What Do You Consider To Be Data Sources And Verification Sources?

[residentialguy]

Asked one why he bought this 113 acres...he is my neighbor who makes a lot of money and he basically said because he can and he didn't want to see it cut up into housing. Rich people do things like that. He'll probably clear some of the overgrown parts, fence it and put Charolais cattle on it. But he paid far too much for a "legacy farm" that has been in the family for over 100 years simply to grow cows.

Another chicken grower I know bought some likewise overpriced land. I don't need to ask why. He's going to put $3 million dollars worth of barns on it. Does it matter if he paid $4000 an acre or $5000 an acre when that's not even 10% of the overall investment? I don't think so. My problem is to figure out if that is a "market price" or not.

All the more reason to call. Last thing I want to use as a defense is "Well, I just figured..."

 

[Have Laser-Will Travel]

So, how do you know the motivations of the buyer and seller, if they are related, how much the property would sell for if the buyer didn't need the concessions to be paid by the seller, etc???? These can have a profound effect on the sale price. And fyi, state boards have slapped the appraiser with a violation for not verifying these things with the party of the transaction.

For residential work, I think it is nominally beneficial and impractical most often and at other times critical but probably more in the case where the range of comparable sale prices is wide or the comps are poor, etc.. I think it is unfair to ask the appraiser to determine the motivations of buyers and sellers. We are not psychologists or private investigators and can't tell the impact on price from things such as a buyer being the niece of the seller. If it really made a difference, it would show in the price. That's the comparable I call on and ask why the price is so low but, no on every comparable.

And how does anyone know if what they heard about a transaction is true or complete or that there weren't offsetting factors? This is just another attempt to turn an estimate into an absolute and to place that burden on the appraiser. I provide an estimate of value based on reliable data with assumptions and limitations. It is an estimate-reasonable and supported by not one but, three sales or more. I've reviewed other sales and observed trends. I've completed the 1004MC. I may have noted statistically-generated estimates.

If sale occurs using MLS, the probability that it is at arm's-length is high. Concessions are reported in the MLS in the two services that I've used and are nominal, about as nominal as being off on the estimated contributory value of a pool. Maybe the buyer placed $40,000 value on the pool and not $15,000. Are we going to be asked to interview the buyer about the pool? If concessions were significant, the sale would be an outlier. Technology can run hundreds of thousands of analyses and still be no more accurate than when it runs 10 analyses. In the same way, you can knock on doors and ask to tour comparables and adjust for crystal doorknobs and interview buyers and sellers and not be anymore accurate. It is an estimate.

 

[Have Laser-Will Travel]

So, how do you know the motivations of the buyer and seller, if they are related, how much the property would sell for if the buyer didn't need the concessions to be paid by the seller, etc???? These can have a profound effect on the sale price. And fyi, state boards have slapped the appraiser with a violation for not verifying these things with the party of the transaction.

For residential work, I think it is nominally beneficial and impractical most often and at other times critical but probably more in the case where the range of comparable sale prices is wide or the comps are poor, etc.. I think it is unfair to ask the appraiser to determine the motivations of buyers and sellers. We are not psychologists or private investigators and can't tell the impact on price from things such as a buyer being the niece of the seller. If it really made a difference, it would show in the price. That's the comparable I call on and ask why the price is so low but, not on every comparable.

And how does anyone know if what they heard about a transaction is true or complete or that there weren't offsetting factors? This sounds like another attempt to turn an estimate into an absolute and to place that burden on the appraiser. I provide an estimate of value based on reliable data with assumptions and limitations. It is an estimate-reasonable and supported by not one but, three sales or more. I've reviewed other sales and observed trends. I've completed the 1004MC. I may have noted statistically-generated estimates.

If sale occurs using MLS, the probability that it is at arm's-length is high. Concessions are reported in the MLS in the two services that I've used and are nominal, about as nominal as being off on the estimated contributory value of a pool. Maybe the buyer placed $40,000 value on the pool and not $15,000. Are we going to be asked to interview the buyer about the pool? Technology can run hundreds of thousands of analyses and still be no more accurate than when it runs 10 analyses. In the same way, you can knock on doors and ask to tour comparables and adjust for crystal doorknobs and interview buyers and sellers and not be anymore accurate. It is an estimate.

 

[Terrel L. Shields]

Sellers motivation is normally more important than buyers and they often aren't available or are coy. Agent may be the only source.

 

[residentialguy]

I think it is unfair to ask the appraiser to determine the motivations of buyers and sellers. We are not psychologists or private investigators and can't tell the impact on price from things such as a buyer being the niece of the seller. If it really made a difference, it would show in the price. That's the comparable I call on and ask why the price is so low but, not on every comparable.

Whether or not you think it's unfair, is moot. It's required. If you don't talk to them, how do you know it was an arm's length transaction? How do you know how those concessions affected that sale? I don't have a problem with talking to them. You don't need to have a couch therapy session with them. Why did they want to sell? Did the buyer and seller know each other? Why did the want to buy that house over all the others? These simple questions reveal many answers. The house had good floor plan and views...typical motivations. The house is next to his dying mom...not so typical motivations.

 

[ucbruin]

Whether or not you think it's unfair, is moot. It's required. If you don't talk to them, how do you know it was an arm's length transaction? How do you know how those concessions affected that sale? I don't have a problem with talking to them. You don't need to have a couch therapy session with them. Why did they want to sell? Did the buyer and seller know each other? Why did the want to buy that house over all the others? These simple questions reveal many answers. The house had good floor plan and views...typical motivations. The house is next to his dying mom...not so typical motivations.

Using your logic...
Wouldn't it be necessary (and logical) to verify with both the seller and the buyer regarding the "motivations" of each of them and the their interpretations of the "terms" of the sale?
2 sources of verification....
Correct???

 

[residentialguy]

Using your logic...
Wouldn't it be necessary (and logical) to verify with both the seller and the buyer regarding the "motivations" of each of them and the their interpretations of the "terms" of the sale?
2 sources of verification....
Correct???

Yes, that is optimal... Or their agents

 

[Have Laser-Will Travel]

Whether or not you think it's unfair, is moot. It's required. If you don't talk to them, how do you know it was an arm's length transaction? How do you know how those concessions affected that sale? I don't have a problem with talking to them. You don't need to have a couch therapy session with them. Why did they want to sell? Did the buyer and seller know each other? Why did the want to buy that house over all the others? These simple questions reveal many answers. The house had good floor plan and views...typical motivations. The house is next to his dying mom...not so typical motivations.

MLS reports concessions.

If the seller goes to open market, that indicates that there is no close-range buyer at hand. Beyond that, I have corroborating sales and analyses.

How much do you adjust for "next to dying mom"? Or how would you weight it? If it was listed at market value, he may not have paid anything more than market value.

I think it would be more often useful when trying to find out about the property itself as opposed to transaction conditions. And I do that if things are not lining up. I'm not denying the usefulness of making any calls but, I'm saying that reaching an unbiased party for each comparable is not worth it, in my opinion.

I'm not sure if you are reading my replies. At this point I think we are going in circles.

 

[Have Laser-Will Travel]

Whether or not you think it's unfair, is moot. It's required. If you don't talk to them, how do you know it was an arm's length transaction? How do you know how those concessions affected that sale? I don't have a problem with talking to them. You don't need to have a couch therapy session with them. Why did they want to sell? Did the buyer and seller know each other? Why did the want to buy that house over all the others? These simple questions reveal many answers. The house had good floor plan and views...typical motivations. The house is next to his dying mom...not so typical motivations.

BTW, who do you contact to confirm the sale? This is supposed to be an unbiased source, correct? I don't even know who that would be. (and can you please tell me how to delete a reply? I'm doing something wrong sometimes and making duplicate replies).

 

[residentialguy]

[QUOTE="Have Laser-Will Travel, post: 2819371, member: 124874]

If sale occurs using MLS, the probability that it is at arm's-length is high. Concessions are reported in the MLS in the two services that I've used and are nominal, about as nominal as being off on the estimated contributory value of a pool. Maybe the buyer placed $40,000 value on the pool and not $15,000. Are we going to be asked to interview the buyer about the pool? Technology can run hundreds of thousands of analyses and still be no more accurate than when it runs 10 analyses. In the same way, you can knock on doors and ask to tour comparables and adjust for crystal doorknobs and interview buyers and sellers and not be anymore accurate. It is an estimate.[/QUOTE]
Concessions are reported and typically they affect the price dollar for dollar, however we can't just assume that. Neither can we assume that it was an asthma length transaction.
I'm glad you put that example of the pool on there. If that pool only have a contributory value $10,000 in the in the marketplace and they like it so much they think it's worth $40,000, that's an atypical motivation from someone who is not knowledgeable in the market.