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Rumors. Do they have an inpact on the market?

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Lee SW IL

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Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Im preparing a report within a city that the largest employer (steel mill) has received tax breaks from the school district (last year). Company has filed for bankruptcy, the plant is currently operatable and current compny plans do not call for any shut down.

Rumor's about the steel mill closing have been heard for years. But, again these are just rumor's.

Resales indicate a stable market. MLS data indicates more sales in 2002 than 2001, but due to the lower interest rates all local area markets are seeing an increase in activity, in this region.

In my opinion, the total loss of the mill would be devistating to this community. But, currently the market is stable.

My feeling is rumor's are not fact and should not be relied on, but on the other hand the consumer buying/selling these homes knowing about the rumor's.

Would you, and how would you disclose rumor's in a report?
Would you disclose the largest employer receiving tax breaks due to hardship?
 

Willie

Senior Member
Joined
May 30, 2002
Professional Status
Certified General Appraiser
State
Tennessee
Duhhhhhhh Yeeeeah. No just kidding Lee. In the long run, it can't come back to bite you if you disclose what the rumors are. In the short run it may kill a few deals that you have appraised. Also, I know it is your opinion that it would be devastating. Just be sure your opinion has basis in fact, i.e. another city nearby where this has happened. It all depends on the location. I have seen big employers move out here in TN and it not make much difference. But other centers or employment were within 50 miles. You are doing well by keeping your vision on the horizon in this community.
 

Dave Doering

Sophomore Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Missouri
I believe that rumors can have an effect on the market. Rumors relate to the appraisal principal of Anticipation. But, keep in mind that if there is an effect, it should be measurable in the market. Have you noticed any change in pricing as a result of the uncertainty in the local economy? Has the average days on market for sales changed? Has the ratio of listings to sales changed? And, has the list to sales price ratios changed? These along with average sales price, paired sales and other market data should help you to form an informed market based opinion of the effect, if any, of any uncertainty relating to the anticipated change in the local economic conditions.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I would say it boils down to what is reliable, public info. I don't report rumor's, like you said "rumor's about the steel mill closing have been heard for years. But, again these are just rumor's. " We have the exact same situation with one of the largest employers in my area. But like your situation, "the company has filed for bankruptcy, the plant is currently operatable and current company plans do not call for any shut down" is also the situation in our town. I simply report those facts, and give some area stats from the Dept. of Labor so the UW can make the call.

But then again, our RE market is effected more by tourist dollars buying vacation homes than blue collar plant employment.
 

Verne Hebert

Senior Member
Joined
Feb 25, 2002
Professional Status
Certified General Appraiser
State
Montana
Dave's all over it. Certainly a comment should be made about the economic facts, be brief.

You are talking about negative anticipation. I wouldn't be too concerned about the rumors--I would however keep a good eye on inventory. If inventory rises to high levels, then you have facts to discuss.

Compile and analyze the data, and appraise the property.

If you know what is going to happen, get you financing in order. That is how you make money appraising--you own deals.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Why not contact the economic development department of the Chamber of Commerce for information. Since you do appraisals in that market on a regular basis, why not have a prepared addendum about the community, industry base, employment stats, and your opinion as to the stability of the market?

My software allows me to archive comments. If you do that just remember to update it regularly. I created a three page addendum back in the 1980s when our market was in the toliet. Had a professional writer and english teacher proof and re-write it. Received many many good comments on it. Most underwriters were impressed a residential form appraiser would go to such detail to describe the market. I might add... I also included 3 listings or pending sales in each appraisal to support my use of time adjustments during that very trying period. The better the intended user of the report understands the market you are dealing with the better they will appreciate you and your appraisal.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
I agree with Dave. However, if the rumors are coming from the Union people, people are cutting back on buying, etc., then...when there's smoke, there's fire. I've seen it happen overnight.

Lived in East Texas during the 80's oil boom. Then the Saudi's turned up the spigot and the boom turned to a bust literally overnight. Drilling stopped, service trucks stopped running, and housing began falling at 10% intervals every 4-6 months. Devistation to the economy can happen very quickly where the major employer closes and there is no close viable employment. The town has still not recovered.

Roger
 
B

Bemis Pownall

Guest
Did a review last summer.

I made a comment about the pending HP Compaq merger and all the potential lay offs anaylsis anticipate.

Also took out the across the board $20K tile floor adjustment.

Bank wanted explaination for me dising the floor adjustment but nothing about real potential layoffs.

HP is/was a major employer in this county.

U never know..

:icecream:
 

Daniel Williams

Senior Member
Joined
Jan 14, 2002
Professional Status
Appraiser Trainee
State
Illinois
Lee,

I'v heard the rumors about Granite City Steel for YEARS.....(actually it is National Steel Corp. now). The are still burning coke and smelting iron everyday ,they also recently rebuilt their two blast furnaces'.

http://www.nationalsteel.com/Index.asp?npr=801100000


Look at current values and use your own GOOD judgement.

(check your private mail for my new phone.....I live in Fairmont City now and would enjoy lunch or "happy hour" w/ a forumanian)

happy holidaze,

daniel
 
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