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Skewed statistics

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Pamela Crowley (Florida)

Thread Starter
Elite Member
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
I'm noticing more and more that even 'cookie cutter' subdivisions are not lining up statistically anymore. I have 6 comps up in a large simple subdivision of similar houses 25 - 30 years old with plenty of sales to choose from. No matter what I do, the adjusted spread is $130,400 to $139,000. I've double checked the data and condition of each sale. This neighborhood used to be so easy and the spread was rarely over $3,000 - 5,000. It all used to make sense there with individual amenities and line items easy to determine what the adjustment was.

Now, the statistics are going into following the individual Realtors or Realty offices. I now can almost name the Realtors that are going to be on the listing and/or sale side of the sales that are above the sale prices for certain areas. I have no clue how some appraiser made some of those values, at least not by doing a credible appraisal.

Those are the Realtors that choose their pet lenders and appraisers that will make any deal work for any price. Some have even point blank told my favorite LO that they would sent deals to him only as long as they can choose the appraiser.

I know this isn't really a new scenario. What I am seeing is that this scenario is now "creating" some local markets. When the Realtors call and actually TELL me to go outside of a subdivision and use 'these sales' to 'make' a value that is inflated for the subject, this system has gone overboard.

Anyone else finding this? Add this mess to the AVMs and what good is any of it? Are we going back to the '20s where it really was anything you can manage to get on the contract is OK?

I blame lender select; licensing that has let anyone get an appraiser's license; very little real recourse for appraisers that are number hitters; etc. It appears that the S&L debacle taught them only how to get around the laws - take as much as you can get away with and let the government backed programs worry about what it will eventually do the economy.

I know.... I'm just being negative. I enjoy doing some of the unique properties and digging in to make it all come together and make sense. I expect those to have some adjustments that are subjective and statistics that don't easily come together. When it's now happening in the cookie cutter subdivisions - what happens next?
 

George W Dodd

Senior Member
Joined
Jul 9, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
I have no clue how some appraiser made some of those values, at least not by doing a credible appraisal.

Could some of these values have been supported with 2070/2075 type reports, or with AVMs?

Have noticed similar trends in this market.
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
I have noticed that for years both in a metropolitan market over seven years ago before the wide spread of AVMs and computerized data available; and also in my small market now days. Yes, AVMs with 2070s are even used in my area with very limited sales info available. It is very upsetting to not only have the loan officer and/or loan processor but both the underwriter and a review appraiser to say to go outside of the immediate area to "make value". Me, I report what the market tells me and just make people mad. It is all the fault of TV, which has ruined the character and morals of the nation! Me, I am stuck in midwestern farm home values of 100 years ago.
 
B

Bemis Pownall

Guest
adjusted spread is $130,400 to $139,000

you should be so lucky

I have one sale FHA $185k and a clone sale across street $162K within cookie cutter hood. :icecream:
HO estimate $215

I guess everyone in this neighborhood is pretty confused me included.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Pam,

Just wait until that same subdivision has $20,000 spreads...you're just getting warmed up! 8O :)

Are you seeing a similar trend in the active listings, or is there a scarcity of active listings?

How well I remember shaking my head and thinking that some buyer must be out of his/her mind to pay so much. I was certain they were being suckered, then only a couple of months later the price that they paid seemed LOW compared to the new prices and listings. Remember, a $10,000 increase over a previous sale only translates into about $60 more per month at current rates on a 30 year mortgage. If a homeowner wants to pay that much more to be in that particular subdivision instead of spending it on going out to dinner a couple times a month, that is certainly his/her option. $140,000 will buy you a 1000 SF, 2nd floor condo (no elevator or garage) on the western side of Denver. To some a real home with a real garage and yard for $140,000 is a slice of heaven. A huge number of those who moved into the Denver area were from California, where home prices were outrageous by comparison. What seemed unbelievably high priced in this area was a bargain by the pricing they were used to.

This was three or four years ago, when nobody even know what an AVM was in the Denver area!

It always goes back to the same thing....the age old question of whether the transaction has a willing seller and willing buyer. I can't tell you how many times I had to remind myself that nobody was holding a gun to the buyers head, and if he/she didn't buy the house for that seemingly high price, almost without fail there was someone else standing in line behind them who would.

It isn't easy for me to say this since I struggled with the same dilemma, but you can't fight a trend with yesterday's logic. Do so and you may well be left in the dust. :eek:
 
Joined
Jan 16, 2002
Same thing here with 20% variations on identical homes (been going on for a couple of years already and getting worst by the day). Realtors have no regard for size, condition, and/or location. It's reached the point that I look at the names of the listing and selling agents to determine the degree
of scam taking place. There are certain names that are notorious. If you track these sales to closing the results are interesting. Listing agents are boosting their listings based upon other boosted listings, without regard for sold prices. They are ignoring contracts and acceptances as well. It's the most insane market I have ever seen in 25 years. The entire market
is so skewed that all data has been rendered useless.
 

Chris Harrison

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Utah
Pamela,
I see the same in my market where values are driven by emotions that can't be accounted for by hard statical facts. Over the last year or so the range in final adjusted value can be $5,000 to $10,000 on some of these cookie cutter subdivisions.
Also noticed is the re-listing of properties after 90 days by the same real-estate agent for the same price to produce a dom sale under the 90 day mark. It's not required to report all the prior listings of for the comparable's but I do. If you pull the average dom for some markets, it remains under 90 days and screws the statistical analysis on the MLS. I would like to see reporting of all activity on the subject and comparable's in every report but that's just a reviewers prospective.
I expect to see large ranges in custom home's because buyers can be sold the "better" quality crap of cherry wood vs maple wood cabinets, slate vs custom tile floors, brass vs crome fixtures, etc.

Chris
 

Leon Stewart

Member
Joined
Jan 15, 2002
adjusted spread is $130,400 to $139,000

you should be so lucky

I have one sale FHA $185k and a clone sale across street $162K within cookie cutter hood. :icecream:
HO estimate $215

I guess everyone in this neighborhood is pretty confused me included.

Bemis:

You are talking about a "Real" Market, Pam is dealing in fantacy land with a Sale Price Spread that narrow. But it seems as if she is more concerned with someone's elses value estimate than preparing the best Report she can based on available data.

leon
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Same thing here, Pam. I have two cookie cutter type neighborhoods I've been tracking and it's been interesting. In both, when I look at listings, I can pick out a certain realtor's handiwork before I look at the name. For those that close $5-10,000 higher than I would have guessed, I can usually name the lender without looking. The other contribution to the craziness seems to be the sales pitch involving "and we can roll your other consumer debt into your mortgage for this historically low rate and you'll only have one monthly payment to deal with" along with a pint of snake oil .........

For my next trick, I'll mark the calendar with those addresses which should be foreclosing within the next 12-24 months.

Sure would be interesting to see some of those appraisals..................
 

terr

Freshman Member
Joined
Jan 29, 2002
Professional Status
Certified Residential Appraiser
State
Wisconsin
I thought it was just me with these wide value ranges.

Do you ever get behind an appraisal that was done $20,000-$30,000 higher than market and you are doing the second refi appraisal and the lender says we have this previous appraisal $20,000 higher so your appraisal must be low.
 
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