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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Rainer
34,818
Pablo Santibanez
FastAppraisals4u

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.

July 02, 2007 03:04 PM
Rainer
34,818
Pablo Santibanez
FastAppraisals4u
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.
July 02, 2007 03:20 PM
Ambassador
294,813
Ray Saenz
Homes for Sale in Aurora, Colorado - Aurora, CO
United Property Brokers, Inc
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 !!!
July 15, 2007 03:41 AM
Ambassador
294,813
Ray Saenz
Homes for Sale in Aurora, Colorado - Aurora, CO
United Property Brokers, Inc
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 ?.
July 15, 2007 03:46 AM
Ambassador
294,813
Ray Saenz
Homes for Sale in Aurora, Colorado - Aurora, CO
United Property Brokers, Inc
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 !
July 15, 2007 03:51 AM
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Homes for Sale in Aurora, Colorado - Aurora, CO
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  Ray Saenz, Colorado Realtor
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