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RubberStamp

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Reply with quote  #1 
So in a market that is not declining..  Does FHA require any active listings at all? 
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We argue this: Meanwhile the agent's assistant just did 5 unofficial appraisal inspections they paired with a Zestimate and granted 90% LTV - all guaranteed no buy back.
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johnmbryant

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Reply with quote  #2 
FHA does not require active listings.  The requirement for active listings in a declining market was a product of ML 2009-09 which was superseded by the 4000.1 manual.
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Bobby

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Reply with quote  #3 
99% of my “clients” request at least one. In declining markets they ask for two.
They make since being put on the report, if you look and think about the overall product.

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johnmbryant

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Reply with quote  #4 
Adding comparable listings is not against the rule.  If the client wants one (or more) as part of the assignment conditions, you are obliged to provide one (or more).
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RubberStamp

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Reply with quote  #5 
My biggest client I've had to add 2 listings to every report.  That means a minimum of 5 comps on every report.  Probably added up to 15-25% more work than necessary. Doing up to 50 a month I estimate probably days if not a full business week per month of extra work meeting that request.

Just re-read their engagement letter and somewhere along the line they added in the fine print, quietly in the dark of night, stip number 254 or something, that actives are no longer necessary unless in a declining market. 

What a relief..  but now volume is down 50%.. so not as big a deal.   But I'm testing it out now and just wanted to make sure in case I get push back.

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We argue this: Meanwhile the agent's assistant just did 5 unofficial appraisal inspections they paired with a Zestimate and granted 90% LTV - all guaranteed no buy back.
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treskirkland

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Reply with quote  #6 
All but one of my clients require at least one listing. And most require two for FHA no matter what the market conditions are (even though it is not a FHA requirement)...   
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BillDing

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Reply with quote  #7 
I will add a list of some comparable listings in my additional comments.  I don't put them on the SALES comparison grid.  They aren't sales, not to mention is less food to feed the CU data monster.
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Meatloaf

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Reply with quote  #8 
Quote:
Originally Posted by BillDing
I will add a list of some comparable listings in my additional comments.  I don't put them on the SALES comparison grid.  They aren't sales, not to mention is less food to feed the CU data monster.


When you take a listing and apply a sales price to list price adjustment... it becomes a "sale".  You can then choose to weight or not weight the "sale" based on the fact that it hasn't closed yet and there is a great deal of uncertainty in the adjustment made.  But when you apply the sale/list adjustment it is treated as a "sale".

Listings can often times be better comps than sales in a dynamic market.  To ignore them or to say that they are meaningless or to give them no weight is silly.  Listings/pendings are VERY IMPORTANT!!!!!!

I put at least two in every report.  I like to use the most competitively priced listing as well as the least competitively priced listing.

Lets say you look at a house on monday and the client puts the report on hold for over a week.  There WAS a listing of a house identical that went pending and closed on friday.  The following monday you are given the green light.  Now you have a LISTING with a KNOWN sale price.  Are you telling me you wouldn't grid that out and give it weight?  OHHH I FORGOT>>> Taking comp photos is the most important part of an appraisal.

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RubberStamp

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Reply with quote  #9 
Quote:
Originally Posted by Meatloaf


 Now you have a LISTING with a KNOWN sale price.  Are you telling me you wouldn't grid that out and give it weight?  OHHH I FORGOT>>> Taking comp photos is the most important part of an appraisal.


The only problem is an active listing is a "wish" and may or may not have anything to do with market value.  You cannot apply a standard market active listing adjustment and call it reliable. 

Granted, if it is pending...  then I go at it much more confidently yet you still do not know the results of negotiation.  

Best it can be is support.  Still need a closed sale... somewhere...  Now it can maybe justify going further out or something.  But don't think the benefit of hindsight will not be used against you if called into question when ultimately the sale price is discovered.  This just gives your accuser more rope to hang you with if your assumptions were wrong.  For example you have sale, another sale... in subdiv..  an active in the subdiv pointing 20k higher, you go cherry pick a 20k higher comp from 2 miles away and lean on it and give weight to the active..   then, ultimately the sale price of your active is 20k less.

Your support just vanished in thin air.

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We argue this: Meanwhile the agent's assistant just did 5 unofficial appraisal inspections they paired with a Zestimate and granted 90% LTV - all guaranteed no buy back.
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BillDing

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Reply with quote  #10 

Quote:
Originally Posted by Meatloaf


When you take a listing and apply a sales price to list price adjustment... it becomes a "sale".  You can then choose to weight or not weight the "sale" based on the fact that it hasn't closed yet and there is a great deal of uncertainty in the adjustment made.  But when you apply the sale/list adjustment it is treated as a "sale".

Listings can often times be better comps than sales in a dynamic market.  To ignore them or to say that they are meaningless or to give them no weight is silly.  Listings/pendings are VERY IMPORTANT!!!!!!

The problem with that is, as RubberStamp correctly stated, that is just a wish of a seller.  Your application of "sale/list adjustment" is fine IF you don't apply some medium sale/list adjustment, which incorporates sales that vary up to 30% variance and more, both over or under the list price. Some agents price it low to stir the market viewing and it sells way over list. If you go by some medium sp/lp adjustment, that is also based upon the last listing, which as you know, a property can have a 1/2 doz listings...and you have no idea whether or not this "active listing" is on it's last listing or has 3 or 4 price reductions of new listings till it sells.

You've already established your Market value based upon market support of verified closed and pending sales.  The only accurate way to apply a sale/list adjustment is to adjust the variances of the property and then your sale/list adjustment will be the difference from your market supported value that you have established. For example. You have a 1200 sf ranch that is selling for 200k.  You have 5 similar 1200 sf ranch properties that recently closed for 190-210k adjusted prices. Lets say your opinion of MV is $200k, based upon all market indicators (which includes the active listings).  Now, you have 3 active listings of similar properties..one listed for $185k and one for $225k and one for $235k.  Here's how you would adjust them. (For simplicity, these don't need any other adjustments) You would adjust the 180k listing +$15k sale/list adjustment and the one for 225k you would adjust -$25k and adjust -$35k for the $235k listing. All final adjusted listing prices for all 3 actives would be $200k.

If you gave them some medium sp/lp of -5%, your listings would be way off. (adjusted they would be $175,750 & $213,750 & $223,550) The example I gave above would be supported by the market.  The medium sp/lp would not be supported and just confuses the reader.

You have already developed your opinion of market value on sales by market indicators with both buyer and seller. Take that and apply it to the active listing to show a supported adjustment for what it would have sold for on the effective date. (many don't realize that your adjustment for these actives are for what they would sell for as of the effective date).  You've established that your subject MV is 200k for that 1,200 sf ranch...now apply Prin of Substitution for the similar listing...what would be the most probable price this active listing of a 1,200 sf ranch would sell for on the effective date if all other similar properties sold for $200k? 

Like I said, adjusting them does no good, because the most probable price has already been supported by the market. No reason to put them on the grid.  Now I know some lenders don't get it and require them to be on the grid. If that's the case, put them on a listings grid, not the Sales grid, which is both misleading and it just feeds more data to FNMA to use against appraisers and eliminate the need for appraisers.

oh, and btw, I never suggested to ignore them, rather show them.  I like to show all of them (including photos, stats and features) in a list in my comments; they are market indicators as they show market activity, trend, and supply & demand, all components of determining market value, which you should have already taken into consideration with your sales.


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Meatloaf

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Reply with quote  #11 
Quote:
Originally Posted by BillDing

 

The problem with that is, as RubberStamp correctly stated, that is just a wish of a seller.  Your application of "sale/list adjustment" is fine IF you don't apply some medium sale/list adjustment, which incorporates sales that vary up to 30% variance and more, both over or under the list price. Some agents price it low to stir the market viewing and it sells way over list. If you go by some medium sp/lp adjustment, that is also based upon the last listing, which as you know, a property can have a 1/2 doz listings...and you have no idea whether or not this "active listing" is on it's last listing or has 3 or 4 price reductions of new listings till it sells.

You've already established your Market value based upon market support of verified closed and pending sales.  The only accurate way to apply a sale/list adjustment is to adjust the variances of the property and then your sale/list adjustment will be the difference from your market supported value that you have established. For example. You have a 1200 sf ranch that is selling for 200k.  You have 5 similar 1200 sf ranch properties that recently closed for 190-210k adjusted prices. Lets say your opinion of MV is $200k, based upon all market indicators (which includes the active listings).  Now, you have 3 active listings of similar properties..one listed for $185k and one for $225k and one for $235k.  Here's how you would adjust them. (For simplicity, these don't need any other adjustments) You would adjust the 180k listing +$15k sale/list adjustment and the one for 225k you would adjust -$25k and adjust -$35k for the $235k listing. All final adjusted listing prices for all 3 actives would be $200k.

If you gave them some medium sp/lp of -5%, your listings would be way off. (adjusted they would be $175,750 & $213,750 & $223,550) The example I gave above would be supported by the market.  The medium sp/lp would not be supported and just confuses the reader.

You have already developed your opinion of market value on sales by market indicators with both buyer and seller. Take that and apply it to the active listing to show a supported adjustment for what it would have sold for on the effective date. (many don't realize that your adjustment for these actives are for what they would sell for as of the effective date).  You've established that your subject MV is 200k for that 1,200 sf ranch...now apply Prin of Substitution for the similar listing...what would be the most probable price this active listing of a 1,200 sf ranch would sell for on the effective date if all other similar properties sold for $200k? 

Like I said, adjusting them does no good, because the most probable price has already been supported by the market. No reason to put them on the grid.  Now I know some lenders don't get it and require them to be on the grid. If that's the case, put them on a listings grid, not the Sales grid, which is both misleading and it just feeds more data to FNMA to use against appraisers and eliminate the need for appraisers.

oh, and btw, I never suggested to ignore them, rather show them.  I like to show all of them (including photos, stats and features) in a list in my comments; they are market indicators as they show market activity, trend, and supply & demand, all components of determining market value, which you should have already taken into consideration with your sales.



All I am saying is that it is a basic algebraic principle.

List Price x Sale Price/List Price = Sale Price

When you make the adjustment (whether accurate or not) you are treating the "listing" as a sale.  It is then up to you AND NOBODY ELSE to reconcile the resulting value indication.  

My response was in the declaration that "listings" should not be put on the "sale" grid.  So be it... When you apply the ratio, that listing is treated as a sale.

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BillDing

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Reply with quote  #12 
Quote:
Originally Posted by Meatloaf


All I am saying is that it is a basic algebraic principle.

List Price x Sale Price/List Price = Sale Price

When you make the adjustment (whether accurate or not) you are treating the "listing" as a sale.  It is then up to you AND NOBODY ELSE to reconcile the resulting value indication.  

My response was in the declaration that "listings" should not be put on the "sale" grid.  So be it... When you apply the ratio, that listing is treated as a sale.

No, it's not. It's a listing and has nothing to do with a sale. You shouldn't be applying any ratio.  Whatever your market value is...the sale price of any similar active listing would end up at that value (after variances are adjusted) if it would have sold on the effective date.  It should not go on the grid. 

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RubberStamp

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Reply with quote  #13 
Quote:
Originally Posted by BillDing

No, it's not. It's a listing and has nothing to do with a sale. You shouldn't be applying any ratio.  Whatever your market value is...the sale price of any similar active listing would end up at that value (after variances are adjusted) if it would have sold on the effective date.  It should not go on the grid. 


Granted nobody is gridding comps that aren't required....  But thank your lucky stars that your clients haven't required them on the grid because most do.  The UAD fields allow for active and pending designations.

In the early on I would adjust each one to the median sale price/list price percentage... until I determined that was incorrect as well.  Some homes are underpriced and some are priced just right.  When I applied some "ratio" I would ruin a perfectly good active listing that would ultimately sell at list price because it was priced right to begin with.

Whenever you try to apply big data to real estate on the micro level...  the margins for error are just so profound it makes little sense to do it.

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We argue this: Meanwhile the agent's assistant just did 5 unofficial appraisal inspections they paired with a Zestimate and granted 90% LTV - all guaranteed no buy back.
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BillDing

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Reply with quote  #14 

Quote:
Originally Posted by RubberStamp


Granted nobody is gridding comps that aren't required....  But thank your lucky stars that your clients haven't required them on the grid because most do.  The UAD fields allow for active and pending designations.


I have had to do that.  I put them on a separate listings grid, where they belong. They never have a problem with that.

FNMA bastardized the SALES grid (that is set up specifically for sales) by adding listings in a drop down so they can steal that data, too. There is no GSE requirement to put them there, however...and I would highly recommend you all not to put them on the SCA.


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Meatloaf

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Reply with quote  #15 
Quote:
Originally Posted by BillDing

No, it's not. It's a listing and has nothing to do with a sale. You shouldn't be applying any ratio.  Whatever your market value is...the sale price of any similar active listing would end up at that value (after variances are adjusted) if it would have sold on the effective date.  It should not go on the grid. 


Wait a minute dumbass.  What about in a declining market?

What about in an instance where a builder is closing out a subdivision?

What about when there are NO active listings comparable to the subject?

Your blatant disregard for the most relevant data is absurd.  Ask any buyer or seller if they give a rats ass what a house sold for... What matters most is what is currently listed.

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BillDing

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Reply with quote  #16 

What about it? Who said I disregarded it?  I swear, you must be a AMC reviewer, because you don't read.

As I said, you have already developed your opinion of MV, which is based upon all market indicators...including the few that you were asking about.  Here...I'll C&P part of my post above.

Quote:
"Lets say your opinion of MV is $200k, based upon all market indicators (which includes the active listings)...
I never suggested to ignore them, rather show them [active listings].  I like to show all of them (including photos, stats and features) in a list in my comments; they are market indicators as they show market activity, trend, and supply & demand, all components of determining market value, which you should have already taken into consideration with your sales."


Do you need a bouncing ball?


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