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MLS

When there’s no other manufactured homes in the neighborhood

October 23, 2018 By Ryan Lundquist 19 Comments

What do you do if you’re trying to value a manufactured home and there aren’t any comps in the market? I’ve been asked this a few times lately, so I wanted to pitch in some thoughts.

PUZZLE APPROACH: There isn’t one easy way to approach this, so when appraising something challenging I tend to look at a property like a puzzle where my goal is to find clues into value by considering a number of factors.

THINGS TO CONSIDER:

1) Older sales: There might not be any recent sales over the past 3-6 months, but what about older sales? There’s nothing wrong with looking at sales over the past few years and then figuring out how much the market has changed since those properties sold. This is exactly what I did when appraising a manufactured home in Carmichael recently. There were no recent sales and the most relevent one I could find was from 2016. I used that sale and simply adjusted for the market increasing in value over time.

2) Competitive markets: If sales are sparse in the neighborhood or city, why not look to competitive markets? When appraising in Carmichael I looked to Fair Oaks, Orangevale, and Citrus Heights. Of course I didn’t blindly choose sales. No, I had to be thoughtful about comp selection by making sure the other areas really were selling at a similar level. After all, there are portions of the other locations that could easily sell for more or less than portions of Carmichael.

Beyond one mile? Remember, it’s okay to use “comps” outside of a one-mile radius, but it’s suspect to cherry-pick higher sales further away when there are better (and lower) ones nearby. Here’s a good saying. It’s not how far you can go for comps, but where you should go.

3) If it was stick built: In my experience manufactured homes usually sell for less than stick-built homes. Duh, thanks Captain Obvious. But for the sake of being objective I’m leery about saying stuff like, “It’s going to sell for less than a stick-built home every time”. Anyway, my point is I can ask what the subject might sell for if it was a stick-built home in the neighborhood. Then at least I have a figure in mind as to what the highest possible price might be for the subject.

4) Subject sale: Has the subject sold in the past? If it was a reasonable sale at the time, it might give clues into value. What other locations were competitive at the time? Did it seem to sell toward the higher or lower end of the competitive market? Did it sell for more or less than other stick built homes?

5) Manufactured vs stick built: What’s the price difference between manufactured and stick built homes? That’s a good question. It’s not easy to answer if we don’t have sales in the market, so this is where we might look to a nearby market with more manufactured homes (not ones found in mobile home parks). When comparing manufactured vs stick-built homes, what sort of percentage price difference do we see? I’m not saying we should just take a percentage like this and apply it to stick-built “comps” in the subject neighborhood, but there could be some data here we might end up using. Remember, this is a piece of the puzzle or clue into value rather than the entire solution to value.

6) Ask for advice on finding sales in MLS: One of the challenges with manufactured homes is knowing how to find them in MLS. I suggest starting a map search as I show below. You might also do a single family home search and type in “manufactured” in the property description to see if anything comes up. Ultimately it might be worth it to ask a few colleagues how they find stuff in MLS.

7) Bottom & Top: Sometimes when dealing with a challenging property we have to ask ourselves where the top and bottom of the price market is in the neighborhood. At the least this gives us some context for where the value of the subject property might fit. In Carmichael I looked to the market and saw the lowest sales were closer to $300,000 and the highest competitive sales were just above $400,000. I realize this is a huge range, but at the least this gives me something to work with. Also, if my value is coming in below the bottom of a reasonable range, that’s a prod for me to keep digging for better comps and data (unless there’s a reason why the value should be lower).

8) Land value: Let’s not forget about land value. It’s worth asking what the site would sell for if it was vacant. This isn’t the main approach to value, but it’s a piece of the puzzle. The problem is if I’m relying heavily on one manufactured home comp in the market, but land value alone is more than that comp sold for, then maybe that one “comp” sold for too little.

CLOSING THOUGHTS: It really is like a puzzle when valuing something without the benefit of recent similar sales. My advice? Try to piece together many details like the ones above to help collectively paint a picture of value.

I hope that was helpful.

Photo credit: Thank you Realtor Sandy Muzinich for letting me use photos.

NEW VIDEO MARKET UPDATE: A couple of days ago I made a video to talk through the latest stats. It’s 10+ minutes and I talk through prices, inventory and sales volume. Enjoy if you wish.

Questions: What point stands out to you the most? Anything else to add? I’d love to hear your take.

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Filed Under: Appraisal Stuff, Resources Tagged With: bottom of the market, Carmichael, choosing comps, comp selection, Fair Oaks, Greater Sacramento appraisal blog, how appraisers choose comps, Manufactured Home, MLS, no comps, Orangevale, questions to ask, stick-built home, top of the market

Does it help appraisers when agents increase the pending price in MLS?

September 20, 2017 By Ryan Lundquist 11 Comments

Does it help appraisers when agents increase the pending price in MLS for the subject property? In other words, if a house was listed at $400,000, but gets into contract at $415,000, does it help if the pending price is changed to $415,000 in MLS? This might seem like a silly topic, but I get asked this question all the time, and it seems like many believe this makes a difference for value. Here’s my opinion, and I welcome your two cents also.

