Value over highest comp

[J Grant]

It's an AMC assignment.
I searched back to 12 months, within 3 miles, and these comps just happened to be the most comparable to the subject they are within 1.5 miles and sold in the last 3 months. I was going to call the realtor tomorrow, I try not to call people on Sundays to talk shop. The current market here has seen a decrease in active listings due to lowered interest rates, and the only "comparable" listing within 3 miles is listed at $299, I may have to back and double check that, but it's what I have listed in my workfile. The majority of homes that have been listed on the market have gone pending in 1-2 days with numerous offers over asking price. I'm in Lee County where we have one of the fastest growing housing markets in the country. I didn't want to go over 12 months, just because the market conditions have changed so much in the past 12 months, and large adjustments are usually red flags.

I spend majority of my time searching comps and sometimes, if justified, our comps are more elastic in similarity in the need to bracket a critical to value feature ( in this case, impact windows, that can easily cost 20k-30k for a house and much more for a large sf house ) , Do not be afraid to search back in time or distance, it is not a red flag if explained why you did it. A time/market condition adjustment is not that hard to make and same for a location adjustment.

More recently built houses can tend to have impact windows as do gut renovations, or higher $ sales sometimes you can search for it by feature.

In your subject case the combo of superior roof, generator and windows adds up to the value adder though not enough perhaps to merit the SC price.

 

[Couch Potato]

You say there is only 1 listing within 3 miles? I would say you need to widen the search. The whole premise of what we do is based on the idea one house is much like another and we can adjust for the differences. What other house would the buyer choose if not this one? If there are no alternative houses currently available to buy that are truly comparable, your decision on why that is the case will be the primary driver on your opinion of value. I would not be too concerned at all about bracketing, but very concerned about describing the neighborhood and market conditions.

 

[Tom D]

just close your eyes, and stop looking at the sale price if that can't be achieved with the current sales. you only concern, isn't being over the highest sale price comp. your main battle will be to defend your value, and how you determined it. i have recently, in a very long time, been going past subject sale prices, and sometimes a new high sale price. that is primarily, in my area, caused by the time adjustments. i have yet to hear back about that because my appraisal explains it all. now i have also a couple of times come lower that the sale price, but i knew my position was defendable. that should be always the case, but here you better be more than sure.
with so few sales/listings maybe 5 miles away you should look, would that buyer also do that. maybe those sales will help you or the seller. i would wanna have at least 6 sales/listings on this report. easier now when you are working on it, than later. more only helps you, less is a question asked 'why didn't you look at these'.
always say to yourself 'i never want to get reviewed', cause you never know what they will find that they don't like.

 

[fishbig010]

A Good Post and not a dumb question. What you are dealing with is a fairly common situation and where it gets difficult is when we know the property may be worth what it sold for but we simply do not have the sales data to support it and it falls outside the range of the adjusted sales. With that being said I would also dig deep and look for a few pending sales if they are at higher prices and use those for additional support . As far as the High Impact Windows, I assume those are for high winds and hurricanes, in my area we dont have those but upper end dual pane windows are adjusted at about 2% to 2.5 % for there superior energy efficiency. The generator would probably not bring in a dollar for dollar cost new but I tend to think buyers and market participants would pay up to 50% of its cost new and in an-area like yours maybe more. SO NOW the question is can you exceed the highest adjusted sale ? If all of your gross sales prices are lower than $395,000 , and your adjusted values are-also lower than $395,000, then I would say "no" and you are going to end up at the high end of your adjusted range and run out of gas at about $365K to 370K The problem is the Subjects SC Price is 7% higher than your highest comp and 16% higher than your lowest sale and so the $395K is just not there.

I agree, there is no way I am coming in near the $395. I just wanted to make sure that if I come in at $375, and my highest adjusted sales price is $378, and my highest comparable sales price is $369, that that isn't going to be some huge issue.

 

[fishbig010]

You say there is only 1 listing within 3 miles? I would say you need to widen the search. The whole premise of what we do is based on the idea one house is much like another and we can adjust for the differences. What other house would the buyer choose if not this one? If there are no alternative houses currently available to buy that are truly comparable, your decision on why that is the case will be the primary driver on your opinion of value. I would not be too concerned at all about bracketing, but very concerned about describing the neighborhood and market conditions.

just close your eyes, and stop looking at the sale price if that can't be achieved with the current sales. you only concern, isn't being over the highest sale price comp. your main battle will be to defend your value, and how you determined it. i have recently, in a very long time, been going past subject sale prices, and sometimes a new high sale price. that is primarily, in my area, caused by the time adjustments. i have yet to hear back about that because my appraisal explains it all. now i have also a couple of times come lower that the sale price, but i knew my position was defendable. that should be always the case, but here you better be more than sure.
with so few sales/listings maybe 5 miles away you should look, would that buyer also do that. maybe those sales will help you or the seller. i would wanna have at least 6 sales/listings on this report. easier now when you are working on it, than later. more only helps you, less is a question asked 'why didn't you look at these'.
always say to yourself 'i never want to get reviewed', cause you never know what they will find that they don't like.

I should have clarified better. There are plenty of settled sales, in the area, just a lack of active listing/pending properties. I will definitely broaden my search for actives, as I try to use 2 minimum in every report. They are just hard to come by in our current market right now. And as you said, describe the market conditions! I'm with you though Tom, on adding as many comparable sales as I can to cut down on the questioning of my value opinion. Nothing worse than being considered as non-credible. Thank you both for your inputs! They are much appreciated!

 

[Zoe]

I would go out further where the unadjusted sales prices bracketed the indicated value opinion you arrive at even if I included as extra comparable. You sound like you have a handle on it. It may be an overimprovement, but you can likely bracket the subject's indicated value with a sale somewhere close by. May be in superior location or other factors that are superior to bracket the indicated value opinion you arrive at.

 

[fishbig010]

I would go out further where the unadjusted sales prices bracketed the indicated value opinion you arrive at even if I included as extra comparable. You sound like you have a handle on it. It may be an overimprovement, but you can likely bracket the subject's indicated value with a sale somewhere close by. May be in superior location or other factors that are superior to bracket the indicated value opinion you arrive at.

I will look for it, thank you Zoe!

 

[Zoe]

I will look for it, thank you Zoe!

No problem. Depreciated cost approach to support your adjustments can work too. I know I'm creating more work for you. LOL It sounds like a really nice house.

 

[Mike Kennedy]

Correct me if I missed it - location? urban, suburban, rural??

 

[Zoe]

I would rather use qualitative and jump out subject subdivision, but you can do depreciated cost approach in sales comparison approach to support your adjustments. Income approach too possibly in Florida especially. Just have at least some support for an unadjusted sale or few that bracket your final opinion of value. Tell lender it's complex and taking longer. Talk to buyer if you can and ask their primary motivations.