Today I learned something awesome that I want to share with all of you.

By
Real Estate Agent with United Property Brokers, Inc

Today I learned something awesome that I want to share with all of you.

I am working on a purchase transaction as a Buyer's Agent that I noticed that subject property it is at least over priced $ 5,000.00, even when the Real Estate property is a very nice looking home and it is located in a nice area as well. Colorado Homes, Colorado Realtor, Colorado Homes for sale, homes for sale in colorado, colorado spanish speaking realtor, colorado spanish speaking real estate agent, spanish speaking realtor, spanish speaking real estate agent, aurora colorado real estate, aurora colorado homes for sale, aurora colorado homes

Please take a fast look to the table below and then read the notes.

Select

Sale
Date

Sales
Price

Proximity (Miles+Dir)

Address

Lot Size

All Bldg
GLA
SF

Land Use Group

Zoning
Info

(R)es/
(C)om
Card #

House Style

Year Built

GLA
SF

Bsmt
SF

Fin
Bsmt
SF

Bed-
rooms

Bathrooms

Heat
Method

Heat
Source

 

 

$227,000

 

Subject Property  

3,920

1,927

Single Family

RPCZD

R/1

Two Story

2002

1,927

0

0

3

2.50

Forced Air

Natural Gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

04/27/07

$210,000

0.12 E

666 Agent Way 

4,356

1,927

Single Family

RPCZD

R/1

Two Story

2003

1,927

0

0

3

2.50

Forced Air

Natural Gas

2

 

12/06/06

$222,500

0.19 NE

12345 Appraiser CT 

3,485

1,927

Single Family

RPCZD

R/1

Two Story

2001

1,927

0

0

3

2.50

Forced Air

Natural Gas

3

 

08/04/06

$230,000

0.04 SW

4390 Realtor Way  

4,356

1,927

Single Family

RPCZD

R/1

Two Story

2002

1,927

0

0

3

2.50

Forced Air

Natural Gas

COMP 1 - THIS IS IN AVERAGE CONDITION, HOWEVER LENDER OWNED.
COMP 2 - AVERAGE CONDITION PLUS UPDATING - "MOTIVATED SELLER"
COMP 3 - AVERAGE COND PLUS UPDATING - OLDER SALE, HOWEVER CLOSEST IN PROXIMITY TO THE SUBJECT PROPERTY. THESE ARE ALL LOCATED WITHIN THE SUB AREA.

These notes above are an appraiser opinion. These notes are not a valid opinion, they are just excuses to inflate a property value.

The comparables above are a perfect example of a declining market, why? because sellers need to pay out or put money from their pocket or proceeds to sell. How? Giving seller's concessions for closing costs and pre-paids or for down payment assistance or Both of them to buyers. Giving to buyers assistance they are dropping these days a lot the Market Value on homes.

I asked to 3 different appraisers  and the they are not giving more than $ 222,000.00 on this Subject Property, actually between
 $ 215,000.00 and $ 222,000.00 depending the condition of the real estate property , and this is why:

•1)      1st Comp: $ 210,000.00 this was a bank owned property, When It is bank owned property, on average here in Colorado and on this example of price range & area many appraisers use a rule of thumb they add between $ 9,000 and $ 11,000 to make this a good working comp, you need to add that amount, so on this case it would be a comp. between $ 219,000.00 to $ 221,000.00 Max.

•2)      2nd comp: $ 222,500.00 was sold for this price, but they gave $ 3,500 seller's concessions, so the real value or the real comp would be $ 219,000.00 to use it as a truly comp for the subject property, the appraiser is not taking care about the seller's concession, bad eh?

•3)      3rd. and the last comp, it is way a too old comp from August 2006, It is not within the 6 months, but now lets use this old one as a supposed comp. even when the sold date is old, they gave $ 7,900.00 for sellers concessions, what it means? Really, the true value of this property it is $ 222,000.00 if you want to use it as a comp.

Now, these days all appraisers have a regulation here in Colorado, I do not know in other states whether it works the same, Appraisers from the sales price they need to deduct the sellers concessions to make a good comp for a real estate property.

