underwriter's request for sp/lp ratio

[smackodu]

Sure you are wrong but the underwriters request is stupid. As a former realtor the list price is known as the wish price. The original wish price is the worst place to start when analyzing LP-SP Ratios. The original list price is almost always emotionally driven by a seller who has no concept of reality. Many realtors take listings with a pre-signed price reduction. This usualy occurs wthin the first few weeks of a listing. Here is what I always put in my reports to quiet underwriters. "A buyer will never pay more than fair market value for any property regardless of the listing price." If your comparables are the most recent sales they shouldn't ask for such meaningless statistics. Your value is proven by your comparable sales not LP-SP ratios. You need to go to bat for your clients. The information the underwriter requested and you provided APPEARS to have mislead the underwriter. Provide them the LP-SP ratio based on the most recent LP's.

 

[Mary Tiernan]

Just did a report the other day with final asking price and days on market for each of the comparable sales

however,

in my neighborhood market conditions section I had indicated that optimistic asking prices extends marketing times.

and

under sales comparison comments, although comparable 1 shows original list price of $190,000 with sale at $180,000 after 174 days on market, this property was previously listed for 280 days at $249,000 and an additional 90 days at $229,000.

 

[Carnivore]

Why in the world would a lender make a lending decision based on the average skill with with the agents working in the market list properties. They might as well ask to measure how loud the garbage collectors bang the cans together as a metric for approval.

meta,

I know what you mean to say(were you drinking) and it is hilarious and right on the money.

to the OP

Why were you concrned about them not making the loan. Thats there job, not yours. Tell the m to go get better credit report data or a better job history of the borrower if they want the loan to look better.

 

[Mister Ed]

As a Broker, I would argue that the original list price (in MANY cases) reflects the Realtor's inability to convey the truth about the market to the seller. Many agents, even in the office where I practice, will take the listing at any price with the intention of getting it lowered to a true marketing range down the road a bit.

The only ratio I would be concerned about is the sale price (less concessions) vs the final asking price, which reflects the true marketing range.

By the way, I just bought a new Mustang for half price. The dealer was originally asking $75,000. (get the point?)

Sorry to side track for a second, but the comment I hi-lited is exactly why I have started promoting pre-listing appraisals. A house listed at a realistic price can turn and burn in less than 90 days in my market--good for the seller, good for the buyer, and good for the agents. I have seen houses finally sell after being listed for over a year and watching original listing prices drop by nearly 45%.

Back to the OP's question: I would compare final listing price to sales price. That is what the buyer most likely saw.

 

[ZZGAMAZZ]

Caveat the significance of the addendum by disclosing that the list-selling price ratio was provided in response to underwriting requirements but that it is relatively meaningless because your knowledge of seller motivation for the hundreds of comparables remains largely and forever unknown...