Short Sale Comps

[CenCoastApr]

Happy Spring, I was hoping to pick you folks' brain a bit. I have a report on a 27 year old 1,250SqFt SFR up for ReFi. It is one of these medium density neighborhoods with small lots on the Central Coast. Unfortunately it happens to be one of the smaller units in the neighborhood. I am having trouble finding reasonable comps to bracket below SFR Square footages. The one I do have is 1,183 SqFt, (a January transfer) shows on MLS as a short sale with "this property has been placed in an upcoming event. All bids should be submitted..." in the comments. Yes it seems to have likely sold low as its ruining my grid. Condition is inconclusive based on the photos. Should I dump it and go back to the next small SqFt sale (back in August) or should I keep it? I come to fee appraisal from the Tax Appraisal world and we would not use auction/short sale comps at all. But we were also not bound by the same level of bracketing standards. Advice from wiser folks would be appreciated.

 

[TerryRohrer]

Happy Spring, I was hoping to pick you folks' brain a bit. I have a report on a 27 year old 1,250SqFt SFR up for ReFi. It is one of these medium density neighborhoods with small lots on the Central Coast. Unfortunately it happens to be one of the smaller units in the neighborhood. I am having trouble finding reasonable comps to bracket below SFR Square footages. The one I do have is 1,183 SqFt, (a January transfer) shows on MLS as a short sale with "this property has been placed in an upcoming event. All bids should be submitted..." in the comments. Yes it seems to have likely sold low as its ruining my grid. Condition is inconclusive based on the photos. Should I dump it and go back to the next small SqFt sale (back in August) or should I keep it? I come to fee appraisal from the Tax Appraisal world and we would not use auction/short sale comps at all. But we were also not bound by the same level of bracketing standards. Advice from wiser folks would be appreciated.

Actually, you are not bound by any bracketing standards. The critical element to ensure is that your adjustment for differences in GLA is supported across the difference between your subject and comps. That can be done by comparing older sales to one another across the same difference in GLA and documenting and applying what you found.

 

[J Grant]

Happy Spring, I was hoping to pick you folks' brain a bit. I have a report on a 27 year old 1,250SqFt SFR up for ReFi. It is one of these medium density neighborhoods with small lots on the Central Coast. Unfortunately it happens to be one of the smaller units in the neighborhood. I am having trouble finding reasonable comps to bracket below SFR Square footages. The one I do have is 1,183 SqFt, (a January transfer) shows on MLS as a short sale with "this property has been placed in an upcoming event. All bids should be submitted..." in the comments. Yes it seems to have likely sold low as its ruining my grid. Condition is inconclusive based on the photos. Should I dump it and go back to the next small SqFt sale (back in August) or should I keep it? I come to fee appraisal from the Tax Appraisal world and we would not use auction/short sale comps at all. But we were also not bound by the same level of bracketing standards. Advice from wiser folks would be appreciated.

don't use that short sale, explain why, comment attempts to bracket subject sf found no viable comps, the end.

 

[George Hatch]

The reason to not use a short sale would be if the conditions of sale are atypical for that market segment right now. Since you know that other sale will come up if someone reviews your report you might consider saving yourself some time/effort a week from now by addressing this sale as a 1-liner in your report and explain why you didn't consider it to be indicative of the prevailing market trends. that way nobody gets to thinking they found a "gotcha" that you somehow missed in your research.

If the market tanks 5 years from now then under those market conditions short sales and REO resales will become a lot more typical. At that point you may end up treating such sales data differently.

 

[CenCoastApr]

The reason to not use a short sale would be if the conditions of sale are atypical for that market segment right now. Since you know that other sale will come up if someone reviews your report you might consider saving yourself some time/effort a week from now by addressing this sale as a 1-liner in your report and explain why you didn't consider it to be indicative of the prevailing market trends. that way nobody gets to thinking they found a "gotcha" that you somehow missed in your research.

If the market tanks 5 years from now then under those market conditions short sales and REO resales will become a lot more typical. At that point you may end up treating such sales data differently.

This is a good thought. Thank you! There was certainly something up with this property but the listing was deliberately vague.

 

[shrubberyvaluation]

Even when there are a lot of distressed sales I still prefer not to use Short sales unless its the best available. If the distressed sales are predominant they are probably depressing the prices of the normal open market sales.