• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Tough call. and not number chasing.

Status
Not open for further replies.

The Sheriff

Member
Joined
Mar 21, 2007
Professional Status
Certified Residential Appraiser
State
Arizona
I'm completing an FHA assignment in Queen Creek, AZ, on a property with a ridiculous pool... Queen Creek is a very heavily declining market for non-Arizonians.

I have a model match to the subject that closed for $253K in late December (not a great pool compared to mine, but the property is a model match). The best available data for the subject's neighborhood show approximately a 2.2% decrease per month since the first quarter of 2007. Here's my dilemna... I have a larger model that closed in a non-distress sale for $295K in late March (this property had a ridiculous pool set-up - slightly superior to the subject). Every other sale that has closed in the past six months is distress (with moderate play pools). I have a non-distress pending sale at $299K that appears to be closing in the $280K range that also has a ridiculous pool set-up. When I say ridiculous for my property and these other properties, we're talking beach front entry, salt-water pools with fountain features and spas. The fountain features and spa typically cost the price of the play pool. Buyers in the market place have recognized these properties are as close to a backyard paradise that you'll get for any part of Arizona.

I write a pretty mean narrative when I'm justifying my opinion of value. However, in this case, what I've noticed, the banks are liquidating everything in under 30 days. Of all the bank owned resales, only one has a marketing time over 30 days (which I'll call my comp #3). The average marketing time in the neighborhood is 107 days over the last six months.

I want to give primary weight to the adjusted model match (roughly bringing the subject in the 220K park after the time adjustment of 13%). Secondary weight is given to the other non-distress sale as the property is larger with a superior pool set-up. And then minimal weight is given to comp #3 (bank owned - although close to the average marketing times of the neighborhood).

The adjusted sales spread is quite wide due to the bank owned going out the door at $200K. Every active on the market is bank owned or a short sale, except two of these properties. The pending... and then a model match active to mine that is listed for $235K (lowest non-distress sale, non-bank owned sale). Everything listed lower than where I'm considering coming in at has less than 30 days on the market... and some are listed $40K-$80K less. All of these are short sales (with three being bank owned).

I'm very fair... but with these liquidation sales (as they have marketing times under 30 days before they are scooped up), do we penalize an owner when properties that have been non-distress with ridiculous pools have sold considerably higher. I don't want to get burned on a review essentially knowing that some reviewer utilized three bank-owned resales with pools that closed in under 30 days (because that is the only thing out there). At what point do you just play ultra-conservative and go super low end even though some available market data says you shouldn't be such a conservative jerk?

Disclaimer... This is a non-number hitting report... however, $180K vs $220K is a huge swing... Do I stand up for the $220K value, or make life easy and come low and call it the day.
 
Last edited:

The Dog

Senior Member
Joined
Apr 18, 2005
Professional Status
Certified General Appraiser
State
Oregon
Here's my dilemna...

Every active on the market is bank owned or a short sale, except two of these properties. The pending... and then a model match active to mine that is listed for $235K (lowest non-distress sale, non-bank owned sale). Everything listed lower than where I'm considering coming in at has less than 30 days on the market... and some are listed $40K-$80K less. All of these are short sales (with three being bank owned).


At what point do you just play ultra-conservative and go super low end even though some available market data says you shouldn't be such a conservative jerk?

.

I think you answered your question all ready. If what you state is right, the bank foreclosures maybe the present market. The market appears to be in the low end, if you have a multitude of foreclosures competing with " a limited number of regular" sales. As long as foreclosures are driving your market, I know where I would place the value.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
The question I have is ... what properties are on the market right now? Realizing that your 'ridiculous' pool sale occurred during the same time as the marketing of the bank sales, it seems to me there is a market preference for the 'ridiculous' (a poor choice of words I might add ... along with "bring it in").
Your job is to do an thorough analysis of the market and report your findings. I personally think the market is telling you something ... the question is are you listening and can you make a good case for your analysis in your addenda?
 

JRS at OBX

Elite Member
Joined
Jun 13, 2006
Professional Status
Certified Residential Appraiser
State
North Carolina
I want to see a picture of this ridiculous pool.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
It is not like you only have one sale with a superior pool that is a market transaction whereby it could have been a fluke. The pending sale, with the similar pool, selling higher as a market transaction is key. Call the agent, try to get an idea of what it is contract for and use it as comp #4. Call on the listing, too. It is my experience that the quality of the pool upgrades is an indication of the quality of the upgrades inside the house. Maybe the listing with the nice pool didn't have good interior upgrade while the other did. Look at interior MLS photos or if not available talk to the agents who sold these ridiculous pool houses about the interior upgrades.

