http://batonrougerealestateappraisers.com/ – Baton Rouge Appraiser Attends Appraisal Institute’s “Appraisal Challenges: Declining Markets and Sales Concessions”, Part 2
True or False #6: A change in the median sales price in any given market will be absolute evidence of a change in that market’s values?
*Study competing listings and what percentage of competing listings had price reductions. My comment is: if less than 20% had price reductions and a normal marketing time period, then market may be stable, normal. If 50%+ had price reductions, then market is slowing, possibly declining.
True or False #7: Days on market (DOM) can be used as a tool to indicate when the market is changing?
*Enhancing Appraisal Reports With Graphs. Learned how to easily create MS Exel Spreadsheets (Graph function) to Graph Markets based on average/median/mean sales prices, time on market (# of months) and periods of time (2007 versus 2008). Helps with quantifying markets ups and downs to support market conditions adjustments.
True or False #8: A property was listed for sale at $198,000 for 180 days in a market where homes usually sell within 30 days. The appraiser concluded that the market value is less than $198,000 ?
*When using MLS Sold Comps, be sure to check the history of that comp and all of the comps you use. The most current MLS sold listing may only reflect a marketing time of 17 days on the market. However, that may have been the 4th consecutive listing of that home and the home could have actually been on the market for 620 days. It’s critical to report accurate days on the market for your sold comps.
True or False #9: The average sale price in a market can always be tracked to give an indication of changes in market condition?
*Helpful Websites For Gaining The “Big Picture” of the National and Local markets:
www.federalreserve.gov – mortgage rates and their history showing buyers may wait for lower rates
www.realtor.org – Housing Stats, Existing Home Sales Overview Spreadsheet
www.census.gov – Residential Building Permits
www.fdic.gov – State Wide Stats
www.nahb.org – National Association of Home Builders quarterly reports on housing starts
www.erc.org – Regional Market Snapshots
www.appraisalinstitute.org – According to Instuctor, the Appraisal Institute’s “Site-To-Do-Business” is an amazing site for local demographic studies for multi-family population studies – feasbility studies for multi-family construction. Also helps answer projected population, household size increasing and are households increasing.
True or False #10: In the subject’s market, the list prices today for very similar properties are lower than they were a year ago. Absent extenuating circumstances, this probably indicates a declining market?
*MLS Searches – Don’t State Price Ranges when entering your search parameters. Insert search parameters, such as age, # bedrooms, from 1,500sf to 1,800sf living area, but not price ranges. If you insert price ranges, you may be missing some comps that might clue one in to market changes.
True or False #11: Comparable listings of competing properties will tell the appraiser what the subject is worth?
*Cost Less Depreciation. There was a brief discussion regarding Cost Less Depreciation. The example given was a recent new $12,000 Screen Porch and why the appraiser only gave it a contributory value of $1,500. The instructor advocated using the Cost Less Depreciation than an arbitrary figure like $1,500.
True or False #12: The supply and demand factors for one suburban city may have an impact on an adjacent city’s supply and demand factors in the same market segment?
*Short Sales. Instructor stated several lenders had participated in this seminar over the past several months and that these lenders were overwhelmingly willing to take short sale deals rather than foreclose on homes. The small loss they will take on the short sale is generally far less than the actual cost of disposing of a foreclosure and also paying the Realtor’s commission to sell the home.
Discussion Topic:The subject is a ¼ acre site located adjacent to a golf course in Boomer City. It’s improved with a 2,500 sq. ft., one story, 2 bedroom residence with an attached garage. Will the market for this home be the same as the market for a 2 story, four bedroom home in the immediate area?
*Reporting Statistics. When reporting statistics of housing markets, an appraiser should be very careful not to violate fair housing laws. USPAP Advisory Opinion 16 prohibits value conclusions based on these factors.
*Commerce Dept Numbers. In class, it was reported that the Commerce Dept recently reported a national decrease in home values of -4.5% and median decrease of -6.5%, that’s nationwide.