Subject as a Comp

[J Grant]

For the sales you use in your grid, do you assume those sold at MV/arm's length or no? How can you arrive at an MV for the subject, if none of the comparables sold at MV?

I don't assume the comp sales sold at MV!!! Show me in USPAP or texts where apparisers assume that ?

Their prices are what I see in a reasonable probable range. Thus we usually do not use outlier sales. We use comp sale prices as adjusted for form a range from which to reconcile a MV for subject - we are not appraising each comp sale price to see if it sold at MV.

If a sale price of a comp was affected by terms such as concession /other we adjust its price for that affect.

 

[Dublin ohio]

I don't assume the comp sales sold at MV!!! Show me in USPAP or texts where apparisers assume that ?

Their prices are what I see in a reasonable probable range. Thus we usually do not use outlier sales. We use comp sale prices as adjusted for form a range from which to reconcile a MV for subject - we are not appraising each comp sale price to see if it sold at MV.

If a sale price of a comp was affected by terms such as concession /other we adjust its price for that affect.

So why not treat the previous sale of subject the same.

 

[alebrewer]

If a sale price of a comp was affected by terms such as concession /other we adjust its price for that affect.

So you're adjusting comparable sales based on YOUR opinion that the sales price(s) were influenced by terms that affected the....... wait for it..... market value price of that sale. But.... this is as far as I'm going down the rabbit hole this time. I've learned my lesson.

 

[alebrewer]

So why not treat the previous sale of subject the same.

In the words of Captain from Cool Hand Luke: "Some men, you just can't reach. So you get what we had here last week -- which is the way he wants it. Well, he gets it. And I don't like it anymore than you men."

 

[J Grant]

So you're adjusting comparable sales based on YOUR opinion that the sales price(s) were influenced by terms that affected the....... wait for it..... market value price of that sale. But.... this is as far as I'm going down the rabbit hole this time. I've learned my lesson.

See the guidelines for adjusting for concessions etc. It does not say adjust to what the MV price should be - it says adjust for concession or financing affect on price in our judgement.

 

[shrubberyvaluation]

AS was said: My first thought: Non-Arm's Length? Use: only IF absolutely necessary (4-5-6)
AND likely not even. Why not shed-light with extra comments regarding the : Subject History.

It wasn't made clear if the sale to mom (which is being considered as a comp) was arms length. It doesn't say who sold it to mom. The current sale to the son is what the appraisal is for now, which is non-arms length. The question would be if the sale to mom 3 months ago was arms length.

 

[alebrewer]

See the guidelines for adjusting for concessions etc. It does not say adjust to what the MV price should be - it says adjust for concession or financing affect on price in our judgement.

You're absolutely correct. Carry on.

 

[J Grant]

So why not treat the previous sale of subject the same.

We can,and I have used a prior sale as a comp on reports -
I was pointing out the anchor bias trap that assuming the prior sale price was a MV can create.

 

[Doug Bennett]

Does anyone know what USPAP says for using the subject as a comp?

The underwriter wants it removed; however, I think it is necessary to produce credible results.

Subject sold 3 months ago in cash to mom, and now, it is being sold to her son.

I think it reasonable to have it in the report with appreciation applied, especially since 2 of the other closest comps bracket the adjusted value nicely.

Comp 1 after adjustments 389k
Comp 2 after appreciation $392k (subject)
Comp 3 after adjustments $394k.

Thoughts?

Do you have any other Comps that adjust at a similar Value? My guess is they're hesitating as it was not an Arms-Length transaction. Go back as far as you (reasonably) need to, make a Time Adjustment if necessary, and move on. Eliminating the heartburn in "discussing" it back and forth would be worth it to me.

 

[shrubberyvaluation]

We can,and I have used a prior sale as a comp on reports -
I was pointing out the anchor bias trap that assuming the prior sale price was a MV can create.

You can have an anchor bias from many things. Do you not use the model match next door that sold recently because you are afraid it will give you an anchor bias?