By the time you get done you could find out that the high sales are inflated and not viable for one reason or another, but more likely they are where the market is at and people are willing to pay more for the better quality, non-REO distress sales.
 

EVAUSA

Junior Member
Joined
Jan 26, 2008
Professional Status
Certified Residential Appraiser
State
California
Your market may be REO and Short Sale driven, and in that case, any non-distressed sale entering the market will have to compete at the lower price if they want to sale. On another note, why is this pool "ridiculous"? Sounds like there is buyer demand for a little bit of paradise in the desert.
 

Jennette Picinich

Sophomore Member
Joined
Apr 24, 2006
Professional Status
Licensed Appraiser
State
Arizona
Sheiff,
I don't do much appraising in this area, however I am also a sales agent and Queen Creek is My primary sales area. I will tell you that all though you may see some higher sales from the end of last year, in todays market if the poperty was to be listed at the higher price no agent would even show the home. Today, buyers in the area are looking for the "deals", if it's not a deal it's not apt to be shown more less purchased at the higher price. Just my two cents!
 

Alison Swain

Senior Member
Joined
Sep 13, 2005
Professional Status
Certified Residential Appraiser
State
Florida
I've got similar situations on two I'm doing also. Both subjects are well maintained and updated. What few "normal" sales there are are selling about 20% higher. But bargain prices on stripped-down versions with little/no mainteance and crappy looking landscaping sell fast (one week to just under a month).

Seems there are really two different markets --- those looking for "turn-key" properties for homes and a whole lot more who are bargain shopping and don't mind having to spend a few $K's to make repairs and upgrades that the other, longer-marketed homes already have. It appears that those looking for a home will pay more to just close and move in, there's just fewer of them.

If we appraise nicely maintained homes with quality upgrades closer to what the crapped-out, abandoned REOs are selling for in just days, seems like something is off about that. Also seems like we're resetting the market price not only for the nicer homes but also even lower on the crappy REOs. :shrug:
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
There are so many moving targets right now that every single stinking residential assignment needs a level D market analysis.

The best available data for the subject's neighborhood show approximately a 2.2% decrease per month since the first quarter of 2007.

Maybe it's just a quirk of my area but I HAVE to break down 2007 into two segments or else the statistics get skewed. During the first 6 months of '07 there were market storm clouds brewing but the markets did not virtually collapse until after July '07 and were in freefall starting in about October. So if you use the entire year as a whole in developing statistics you have the first half doing so-so but the last half in disaster. In any case, I don't think pricing trends can be measured in a linear, per-month fashion.

Now there's news from NAR and DataQuick that sales are up by a large factor. Well, that's just head hunters snatching up short sales, foreclosures and REO's. I don't think that everyone getting $700 from George Bush is signficantly changing the real estate markets.

Market dynamics and consumer philosophies seem to be changing now too. People aren't as willing to blow $100k on a fancy pools or marble and granite nick-knack nitches in the bathroom.

The market has become so unstable (lenders wanting to blow out their foreclosure properties but they're using BPO's and AMC goofuses to help them decide how much to sell for; Real estate brokers/agents wringing their hands about listing prices because they don't know how to read the market; properties being lowballed for either a quick sale or as a strategy to inspire over-bids; etc, etc) that I don't really see a pool issue stirring up much excitement.

If an appraiser has put as much thought into the problem as you apparently have I doubt if a reviewer is going to be able to convince anyone that your opinion is not reasonable or not supported. Appraisers don't get in trouble for value issues. They get into trouble for errors in development and reporting.
 

The Sheriff

Member
Joined
Mar 21, 2007
Professional Status
Certified Residential Appraiser
State
Arizona
Thanks everyone for the helpful backup... Greg... I guess you last three sentences summed it up. Unfortunately, it's not a pretty picture in this market. If the report gets cut, they will be able to only utilize liquidated properties to render my opinion of value mute. I feel I can whole heartedly defend my position. Oh... what a great time to be an appraiser. Thanks Skippy!
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks