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What is your support for "declining values"?

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leelansford

Thread Starter
Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
If in any of your recent appraisals you have concluded that "values are declining", what data do you use in support of your conclusion?

Do you rely on a comparison of "average sold price" from one period to another...or...what?

Just wondering.
 

ockyappraiser

Senior Member
Joined
Sep 26, 2002
Professional Status
Certified Residential Appraiser
State
Kentucky
I look for the active listings within a given distance from the subject. . .look at the range, median and average values. Then compare to sales in the same distance range from the prior year. . .also range, median and average.

We have to interpret "declining values" as the lender would. Lenders want to know. . .are homes in the subject immediate area stable, declining or increasing in value. The lenders will base this on listings compared to sales. . .that is why many want two listings gridded out in reports (i.e. Landsafe).

What I have found is that "declining" vs "increasing" varies greatly depending on what part of the metro area I appraise in the subject is located.
 

Lee in L.A.

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
Our MLS allows you to export the listings from your search.
Whatever data fields you want. Then you can import to a spreadsheet for easier analysis. Sorting, etc. :banana:

Realquest allows custom exports too, but of course has no actives.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
since the beginning of 2006, all data searches retro 3 years identifying trends in Actives, Contracts, Closed by property type, style, actual age, quality & utility, school district (heavy impact in my markets), LP/SP ratios, Concession trends to reliably summarize and report SPECIFIC elements impacting a subject. Heavy emphasis on "comparable and competive versus "all".....generalizations typically are unreliable to accurately depict trends.
 

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
If an appraiser SOLELY relies on the historic closed sales, they will ALWAYS be behind the curve.

If you don't analyze ALL the market data, inclusive of offerings, expired, pendings and solds within a prescribed period of time, how do you establish an absorption rate? How do you establish the market is appreciating, stable or declining.

The answer is supply and demand and that premise comes before the closed sales, IMO.
 

Jason Barber

Junior Member
Joined
Feb 16, 2006
Professional Status
Certified Residential Appraiser
State
Michigan
I ALWAYS check stable. LO's tell me this is correct.

Sincerely,

"Skippy"
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
I follow several steps:

1. I have a tab of median values and average price per square foot month by month for my county at the end of which I show the past 30 day cycle (beginning on the 1st and 16th day of the month) over the same 30 day cycle from a year ago. I put this in my comments section of page 3.

2. On the addendum I break down the subject market year over year for the median value from the past 12 months, the average price per square foot over the past 12 months, the LP/SP ratio and the average days on market with the number of sales. I compare these figures to those from the prior 12 months.

3. If my market is large enough I then break that down to the last full 3 month cycle compared to the three month cycle from a year ago.

4. I next show the number of active listings in the market and provide the average list price per square foot and using the projected sale price by applying the LP:SP researched above, I show the project average sale price per square foot.

5. I then show the pending sales in the market the same way I showed the listings.

6. I include at least one pending (if available) and market listing in the sales comparison approach.

7. If I am lucky...but it would be very lucky these days...one of my sales will have closed twice within the year.

Based on all of the data I look for the most consistent way to express the time adjustment. Very often, especially in highly conforming markets, the it is a decline in value based on the price per square foot where I take the drop in value by sf, determine the percent per day over a one year period, count the days from contract date to effective date for each sale, multiply that by my daily % decrease, apply that to my price per square foot for the comp, multiply the result of that by the square foot of the comp and round the adjustment to $100 or $500 or $1,000 (whichever makes sense for the given market). Other times, especially where the market is not so conforming, the median value percentage drop works out best.
 

Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
If in any of your recent appraisals you have concluded that "values are declining", what data do you use in support of your conclusion?

Do you rely on a comparison of "average sold price" from one period to another...or...what?

Just wondering.

In short, yes but more.

When the market is changing the both average sales prices for the big area and the micro area/comparable type should both be analyzed, and possibly for different period segments (monthly, quarterly, yearly). Pendings' and listings' prices should also be included. Non price factors such as 'days on market' shpold also be discussed.

It's different with every assignment depending on what data is available.
 
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