Using the Subject as a Comparable Sale

[AnonApprsr]

Good Evening Gentlemen,

I am performing an appraisal on a condominium property, for mortgage refinance purposes. I performed the appraisal for the sale, in August of this year. The current marketing conditions are stable for condominiums (especially over the past 6 months, very stable). One comparable sale is even still good, (a late June sale) although I have newer ones that I will be using. The value is pretty much the same as it sold for, and the Subject even had $10,000 of cosmetics done (lighting, painting, electrical upgrading) since the sale.

Should I use it as a Comparable? I don't "need" it, so I'd like to focus my question on what would you guys do? What would my peers do? It certainly supports the fact that I'm saying the market is currently stable, as well as the value I have developed.

I think one of the things to consider is that I performed the appraisal for the Subject's August sale, for the same lender as now. I say it's fine, what if I was the only appraiser in 30,000 Square Miles and did every sale in my count? I say obviously I can use those sales as Comparables. Maybe my prior appraisal in August is not even an issue and I'm over thinking it.

Anyway, would you use it? Should I use it? 4th comp?

Thanks for reading.

 

[KYLECODY]

Dont know what you need by you dont "need" it.

A recent sale of the subject that was exposed to the open market and sold as an arms length transaction is a good indicator of value/most probable sales price. It can be used as a comp. Some UWs may not like it but thats their issue....I certainly wouldnt use it as one of the first three comps.

Whether you did the subject months ago for the sale is irrelevant. New assignment, new work file.

 

[Mztk1]

If I am the unit owner, and you say the market is stable, and appraise it for the same amount as August using my unit as a comp, but I put $10,000 into it, I would feel you were lazy or are incompetent - which I know you are neither.

The subject when it sold was a different product than the subject is now.

If you have comparables in more similar condition to the subject "as is" then "as was", then they are better sales. If they show no increase, you'd either have to consider whether the market is slightly declining, or why $10,000 in improvements add nothing to the value and then discuss it in the report.

Obviously, there would be a discussion on the subject's prior sale. It should only be used as supporting data anyway. But its condition would likely need to be rated as "inferior" relative to the subject today; and then do you adjust or not?

If after the improvements the value stayed the same, I'd likely just write a narrative about the prior sale, the improvements and why the value did not change, relying on the more similar, recent comps to tell the story.

If the value did go up slightly due to the upgrading, I'd probably throw it on as a fourth comp in support of the new data.

 

[Mike Garrett RAA]

Only as a last resort....IN MY MARKET.

 

[AnonApprsr]

If I am the unit owner, and you say the market is stable, and appraise it for the same amount as August using my unit as a comp, but I put $10,000 into it, I would feel you were lazy or are incompetent - which I know you are neither.

The subject when it sold was a different product than the subject is now.

If you have comparables in more similar condition to the subject "as is" then "as was", then they are better sales. If they show no increase, you'd either have to consider whether the market is slightly declining, or why $10,000 in improvements add nothing to the value and then discuss it in the report.

Obviously, there would be a discussion on the subject's prior sale. It should only be used as supporting data anyway. But its condition would likely need to be rated as "inferior" relative to the subject today; and then do you adjust or not?

If after the improvements the value stayed the same, I'd likely just write a narrative about the prior sale, the improvements and why the value did not change, relying on the more similar, recent comps to tell the story.

If the value did go up slightly due to the upgrading, I'd probably throw it on as a fourth comp in support of the new data.

The updates don't really directly translate into $10,000 in market value, in fact I'd say maybe %25.... and yes I'd adjust.

I'm trying to get this out the door, so I'm not going to use it as a 4th comp. My boss and I just spoke, and he said to me "Anon, the reader of the report already knows about the sale and the updates, you don't need it in a grid." And he's right...

I'm still interested in what the board has to say about it, though.

Thanks so much for the responses!

 

[Mr Rex]

Anon, its been discussed many times, including yesterday:

http://appraisersforum.com/showthread.php?t=148670

 

[AnonApprsr]

I wanted to feel special Rex, as if I was the most important Anon on the board. Thanks for squashing my sense of unique, even whimsy.

 

[PropertyEconomics]

The updates don't really directly translate into $10,000 in market value, in fact I'd say maybe %25.... and yes I'd adjust.

I'm trying to get this out the door, so I'm not going to use it as a 4th comp. My boss and I just spoke, and he said to me "Anon, the reader of the report already knows about the sale and the updates, you don't need it in a grid." And he's right...

I'm still interested in what the board has to say about it, though.

Thanks so much for the responses!

In the latest Realtor magazine there is an analysis of percentage of returns for various forms of upgrades. Interesting reading.