I was asked by a friend to help valuate a property in a neighboring county in which I have done a fair amount of work. It seemed like a simple request and I was happy to oblige.
But when I sat down to do my CMA yesterday; I discovered that since there were no comparable sales for the subject property in the last twelve months. As I continued to broaden my search, I was shocked that there were still no other properties that had sold county wide.
And although I will attempt to establish a sale price for the property utilizing other methods, the startling paucity of statistics indicate clearly that this is going to be a very hard property to sell at ANY price.
The sellers will have to make a tough decision. They will either have to wait out the current market or take a huge loss on the property. It’s a harsh reality, but the sellers need to know what they are up against in order to make an informed decision.
And maybe, just maybe, we can reverse the trend!
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Richard.....that happens on occasion to many agents and homeowners.....a unique property that has no comps....I had that situation on one home several years ago and the appraiser did replacement cost minus depreciation for the years....we made it through!!! I think you'd have a difficult time NOW with the underwriter on that one!!
Hi Richard
That is a tough one; if the picture is the home in question I can see why you had a problem. What was the price you came up with, and what was the home owners decision?
Richard:
If you are having this much difficulty, you know that the appraiser will experience the same. When I find that I have to be that creative with a CMA, I do start to worry about the appraisal coming in since they must rely on the same data that we have access to.
Richard, we are not miracle workers, I agree that all can you do at this point is give the potential sellers the correct honest information so that they can make an informed decision. It is the right thing to do as opposed to givng them an unrealistic list price, and having it sit unsold on the market. Thanks for doing the right thing and behaving like a professional, if we all did the same, maybe the public would have a better opinion of the industry
My husband and I had this happen to us 8+ years ago when we wanted to re-fi out house. The appraiser could not find comps in the MLS so I drove around and found them based on location within one-half mile which encompasses 3 counties - KNOWING where you ARE is the first step in KNOWING where to GO!!!
Richard, Having years of experience is the best remedy for this situation even without comps we will have a gut feeling on the value. Conveying that with confidence is one asset that can't be over looked...that is one of the many reasons buyers & sellers hire a Realtor.
Richard, sometimes this is very true on rural properties in our area. The appraisers have to go further than the 3 miles.
No sales in a year...client needs to wait unless they want to be "the next comp!" Obviously demand is non-existent. Looks like a challenge. Let s know how this goes!
Barbara...
Interestingly enough, this property is not all that unique ... nice home on acreage. It's just that NO nice homes on acreage have sold ... and THAT is scary! Thanks so much!
Lois...
The photo is not the property, I haven't been there yet. The house is mid-sized on acreage ... and NOTHING has sold in the county on over than 5 acres. And this is a rural county where most homes are on big tracts. Thanks for the comment.
Claudette...
That is REALLY something to think about. Thanks for chiming in!
Richard, that is a cunundrum to be sure. I had a whole big long comment, but then I realized that you know more than I, LOL. So all I can say is... good luck!
Richard this happens once in awhile here and I agree that it is perplexing, Missy's idea to go further out is an option. In this situation, I turn to trusted appraisers I have worked with over the years for advice (not an actual appraisal) and pointers. What seems to be most compelling is your point that, "this is going to be a very hard property to sell at ANY price." If they have any chance at all to wit it out your are right in encouraging them to do so. If they have to sell now, then they are aware of the consequences! Tough call my friend!
I'm not beyond asking an appraiser to step in and just do an appraisal for a couple hundred bucks. That way when the other agent asks how you came up with a price you can send it to them. If the buyers bank comes up with a different number you can let them battle it out.
Hi Richard, I can see the dillema but with your experience and knowledage I'm sure you'll be fine!
Richard - I was hoping for the magic answer from the guru, but, can see you are having the same difficulty I am having here on some of the properties.
Richard,
In this case, I'd tend to go with replacement cost less depeciation.
Hi Richard. First of all, nice use of the word paucity!
Also, tough to do an accurate CMA w/ no comps, isn't it?
Ken
Richard: I just listened to an appraiser give a talk last week about comps in situations like this. Evidently, they will use year, or years old data, and "bring it current" using market trends to adjust the what-would-have-been price. Sounds frightening to me, but the appraiser said she used to do it all the time.
Richard...Not overly uncommon in some of the areas I work. But my clients on land sales are starting to hold out for a better price and getting it. That is going to help in stableizing the market in those areas!
But we are up against a few agents that working the other end telling people that there is no way their property is woth the amount they want to ask and now we are getting it.
Since an appraiser is going to have the same difficulty that you will, just rely on your expertise to price the home correctly.
And with your marketing skills, you will no doubt reverse the trend of no homes sold in that area!
This will be a tough one for sure. But, there's always a price that a property will sell for. The question is, what is that price?