I’m wrapping up an appraisal in the city of Vacaville in Solano County. I wanted to share some trend graphs with you as well as give a little insight into what I do as a real estate appraiser to hone in on a final value opinion.
One of the first things I do to dissect market conditions is run a general search of all sales in the entire city or area where the subject property is located. In this case, I plotted sales in the city of Vacaville under $1,000,000. There were definitely sales above this level, but I took them out since the graph makes better sense without the upper-end of the market. Can you see a period of increase and then big decline? Do you notice too what’s happened to the upper level of the market?
The next thing I do in the appraisal process is take a look at a more narrow geographic search. This ends up being whatever boundaries I determine for the subject neighborhood. In this case, the parameters were less than one square mile and consisted of homes of similar age and overall quality. Does this neighborhood graph seem to follow the trend pattern above from the city of Vacaville?
Thirdly, I look at all listings, contingents and pendings within the immediate neighborhood. Though these are not sales, they can be strong indicators of what is happening in the market or where it is heading. For example, it says something about the market if all listings and pendings are higher, the same or lower than the most recent sales in the neighborhood. Lately, the supply of listings has been lower, so many properties are moving quickly and its common to see multiple offers and contract prices higher than asking price due to increased competition.
Next I put a square footage parameter on sales in the defined neighborhood to see what similar-sized properties are doing (as opposed to looking at all sales in the neighborhood, which definitely includes non-similar properties). Granted, the spectrum for GLA below is quite wide, but in this case there were few sales within the neighborhood even in this parameter, so it was important to widen the bracket a bit to get a better glimpse of the market. As you can see from this graph when compared to the one directly above, houses with a larger size tend to sell toward the middle to upper end of the neighborhood market. After doing these initial steps, it starts to become a bit clearer what sort of value range the subject might fit in.
The steps above are only a few initial steps in the appraisal process to help build a general framework for viewing the local market. I could honestly go on and on because there are so many factors to consider when appraising a house, and many conversations to have with local agents also.
Let me know if you have any questions about the valuation process or a need for any specific research or appraisal services. I serve multiple counties in the Greater Sacramento Region and I can be reached at ryan@LundquistCompany.com or 916-595-3735.