Would you adjust for short marketing time?

[Mztk1]

I don't make adjustments for DOM. But if there is a comp that spent a relatively short period on the market and it is adjusting lower then the other sales and I have to use it, I will explain it in my comments and give it less weight.

 

[Wayne Tomlinson]

What I intended is that there is no magic answer to the question.

The market is the market. and no formulae, just as no set of canned comments will serve to allow the appraiser to say that "I always do......" whatever.

You have to use all your skills, and not rely on rules of thumb.

Sorry if I didn't explain well enough.

Wayne Tomlinson

 

[Caterina Platt]

I don't make adjustments for DOM. But if there is a comp that spent a relatively short period on the market and it is adjusting lower then the other sales and I have to use it, I will explain it in my comments and give it less weight.

This is the right answer. Sometimes people leave money on the table. Knowing the reason by verifying the sale is important, but creating an adjustment to have a prettier range of adjusted values isn't proper. Distress sales, uninformed sellers, or non-arm's length transactions are your most common reasons for lower than market transfers. Generally, it makes the sale a non-comp. If you have to reflect it, fine. Just don't try and dork the data. It is what it is.

 

[KD247]

Three good answers in a row! I wonder if there's a parallel between adjusting for Days on Market and adjusting listings for typical reductions from asking price (an LP/SP adjustment). Neither of these adjustments reflect physical differences - both attempt to estimate the market's pricing decisions and are based on general trends. As Caterina says, it doesn't sound right to create an adjustment just to level out the adjusted sales prices.

 

[Lee Lansford]

...

When you see the marketing time for the comps you are using is in the 45 - 60 day range, and then one of the sales sold in 10 days...

Would you make some sort of upward adjustment to reflect the presumed under pricing of this house?...

Thoughts?

Regards

Hal

"Thoughts?"

Yes.

A fast marketing time MIGHT indicate:

a) The property was fairly and competitively priced (reflecting the current market) and reasonably should be the next to sell;

b) The property was priced too LOW (below market)!

c) The seller was atypically motivated.

The appraiser's next step is to determine what was the most important factor that influenced the sales price.

And, no, I would not adjust upward for a perceived "low" price. The sale may, or may not, be a reasonable reflection of the market. Everything that sells is not necessarily a "comp".