Verifying Sales

[matt hawk]

This may be better suited as a poll, but I'm also looking for some narrative replies (forgive me). What questions do you ask property owners when verifying sales? I certainly understand you can't do a full length interview, not if you want realistic info, so what questions do you put at the beginning of the conversation? As a follow up question (poll), how successful are you in your verification process, meaning, what percentage of folks are willing to give you the time of day?

 

[PL1957]

This may be better suited as a poll, but I'm also looking for some narrative replies (forgive me). What questions do you ask property owners when verifying sales? I certainly understand you can't do a full length interview, not if you want realistic info, so what questions do you put at the beginning of the conversation? As a follow up question (poll), how successful are you in your verification process, meaning, what percentage of folks are willing to give you the time of day?

Answering your second question first ...

I find people (buyers/sellers/brokers) are much more willing to give you the time of day if they feel you've already put in the time to obtain the basics about the transaction and are merely looking for verification as opposed to ALL of the info.

In other words, the odds of a person answering a question phrased "Public records show you bough ABC for XYZ. Is this correct?" are much greater than "What did you pay for ABC?"

The questions asked are totally dependent on the property type. Much different info is necessary for multi-tenant properties vs. owner-occupied, etc.

The participant interview should be the LAST thing you do, AFTER exhausting all other sources, but is is something that should always be done.

 

[H.B. Userman]

PL has a very good point. I always ask the question "So, do you feel you got a good deal or what is a fair transaction?" if its the buyer. If it's the seller "Do you think you sold it too cheap or was it a pretty fair transaction?" Of course this info needs to be taken with some salt, but I've gained good insight asking those questions.

 

[Hugh Griffith]

PL has a very good point. I always ask the question "So, do you feel you got a good deal or what is a fair transaction?" if its the buyer. If it's the seller "Do you think you sold it too cheap or was it a pretty fair transaction?" Of course this info needs to be taken with some salt, but I've gained good insight asking those questions.

Asking both parties is much more reliable than asking only one party, and it is nice when you get the same $ reply. Also always nice to confirm it on the deed tax or something similar. All aside, it is prudent to know as much about the transaction as possible before trying to confirm the $ by asking.

 

[Serge Paquette]

I'd be very careful to avoid leading the person being interviewed to certain answers. Too many leading questions are likely to produce a less accurate response and write-up. Open ended questions are better than using only questions which yield a yes or a no; though those are useful too. I offer some kind of reciprocity right away, that seems to get things rolling. Getting the contract date is a good question. Sometimes the contract date is years before closing.

Avoid things like "was the cap rate 10%?". Getting the rental income, terms, escalation, expenses and so on will result in a much better cap rate indicator and help you understand why a cap rate might be low or high.

 

[ginna currie]

Here in NY, everything is either very public or VERY PRIVATE. If it is "very private", i.e the Hamptons, I try talking to the real estate agents, attorneys. Neighbors are also a good source of irrelevant information that sometimes can be helpful.

 

[Joe Christensen]

Public data is pretty good in Los Angeles and I feel really stupid asking if it is correct. Therefore, when dealing with brokers, I identify myself as an appraiser and ask for a minute of their time. If it is granted, I then identify the property and ask if there is anything unusual about it which I should be aware of. Regardless of the answer the next question is are zzz dollars and YYY selling date correct. I thank them and get off the phone. It works pretty well. Joe

 

[PL1957]

Public data is pretty good in Los Angeles and I feel really stupid asking if it is correct. Therefore, when dealing with brokers, I identify myself as an appraiser and ask for a minute of their time. If it is granted, I then identify the property and ask if there is anything unusual about it which I should be aware of. Regardless of the answer the next question is are zzz dollars and YYY selling date correct. I thank them and get off the phone. It works pretty well. Joe

If that's all your doing, your missing most of the boat. The main reason to talk to a buyer/seller/broker is to try to get inside their head to figure out the motivaion behind the deal. How did the broker price the deal? How did the buyer analyze it? What was important to them? How did this sale differ from the competitive set? Unless the appraiser can provide these insights into the transaction, he's not adding anything beyond what a good AVM can offer.

 

[ginna currie]

While out shooting comps today(garages)... I conveniently had 3 comps all within a spitball throw of each other, so I asked as many questions as possible.. Was it a an arms length transaction(nope), can I see the inside(sure), were there any unexpected capital expenditures and how much(not those exact words--new roof). One seller moved across the street so I went across 4 lanes of traffic and asked about the locational characteristics,etc.
I feel much more confident about the sales I chose since interviewing the market participants.