With respect, I said I’d look at them; I distinctly noted that those would not be the only ones I’d look at – and they weren’t. I looked at the larger (and smaller) homes in the area as well as the newer homes. Those three are the ones that are the most proximate, and on paper, the most similar sales.
The “6-month” rule is indeed a relevant one to a lender, but that doesn’t mean that the (one) 6.5-month old dated sale is irrelevant, which is why I also looked at the more recent but less proximate sales and also why I looked back in time to compare what these outside areas were doing in relation to this property’s neighborhood at the beginning of this year. I didn’t make my “5% remark” without basis.
Yes, an appraisal for mortgage underwriting does rely primarily on closed sales, which by definition occurred in the past. But even you would have to agree that the actives are indicative of what’s going on only to the extent that their upper ranges will exceed what these homes will close for if they close at all. Remember, before those sales close many of them will have to get by the appraiser and the lender’s review, neither of which are as gauranteed in 2007 as in 2006.
FYI, the recent performance of the closed sales includes closing prices that are predominantly at the bottom of their respective ranges and in many cases below those ranges. I like pending sales a lot too, but I know better than to project closing prices at the upper ends of those ranges, because over the last 10 months the data in this area doesn’t support that.
Your job as a realty agent is to be an advocate for your client, and listing prices are a position to start from; not a freestanding indication of value. I would in no way be disappointed if you established a listing price well in excess of what I’d appraise a property for. In fact, I’d expect you to do it, ’cause I recognize that’s your job and I know better than to use my requirements as an appraiser to judge your actions as a realty agent. Apples and oranges.
Who knows, maybe with more research and in seeing these properties in person I’d change my mind. Come to think of it, there’s no ruling out a lower opinion of value – that happens a lot more often as the higher opinion.
FTR, I did qualify my remarks quite a bit and I did express my opinions as opinions, not fact. The thing is, if I were appraising this property and a buyer and seller had decided on $900k, the burden would be on the agents involved to make their case for that value because the trends demonstrated by the closed sales don’t appear to support that value, let alone make it obvious.