Quick Answer: First off, sometimes agents think appraisers only look at the pending price, but appraisers make it a point to view the entire listing history. If you didn’t know, the Fannie Mae appraisal form actually asks appraisers to input the complete pricing history of the subject property into the appraisal. The appraisal report therefore records the original list price, any price changes, and the pending price. So it’s not like the appraiser or lender is blind to the fact the subject property was originally listed for less and is now in contract for more. In short, upping the list price for the subject property doesn’t help the appraisal come in higher or do anything for value. We have to remember the proof of value is found in the comps instead of whether the list price in MLS was increased or not for the subject property. However, on a different but related note it can be useful when appraisers are choosing comps and they see other pendings in the neighborhood getting into contract at higher levels. After all, pending sales showing higher prices might help us see the market is increasing or even help us make upward time adjustments. So while this practice of changing the list price in MLS for the subject property doesn’t do anything for value, in my mind it can be useful when looking at other pending sales in the neighborhood to see if everything is getting bid up or in contract at higher levels.

Three questions:

  1. What is the goal of this practice?
  2. If this practice is not done when the property is in contract for less, why should it be done when the property is in contract for more?
  3. If this happens in mass could it screw up data in any way?

I hope this was interesting or helpful.

Questions: What is your opinion on this practice? Is it a good idea or not? I’d love to hear your take.

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Filed Under: Random Stuff Tagged With: appraisers looking at listing history, choosing comps, comp selection, data in MLS, Fannie Mae appraisal form, fooling the appraiser, listing data, Market Value, MLS, Sacramento Real Estate Appraiser, talking to appraisers

How to use MLS to know how the market is moving

February 25, 2014 By Ryan Lundquist 2 Comments

How can you know right now what the real estate market is doing? What would you say if a client asked you about the market this month? You could probably rattle off some generalities about an increase of inventory and how sales are always lower in January and February. OR you could give them a few specific stats very quickly. Let me show you how.

Scroll Quickly: This post looks like it is a long read because of all the images, but it’s really not. It’s more of a demonstration than anything. I hope you like it and find a nugget or two of usefulness.

First off, do a “Standard” search from the main navigation bar.

standard search in MLS

Next select your criteria. If you want to do a search for the current month, enter the first date of the month in each field. Be sure to only select “1 house on lot” and “Sacramento” for county (or whatever counties you are searching). Then click “Statistics”.

2014 february search in mls

What Stats to Look For: After clicking “statistics” you will see quite a few numbers. What should you be looking for? Some of the most important ones are number of listings, number of pendings, number of sales, average days on market and median price (I take median price with a grain of salt though until about 7-10 days after the month is over since data can be VERY skewed until all the sales numbers are in). Click on the image below to see what the screen looks like when you hit “statistics” above. The image was too large to fit in my column.

2014 February so far 530

So What is Happening in February? Based on the image above we are seeing more listings than sales, but a large number of pending sales. Whenever there are more listings than actual sales, it’s a sign that inventory is increasing. Yet the number of pending sales also tells us that buyers are definitely hungry for real estate. Also, if you’ve been following trends you’ll notice that the average days on market is about ten days less in February so far than last month. This tells us buyers are getting into contract more quickly. The median price has increased so far in February, but again take that with a grain of salt until the month is over.

What About all of 2014? If you want to search data for the past two months (all of 2014), simply enter January 1 as you starting point. Keep in mind you could also search by city, zip code or even do a polygon search in MLS and then hit “statistics” so you know what is happening in a very specific neighborhood.

2014 january and february search in mls

Click on the image below to get a sense of how the market has been so far in 2014 in Sacramento County. As you can see there are far more listings than sales so far, but there are almost 2300 pending sales.

2014 so far 530

2-22-14- 7amFresh Coffee & Quick Glances: By the way, I’m sure everyone has seen and used the 24 hour market watch widget on your MLS home screen. I recommend looking at this whenever logging in because you can get a quick sense of what is happening in the market. So grab your cup of coffee, turn on your screen and take 10 seconds to scan listings, sales, pendings and price reductions/increases. Over time this can help us stay in tune with the market. Are there more listings than sales coming on the market? How many price reductions are there? This is a good temperature of real estate.

If this was helpful, feel free to forward the post.

Questions: Any thoughts? What are you seeing in February so far?

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Filed Under: Resources Tagged With: data, Home Appraiser, House Appraiser, listings to sales ratio, Metrolist, MLS, pendings, real estate trends, resource, Sacramento Real Estate, Spring Fever, understsand real estate, using data

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First off, thank you for being here. Now let's get into the fine print. The material and information contained on this website is the copyrighted property of Ryan Lundquist and Lundquist Appraisal Company. Content on this website may not be reproduced or republished without prior written permission from Ryan Lundquist.

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