Appraisers' Free Forum

have a question · Member Joined: 09 Nov 2007 Posts: 5

Hi. I am not an appraiser, so I'm hoping for some help from people here. I have made an offer on a house, and the seller provided us with an appraisal to justify their asking price (which is obviously below our offer price). I have read residential appraisals before (but not in this state) so I am somewhat familiar with the methodology, but the appraisal I was given raised some questions for me. I won't go into all the points of confusion, but here are two main questions:

1) The appraiser assumed a stable market and 0-3 month marketing time. Therefore, should there be adjustments to comps that took longer than 90 days to sell?

2) One of the comps used was not an actual sale, but a home that is for sale two doors down from the subject. I have not seen this done before and am wondering if it makes sense. In other residential appraisals, I have seen competing properties on the market listed and discussed, but not included as a comp used for calculating indicated value by the sales comparison approach.

Thanks to everyone here in advance for for any responses! Very Happy

**Annemieke Roell** · Posted: Fri Nov 09, 2007 2:38 pm Post subject:

Hi there and welcome to the forum.

It will help quite a bit if you can tell us where you are located.
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have a question · Member Joined: 09 Nov 2007 Posts: 5

Oh, I'm sorry. The house is in an established non-HOA neighborhood in Scottsdale, AZ.

**Otis**

have a question · Member Joined: 09 Nov 2007 Posts: 5

Thanks very much for your reply.

The appraiser used a total of six comps, one of which was the home still for sale. All comps used sold in Sept. '07. My realtor gave me a list of all sales since May, '07, and there were other comparable sized homes sold in August and October, which made me even confused about why you would use a home still for sale.

**Otis** · Posted: Fri Nov 09, 2007 4:21 pm Post subject:

You might want to look at the effective date of the appraisal. I'm not familiar with the Scottsdale market but if it's a declining market, then the opinion of value may not be valid as of today's date. Also, appraisals are not for the life of the property (in other words, they become ineffective after a certain amount of time [typically not considered applicable after 120 days for most lenders and/or investors]). If the appraisal was completed in April or May, then it's over 120 days old.

Mako · Member Joined: 11 Aug 2007 Posts: 849

**Jim Plante** · Posted: Fri Nov 09, 2007 4:42 pm Post subject:

**Otis** · Posted: Fri Nov 09, 2007 5:02 pm Post subject:

have a question · Member Joined: 09 Nov 2007 Posts: 5

Thanks to everyone for the helpful responses.

The appraisal is current (dated 10/15/07). I understand that you can have a stable market and a DOM of 90 or more. I guess my question was that if the appraiser is valuing the property assuming a marketing period of under 90 days, would an adjustment have to be made to the comp valuations for homes that took over 90 days to sell, or is that already factored into the selling price. I don't know if I'm being clear with my question. Another way of asking is, of comp X sold for $xxxxxx but took 300+ days to sell, does value have to be adjusted to reflect a marketing time of under 90 days. Our realtor is emphasizing to us that the seller had an appraisal done to price it to sell quickly, so I guess I'm questioning if the appraisal is really valuing property that way.

**Otis** · Posted: Fri Nov 09, 2007 6:38 pm Post subject:

mr rex · Member Joined: 11 Aug 2007 Posts: 350

One thing that you might not be seeing in the comps DOM is reductions in list price to get it into a reasonable price range to sell. DOM is only pertinent after its priced appropriately and any changes in list prices are considered. In a stable market with 90 day normal marketing, a comp that took 300 days was likely way over priced to begin with, and then reduced until it reached a reasonable market price. Sometimes being on the market too long at a high price also snowballs, as Realtors just ignore the overpriced comp even after price reductions, because in the back of their mind, they remember dismissing it, but forget why after a while.
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have a question · Member Joined: 09 Nov 2007 Posts: 5

Thanks for your responses.