 People, Watch out your client's back, these comparables will be automatically rejected by the Lender's Review Department and I understand that you do not want to waste your time and work hard for something that it does not make sense, and then suddenly the transaction is down for something like this, also it is our duty to see our client's best interests as Realtors, I am not an appraiser, but I have learned many things from appraisers

PS: Learn, Ask and Educate your clients
.

Aurora Colorado Real Estate Aurora Colorado Homes for Sale Colorado Spanish Speaking Real Estate Agent Realtor 

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Rainmaker
295,344
Ray Saenz
United Property Brokers, Inc - Aurora, CO
Homes for Sale in Aurora, Colorado - Aurora, CO
Ardell, the point of this blog, it is that sometimes we trust what supposed appraisers and Listing agent says and we need to do our home work to protect our client, and the information that I wrote above makes a perfect example of what it can happen to some of you if you do not check very deeply, thanks for stopping by
Jun 20, 2007 12:16 AM #3
Rainmaker
333,920
Thesa Chambers
Alpine Real Estate - Bend, OR
Principal Broker - Licensed in Oregon
I got it - maybe because I have seen a property not appraise... I think it explains well what to watch for when you are looking at solds on MLS - MLS in my area does not tell you about sellers concessions.
Jun 20, 2007 12:46 AM #4
Rainmaker
295,344
Ray Saenz
United Property Brokers, Inc - Aurora, CO
Homes for Sale in Aurora, Colorado - Aurora, CO

Thesa, very interesting, I did not know that, I thought that maybe all MLS were similar with the same kind of information, I see that not :)

 

Jun 20, 2007 01:07 AM #5
Rainer
111,289
Carole Cohen
Howard Hanna Cleveland City Office - Cleveland, OH
Realtor, ePRO
Ray, in our area, unless it's new construction, if the sale price is higher than the list price you get an inkling that there were seller concessions. Of course it could be that the home went into multiple bids as well. But there is not a separate category for concessions. It's really critical to pay attention that the highest and best offer does not exceed a possible appraised value. If you wind up adding on 6 percent for closing cost and downpayment assistance, that can really be a problem can't it? Good post
Jun 20, 2007 02:51 AM #6
Rainer
77,771
Kim Murphy
1st Advantage Mortgage / Draper and Kramer - Carol Stream, IL
Mortgage Loans in DuPage, Kane, Cook, Lake, Will C
Ray... you do a great job of looking out for your clients.  This is a great example of really doing your homework to get your clients a home at a "fair" price!
Jun 20, 2007 10:19 AM #7
Ambassador
1,984,019
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut - Middletown, CT
Your Connecticut Mortgage Expert

Ray, as always this post is full of good information.  Here in Connecticut Appraiser also have standards that they have to follow, and can get in big trouble if they do not follow the procedures that they have to follow.  Selling prices that are over the Listing Price are always red flags and can be big problems with lenders.  

Jun 20, 2007 11:00 AM #8
Rainmaker
295,344
Ray Saenz
United Property Brokers, Inc - Aurora, CO
Homes for Sale in Aurora, Colorado - Aurora, CO
Carole, yes, it is true, what I wrote above, it is it does not matter what kind of concessions were, could be  serller's concessions ( closing costs, prepaids and down payment assistance ). thanks :)  for your comments :)
Jun 20, 2007 06:44 PM #9
Rainmaker
295,344
Ray Saenz
United Property Brokers, Inc - Aurora, CO
Homes for Sale in Aurora, Colorado - Aurora, CO
KIm :) thanks ! :) keep the good work and thanks for stopping by, we always have to look for our client's best interests, don't we ? :)
Jun 20, 2007 06:45 PM #10
Rainmaker
295,344
Ray Saenz
United Property Brokers, Inc - Aurora, CO
Homes for Sale in Aurora, Colorado - Aurora, CO

George, Well, at least we think the on the same way :)   Ardell, was asking what was the point of this blog, well, some of you already made and understood some points here :) thanks for your support !

