Short sale vs. Builder sale

[danieljohanson]

Working on an appraisal in new development. Development has been under construction for 2-3 years. All resales are short sales selling for 200k less then current similar builder sales with similar features then subject. Subject late 2007 build. Subject is basically new condition highly upgraded and well maintained. I estimated effective age at 1 year r less. New homes with similar view, sold 200k higher all day long in development (plenty comps). Resale sellers with equity are not listing homes. None located. Only builder sales are only arms-length sales and listings in area. All resale short sales appear to be inferior view, etc... Leaning toward using all new comps. Builder arms- length sales would be a better indication of market value definition right? Anyone see this as a potential review problem? I don't see how there could be a $100k per year market reaction for age difference.

 

[incognito]

If YOU were a buyer in the development, wouldn't YOU want to go through the hassle of acquiring a functionally equivalent Short sale home, in order to save $200K? I would.

Something is up. I would research the seller paid concessions, seller rebates, or other circumstances which are causing this situation. Savvy investors would be ALL OVER those short sales, if like you say, the developer has "plenty of comps". I think you have more research to do....

 

[Lloyd Bonafide]

If YOU were a buyer in the development, wouldn't YOU want to go through the hassle of acquiring a functionally equivalent Short sale home, in order to save $200K? I would.

Something is up. I would research the seller paid concessions, seller rebates, or other circumstances which are causing this situation. Savvy investors would be ALL OVER those short sales, if like you say, the developer has "plenty of comps". I think you have more research to do....

Definitely - there has to be some huge concessions offered thru the builder. It may be hard to pry that info out of them, but if there are active short sale listings and recent closed sales at a huge discount, then the concessions must be there. I'm working on a report now where the builder is offering $50,000 in concessions for starters, and I'm sure that more can be negotiated.

 

[james stephens]

Leaning toward using all new comps. Builder arms- length sales would be a better indication of market value definition right? Anyone see this as a potential review problem? I don't see how there could be a $100k per year market reaction for age difference.

If the Subject is not new then you should use at least one comparable that is not new. Buyers will pay more for a new home when they can choose paint, carpet, upgrades, etc. Also, it sounds like you need to interview a few agents to find out why such a large gap exists between the new homes prices and "short sale" resale prices. What's the premium for the Subject's view? What's the price range in the development?

 

[incognito]

Here is another idea. See if you can't get a copy of a closing statement for one of the builder comps. It takes work, but if you call enough Realtors, buyers, sellers, and even other appraisers, you will get one. Then you will get the true story. Too often we as appraisers become complacent in our search for market data. A good appraiser should be a good detective. This is where building relationships with the real estate/mortgage/title/county appraiser communities will pay back good dividends! A lot of times the onsite sales person will give you anything you need, just ask!