• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Winter Versus Spring Market

Status
Not open for further replies.

Digger88

Elite Member
Joined
May 11, 2010
Professional Status
Certified Residential Appraiser
State
Virginia
my winter market was awful and now the spring market is on fire. if i use my most recent comps (winter market) some are coming in low because of depressed winter values. couldnt you argue the best comps are ones that sold in the most comparable market which was last spring? ive never done this mind you because i just use most recent comps but the thought has crossed my mind.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
make time/market condition adjustments to the older sales see what comes out- winter just ended these sales are not ancient history, are they? We are not supposed to be biased if prices come in lower or higher, the only reason then for rejecting them is they were lower...

If your market is predictable pattern cycling in and out of a hot spring market, then reconcile that increase across 12 months ?

Your idea is to skip back to last spring sales and pass over the newer sales because last spring sold higher? A market encompasses more than just a season but perhaps include one of those older sales to indicate a time adjustment for a recurring spring price increase ( do prices go back down in summer?.

Be careful though about relying on last year spring sales prices-, your market may be different but in my market area I see in a number of subdivisions houses sold for higher prices a year back as interest rates were lower then.
 
Last edited:

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
my winter market was awful and now the spring market is on fire. if i use my most recent comps (winter market) some are coming in low because of depressed winter values. couldnt you argue the best comps are ones that sold in the most comparable market which was last spring? ive never done this mind you because i just use most recent comps but the thought has crossed my mind.
If your market is truly seasonal in nature then, yes you can make a good case for using comps from last spring and you should be able to justify doing that pretty easily by including a detailed narrative explanation and a summary of market data going back several years that shows the seasonal swings in sale prices in your market (a graph or table would be good to demonstrate this data). If you do that though, you certainly should also include the most recent comps from the winter market and explain why you weighting those comps less than the comps from last spring (if that is what you choose to do.

This is not a difficult issue to address, it just takes a little extra time and effort to address properly
 

TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
I also work the DC suburbs and Digger is correct, there was a slight give back in pricing over the winter (which is typical), however due to the low available inventory, prices are taking a huge jump this spring with the start of the spring market. From what I am seeing, going back to last spring would still fall short of the contracts now being seen this spring. I have only been able to find support for the current offers on half of the recent appraisals I've completed, there is really nothing to do until some of these spring settlements take place with the higher pricing. Using current contracts doesn't really help much either as many contract offers are above the stated list price shown on the MLS. The bozo agents put in a 10 day appraisal clause or whatever on the contracts, even if the deal is not scheduled to settle several months down the road, if they would wait a month or two, there probably would be support for their prices at that time once the settlements come on board.
 

A K

Elite Member
Joined
Jul 31, 2013
Professional Status
Certified Residential Appraiser
State
Maryland
That's what I have been saying. Prices gap up in the spring when undersupplied. The typical method of applying market conditions adjustment of x% per month is no good. Makes us look stupid.
 

A K

Elite Member
Joined
Jul 31, 2013
Professional Status
Certified Residential Appraiser
State
Maryland
One of the reasons appraisers are becoming irrelevent.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
This thread brings us back to the fundamental question ; what a MV purpose appraisal is and what it is not. Is the appraisal purpose to hit a trending price or future price indicator , or is to opine the opinion of market value as of eff date.? In an appraisal, as designed, a MVO and a pending price might differ at times . This does not make us look "stupid", it means the appraisal itself has certain limitations. These limitations are the fundamental element that sets an appraisal apart as a product. While the built in limitations make an appraisal reliable for purpose of the intended users, it can frustrate everyone else.

How to handle a seasonal price surge?
I can't provide "the " answer ( can anyone..) However a possible way to handle it could be if the prices are higher during spring 3 months, the other 6 months are stable, and 3 month winter prices are lower, and this happens in a pattern year after year, why not reconcile the seasonal affect on price across the past 12 months? Then any other additional market or price trend could be adjusted for , after the seasonal price trend is separated out and reconciled on an annual basis. .

If it just follows the latest season, would a MVO jump in large amounts, much lower in winter and much higher in spring? One way to gain perspective is to revisit how the MVO is stated. It is stated: ( paraphrase) "What the property should bring AS OF the effective date" . It is not stated "What the property would sell for ON the effective date".

It asks what the property should bring according to the appraisal, it does not ask for a sales price opinion.


Why does the statement read "as of", and not "on"? It is not a casual choice; AS OF includes the past sale comps forward up to ( as of ) the effective date. Of course appraiser also considers the pending / listing and inventory trend as of the effective date.. However, considering the listings and pending doe not task us with providing a future value opinion beyond the effective date ... (unless a providing a future value opinion is stated as the purpose of assignment )
 
Last edited:

TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
The issue is there are times when the past data does not keep up with the CURRENT market changes taking place. Prices are rising sharply not only because of the seasonal cycle but even more so because of the shortage of available inventory. Because of this inventory shortage, that also means a real shortage of current data. Some assignments we appraisers know prices have changed to new higher levels, but there is no data to support that knowledge until settlements take place at the new higher levels. The best advice to the real estate agents I could offer is not to be one of those first settlements, like I mentioned, agents are working against themselves when they put in 10 day or whatever appraisal clauses on deals that are not scheduled to settle for several months down the road. During the boom years, there usually was a lot of current data to keep pace, and many agents knew not to accept the highest offers, but instead maybe took lower offers if the buyers were putting a lot more money down where the appraisal value was not as critical, etc. In my opinion if prices are increasing at such fast levels, it is better for the purchasers to have to put more of their own money on the line to confirm the newer pricing levels are fully legit.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Shift caps key not working? Winter markets are smaller, prices can be lower. The gorillas in the room are the rise in interest rates and rising lumber prices.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
The issue is there are times when the past data does not keep up with the CURRENT market changes taking place. Prices are rising sharply not only because of the seasonal cycle but even more so because of the shortage of available inventory. Because of this inventory shortage, that also means a real shortage of current data. Some assignments we appraisers know prices have changed to new higher levels, but there is no data to support that knowledge until settlements take place at the new higher levels. The best advice to the real estate agents I could offer is not to be one of those first settlements, like I mentioned, agents are working against themselves when they put in 10 day or whatever appraisal clauses on deals that are not scheduled to settle for several months down the road. During the boom years, there usually was a lot of current data to keep pace, and many agents knew not to accept the highest offers, but instead maybe took lower offers if the buyers were putting a lot more money down where the appraisal value was not as critical, etc. In my opinion if prices are increasing at such fast levels, it is better for the purchasers to have to put more of their own money on the line to confirm the newer pricing levels are fully legit.

Seems like we agree... Aka it is by intentional design that an appraisal is not meant to hit the latest CURRENT change, since the appraisal also considers past sales etc. We can adjust for seasonal on it's own basis of whatever pattern occurs yearly, and then adjust for other market changes and conditions. I would presume part of what feeds into a seasonal price surge or dip is the inventory S/D?

Let the brokers handle their own problems with pricing and qualified buyer putting down cash. The brokers like to apply pressure to hit a high $. and part of that pressure is making comments like "appraisers are not keeping up with the market "
We have a job to do, opine MVO for our client, they have their job to do which is buy and sell properties. RE agents should be aware if their buyer is using financing and the SC price is high that there might be a gap between the appraisal and SC price. Funny how RE agents who have been in the business for 20 years can act shocked when it happens! I've literally had a few say, "this has never happened before" . Really? In 20 years? some of them should get academy awards for acting...
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks