interesting work.

 

[airphoto]

Jeff,

You should be able to go to your deed book for that time period and find sales in the required area .. granted, the deed book won't tell you what the improvements were at that time, but will give you a place to start with parcel sales (from which you can determine location/proximity.) If you're fortunate, may be able to find the advertisements/listings/newspaper ads for the properties sold .. possible you could even find assessor's tax cards from that period to get an idea what the improvements were. Granted that you can't view them in the condition at that time, so the idea of certifying that you've viewed the comparable sales becomes an exception ..

Interesting task, though ..

 

[John Hassler]

I recently had a divorce case where the couple split up in the 70's. I checked with my local MLS and they had books (more like pamplets) that far back. I would try your MLS board first.
The idea of classifieds isn't bad but I would use that as a starting point. Get the addresses of the listings from the paper and then run the ownship rolls at the county court house. You will likely have to go back through many owners. I don't know about Alabama but in California they use tax stamps based on the sale price which are almost always printed on the deed. If you know the tax rate at that timeyou can calc the SP. It would be a lot of work, charge accordingly!

John Hassler

 

[Jeff Horton]

That doesn't work in AL. Deed alway read $1 and other considerations. You can work backwards by the taxes paid but there it nothing that requires you to tell the clerk what you actually paid for it. So it is easy to lie about the sales price in order to lower the fees.

I keep hoping that will change but my buddy/lawer/State Representative says no way. To much oppisition in the House to get that one passed.

 

[airphoto]

Jeff,

Granted you may not find sales information, but you can cross-reference to the recorded mortgage, if any. That'll give you a working point .. can presume a minimum selling value, presuming 70% mortgage balance. Selling value might be more, but unlikely to be less .. unless FHA/VA and you can make different presumptions there .. and, of course, disclose those presumptions with copious disclaimers ..

This is what happens when reconstruction transactions ..

 

[Restrain]

I agree with Bill. If you check your mortgages, especially VA/FHA, these should give you 95%/105% of sale price. In addition, in the 60's you still had a lot of Vets, especially in Texas, using their VA benefits for land purchases. If you can guesstimate an ratio between 1966 and today, you may, if there are no other unusual characteristics, use this ratio against today's sale prices. However, over 30 years, you can have very significant market changes that may affect land in one area or houses in one area vs. other areas. For example, there's one subdivision in a certain East Texas city that I know for a fact has not changed value significantly since 1970. While there has been a general inflation in other areas, this area remained static due to the changes in the neighborhood (went from owner occupant to very heavy low-income rental).

 

[Anonymous]

I am doing a retrospective for 1994, and with my old MLS books, it will be easy enough. But the oldest retro I have ever done was 1969 - the year after I graduated from high school.

Had it not been less than 1 mi. from my own house and a house and 60 ac. land tract, I would not have done it. I did the following. I bracketed the top based upon my father's sale of 40 acres to a neighbor about 2 years later, and his purchase of the 88 acre place I now live on, 3 years earlier.

I recalled a cousin of my father sold her farm within a mile or so to a neighbor, who then sold his place....so I had two sales from within 18 months. I called the people up, though elderly, they recalled the sales price (which was not on the deeds.) Arkansas was just converting to deed stamps required and some deeds had them, some not. The clerk would accept them either way. I found a few other sales in the deeds.

Then I went to one of the elder statesmen Realtors still active. He had taught school where I lived and I knew he quit to start selling real estate about that time. Sure enough he remembered sales from that area and, amazingly could pull up some old files yet. He clued me into a really good sale only a little over a mile away that I should have remembered, thus I had 3 usable sales with little more than a full days research.

As difficult as it was, it saved the people taxes for that amount, estimate was about $30,000 as I recall, so saved 27-34% tax bracket of that amount in an estate settlement. The few hundred it cost them was well rewarded.

ter

 

[Jeff Horton]

One more question. A fellow appraiser told me that when doing retro's that he looks at data 1 year before and after the Appraisal date. Is that right?? Seems like the one year after would not be correct. But if there are no significant changes in value then maybe this is acceptable?

 

[Jo Ann Meyer Stratton]

I think it is good information to look at the market data after the effective date. Some of those properties might have been active or pending on the effective date and all though their final sales price (unless agreed on prior to the effective date) would not be applicable, their market activity prior to the effective date could be informative. After all the more infor the better!!!

 

[Restrain]

If you are looking at a point in time in a Retro appraisal, its a good idea to look back perhaps even further than a year. Example is the 1980's. The market was severly affected in Texas by the fact that you couldn't get a land or commercial loan, compounded by the Feds interpretation of the banking laws. If you just looked at a point and from that point forward, you would not see the whole picture of what was happening. If the data's available, it will help you see if the market was stagnant, changing, trends developing, whatever. Remember, hindsite is 20/20 so use it liberally. Besides, if you miss something by arbitrarily starting at a point without examining what was taking place before the sale, you can invalidate your findings as well as call the entire appraisal into question.