Would You Guys Buy This Arguement?

[JTip]

'A' for effort brotha.

 

[Mary Tiernan]

I guess I don't understand why you are being so stuck on not using a sale that is more than one year old.

How many of these type properties sell in any given year? What is the typical marketing time?

Sounds like a unique property which then deserves a unique market analysis. I usually describe what the whole area is doing, then break out into a specific market for the subject and describe the sales data (lists, solds, pendings, expireds) etc. Then give a summary of the subject's market stable/decline/increase in values.

With the property identification and information regarding sales, you should not have any trouble utilizing a sale more than one year old.

Would you have had any problem using an older sale for the subject prior to the reporting of the declining market across America? Would you have considered it standard practice in the subject's market to search more than one year?

Don't let lender guidelines push you into a corner - you must provide a report that is a true reflection of the subject - a sale date of one year or more should be your last concern.

 

[Mike Boyd]

Certainly, there are sub-markets within a general market area. I see a similar trend in my area where homes over a million dollars have remained stable while lower end homes have diminished in value steadily. However, I have found that you really have to have a strong arguement to demonstrate increasing values. Your graph is good but I would shorten it to demonstrate the market CHANGE......when general values started falling. Include lots of narrative to walk a reader through your graph.

 

[Lawrence R.]

You're ALL kidding.......Right?

Care to elaborate on your incredulity? Remember, this is a house, not an Applebee's!

 

[WadeKoutnik]

This is why I hate time adjustments unless there are significant sales in your particular subdivision to warrant a certain dollar amount. What happened 4 years ago has nothing to do with that has happened since your 4th comp sold 12 months ago. The best you are going to get if you insist on calculating some figure is to see what comparable properties in the same direct market have sold for in the last 12-15 months and see if there is a trend. I highly doubt you will have enough data for it make much sense.

I agree with what the other poster said. Sometimes you just have to know your market enough to use commons sense. Not much in this biz is exact.

 

[Metamorphic]

What happened 4 years ago has nothing to do with that has happened since your 4th comp sold 12 months ago. The best you are going to get if you insist on calculating some figure is to see what comparable properties in the same direct market have sold for in the last 12-15 months and see if there is a trend. I highly doubt you will have enough data for it make much sense.

You're missing the point about going back 4 years. I go back that far, not because of what it tells me about the market in the last 12 months, but because it speaks to the dependability of the method I'm using to document changes in the last 12 months. If my method accurately depicts a known (e.g., an up market 4 years ago, a peaking market three years ago, a declining market 2 years ago) it lends credibility to the method's depiction of a more recent trend that is still subject to speculation, IOW, and unknown. In scientific terms we call it establishing a baseline. It allow's you to understand what parts of the data set are signal and which parts are noise.

 

[Amy Perkins]

I realize that match pairing high end sales and applying their difference to extract a market adjustment is the standard way to perform this. However, if your property is heavy on the land value or views and the other matched pairs are heavy on the improvements you have a problem. Remember all value flows to the land, land goes up and down, improvements tend to be more stable. So if your situation is that you have a good house on a fantastic lot and your matched pairs are new excellent structures with less land value, you may need an adjustment after all. Review land sales in the area and try to extract some data based on matched pairing.

 

[Joshua Fookes]

Ok, I searched for current listings that have sold within the last 4, in the $750k+ range. I found 6. The average change per month is 0.15% appreciation! Even if you assume a 3% sp/lp, you're still looking at positive territory with 2 years of appreciation on the books.

That's the good news. But then I start digging.

The first 37%'er has several expired listings over the last couple years, each one with a higher price. No evidence of improvements. This suggests to me the owner has their head up their rear and really isn't interested in selling.

Call the agent and talk to them about it. Call the seller and talk to them about it. Ask them WHY they raised the price.

The 12%'er is at an air park. The previous sale was listed as plus or minus the hanger...plus evidently since the current listing offers it as an extra but apparently not part of the list price. So its not clear if the hanger was part of the old sale price or if it was a side deal.

CALL THE SELLER. It is your job to know what is going on with the transaction if you are thinking about hanging your hat on it.

