Traineee Comp questions

[The Bob]

The problem with using older sales is the influence can change over time. I've had a number of sales with what appears to be an adverse influence only to find the effect is 0. In really hot markets buyers tend to not discount things like a busy road.

 

[shrubberyvaluation]

The problem with using older sales is the influence can change over time. I've had a number of sales with what appears to be an adverse influence only to find the effect is 0. In really hot markets buyers tend to not discount things like a busy road.

Correct, roads can get busier, or less busy, and market conditions can change. There are all sorts of problems when market data is limited, but you need to make a judgement call on what is the most relevant to see the market's reaction.

 

[Tom D]

long ago when i sold real estate, i asked a couple why they like the house on the 12 lane big city highway. you don't have kids playing in the street, she responded.

 

[Fernando]

Common sense would tell you who in their right mind wants to live on a busy street unless it's for commercial.
There is a negative factor. If not, some other factors would come into play like maybe larger lots on such busy streets.

 

[Bill75]

Don't you think you need a sale on a busy street to support the influence (adjustment) on market value?

I don't know where you're located in Texas, but in my market over the last year, these so called "negative externalities" are mainly non factors due to high demand and people are not caring if the house is located on a major thoroughfare or next to transmission lines. Multiple offers indicates such. Do your due diligence though and see if there is any market reaction.

 

[Tim Hicks (Texas)]

I don't know where you're located in Texas, but in my market over the last year, these so called "negative externalities" are mainly non factors due to high demand and people are not caring if the house is located on a major thoroughfare or next to transmission lines. Multiple offers indicates such. Do your due diligence though and see if there is any market reaction.

Had two last month. Both on busy streets, selling for about 5% less than interior lots. I did have a listing from the same street about $100,000 over everything, though.

 

[gorillakimchi]

yes, always better to have at least 1 similar locational influence. kinda like how did you figure out the adjustment. all answers above me are good, and correct.
go back further, travel future, don't accept it. but that being said, if you don't have any locational comps, just explain it, explain it. depends on the tolerance of the lender. some may really be annoying, so it's better to find that comp now, than having to do it later. you can always use it as comp #4 if the other comps are really more better.

Thanks for your wise advice, sir

 

[Functional Obs]

The subject is on a busy street. Do I need to find a closed comp on a busy street or it is not necessary?

You want to understand the contributory value of the subject's individual features, and you also want to know the penalty it has for negative attributes. Fronting a busy road (unless you're a McDonald's) is probably negative. If you don't have a recent sale of a substitute property on a busy road, look at what happened last year, or the year before, or the year before. Find out what the difference was between a sale on a busy road vs. a sale on a "quiet" one. Extract a percentage. Then do it again .... Do it three, four, five times, till you feel good about how much lower a busy-street property sells for vs. the exact same quiet-street property.

 

[johnnykkla]

Thank you all you guys so much for answering my question. I really appreciate all the input.

 

[Fresh Start]

Regardless of whether its a busy street, a water access, a hill view, etc., the best approach to show market reaction is to find a similar comp. But your not done with just finding similar comp, make sure you explain in your commenting why you included that comp and the reasoning. This is more important than just the comp being added, they lenders want to know the logic behind your reasoning. Always make sure you explain why you included comp X, and Y etc.