 

Jun 20, 2007 06:51 PM #11
Rainer
33,677
Jack Haydon
Charles Rutenberg Realty - Clearwater Beach, FL
Clearwater Beach Condos - Real Estate Homes for Sale

Great post Ray! When the selling price is over the list price the appraiser needs to be very careful when completing the appraisal.

Jack

Jun 20, 2007 09:47 PM #12
Ambassador
1,984,019
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut - Middletown, CT
Your Connecticut Mortgage Expert
Ray, did you get my response on how to fix the widget?
Jun 20, 2007 09:47 PM #13
Rainmaker
295,344
Ray Saenz
United Property Brokers, Inc - Aurora, CO
Homes for Sale in Aurora, Colorado - Aurora, CO

Jack, that's true :) thanks for your comments :)

 

Jun 21, 2007 06:19 PM #14
Rainmaker
295,344
Ray Saenz
United Property Brokers, Inc - Aurora, CO
Homes for Sale in Aurora, Colorado - Aurora, CO

George, I will check the comments in your blog my friend, I have not checked them, I have been busy, but I will be there , thanks again for your support ! :)

 

Jun 21, 2007 06:20 PM #15
Ambassador
508,819
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life
I am bookmarking this one, there is some stuff to observe.  I think this may be a great educational tool for a lot of professionals out there, I'm going to check back and digest it in full.  Nice work Ray.
Jun 22, 2007 08:43 AM #16
Rainer
99,630
Kaushik Sirkar
Call Realty, Inc. - Chandler, AZ
Ray - this makes me think.  What is your general opinion of appraisers?  Who REALLY knows the local market better, the Realtor, or the appraiser?  Should lenders be contacting Realtors for their appraisal...thoughts?
Jun 28, 2007 02:49 AM #17
Rainer
34,818
Pablo Santibanez
FastAppraisals4u - Santa Clarita, CA

Great observation Ray,

In "normal markets" sales concessions are a rarity, however when the market slows they begin to pop up and become a common occurance to entice buyer's to buy.  You "going deeper" into the sales info revealed this to you.  You now recognize and understand what can influence a sales price in a given market.  This insight will enable you to explain and hopefully avoid those last minute surprises that some of your peers may encounter.  There is no 100% certainty as the market is imperfect and we (Appraisers) try to interpret markets to the best of our abilities (Experience)  Your new found insight will serve you well.

Jul 02, 2007 03:04 PM #18
Rainer
34,818
Pablo Santibanez
FastAppraisals4u - Santa Clarita, CA
If I may, I would like to respond to Kaushik's question as to "who knows the local market better" It could be either or.  If an Appraiser works and concentrates on a particular area, they may see on average 1 to 2 homes a day in that specific market.  They may have an edge as a result due to the number of homes they see and estimate.  When the market slows many Appraisers need to expand their market areas and may not be able to specialize in one specific market area.   Many Appraisers work huge geographical areas in which Realtors will have more knowledge of their own specific markets  Bottom line it boils down to experience not one profession Appraiser/Realtors has all the answers.
Jul 02, 2007 03:20 PM #19
Rainmaker
295,344
Ray Saenz
United Property Brokers, Inc - Aurora, CO
Homes for Sale in Aurora, Colorado - Aurora, CO
Jason, thanks for all the compliments / comments, well, I just want to share my experience and what I think about what it is going on, I love changes and challenges ! :) keep the good blog !!!
Jul 15, 2007 03:41 AM #20
Rainmaker
295,344
Ray Saenz
United Property Brokers, Inc - Aurora, CO
Homes for Sale in Aurora, Colorado - Aurora, CO
Kaushik,  but there are some rotten apples around there trying to manipulate price, appraisers know more than realtors on market, but well :) what I can do ?.
Jul 15, 2007 03:46 AM #21
Rainmaker
295,344
Ray Saenz
United Property Brokers, Inc - Aurora, CO
Homes for Sale in Aurora, Colorado - Aurora, CO
Pablo, thanks for your great answer about Kaushik question,  I can not say that I will know more than a very good and well rounded experienced appraiser, but I wrote above there are some rotten apples around there that manipulate and inflate values. :)   keep the good work / blog !
Jul 15, 2007 03:51 AM #22
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