The -1% seems reasonably normal except that its a Rental which not very common for $900k houses in this area. Suggest to me some level of distress on the part of the seller....like maybe they had to move and decided to rent to help cover when it didnt sell right away. Who really knows, but its definitely funky. m2:

Don't guess. Call the seller and ask them about it. Get nosey. It is your job to know what is going on in your market. Call the agents who list properties like the subject. Ask them what THEY THINK about the market for high end homes. You will get different answers from different agents, but these are the people who rub elbows with the buyers and sellers in that market. If you talk to enough people, you will get a good "feel" for where the market is. At the very least they might even have a couple good ideas for comps for you. They may show properties that are much farther away than what you are considering in your analysis. You need to know what the market participants are doing to properly report the market conditions to your client.

The 3% is a circa 1890 Victorian that's has several listings and sales in the MLS which collectively suggest there's been a small parcel sold off at some point and unspecified renovations going on. m2:

Don't just go by what's in the MLS. Sounds like you are reading the MLS and then trying to interpret what is going on. There is rarely enough information in the MLS for these types of homes. CALL BUYERS AND SELLERS and talk to them on the phone. TALK to the agents who listed and sold the properties. GET inside the head of the buyers and sellers in that market. You will be so glad that you did, because you will be a much better appraiser for it.

The first few calls can be awkward and you may forget to ask some questions, JUST DO IT! You'll get your stride after a bit. This is the proper way to verify these types of complex assignments. Sometimes it means pounding the pavement and knocking on doors.

Good luck with it. Report back.

 

[Walter Skaggs]

Some good advice I got early in my career was don't try to be smarter than the market.

 

[Metamorphic]

Call the agent and talk to them about it. Call the seller and talk to them about it. Ask them WHY they raised the price.



CALL THE SELLER. It is your job to know what is going on with the transaction if you are thinking about hanging your hat on it.



Don't guess. Call the seller and ask them about it. Get nosey. It is your job to know what is going on in your market. Call the agents who list properties like the subject. Ask them what THEY THINK about the market for high end homes. You will get different answers from different agents, but these are the people who rub elbows with the buyers and sellers in that market. If you talk to enough people, you will get a good "feel" for where the market is. At the very least they might even have a couple good ideas for comps for you. They may show properties that are much farther away than what you are considering in your analysis. You need to know what the market participants are doing to properly report the market conditions to your client.



Don't just go by what's in the MLS. Sounds like you are reading the MLS and then trying to interpret what is going on. There is rarely enough information in the MLS for these types of homes. CALL BUYERS AND SELLERS and talk to them on the phone. TALK to the agents who listed and sold the properties. GET inside the head of the buyers and sellers in that market. You will be so glad that you did, because you will be a much better appraiser for it.

The first few calls can be awkward and you may forget to ask some questions, JUST DO IT! You'll get your stride after a bit. This is the proper way to verify these types of complex assignments. Sometimes it means pounding the pavement and knocking on doors.

Good luck with it. Report back.

I really dont think its reasonable to start calling agents about properties that you're analyzing for market trend purposes; even assuming you could find the agent and get accurate info from a 4 year old deal. Its enough extra work calling them about the one's you're actually using as comps. I did get in touch with two of the comp agents. One was clue less, the other seemed like she knew what was going on but didnt want to use the "declining" word because she didn't want her county to get branded a declining market Apparently she doesn't read the papers. Makes me wonder what the other appraisers are marking.

This report is put to bed, but what I ended up doing is writing something to the effect that: due to the extreme level of non-conformity in the high end residential properties in this mountain area, the relatively few number of sales, yada yada yada, it was not possible to definitively identify a declining market for the high end stuff but the data suggests this market may be partially insulated from declining prices, but after consideration of conversation with local agents, low, and mid range SFR data from the area, regional trends, yada yada yada, a rate -1/4%/mo for sales older than 3 months was applied.

I'd have preferred to apply something with a more analytical basis, but with less than 1 sale per month in the 1 mill price range, and all sorts of far out things to adjust for between them, I think a considered opinion is the best you can hope for.