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appraiser in Lincoln

Free HOA fees = Evidence of a buyer’s market

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I’ve driven by this banner twice in the past week while on appraisal inspections in the City of Lincoln. Isn’t it a sign of the times for builders to offer concessions like this to buyers? During the boom years before the market tanked there were no concessions as such because it was a seller’s market and builders did not have to create incentives like this to attract buyers. In fact, builders in those days tended to charge very high amounts for “premium” upgrades too, whereas now these same upgrades such as granite countertops and stainless steel appliances tend to show up in standard models. Since today’s market is more of a buyer’s market,  sellers need to price their properties appropriately and in some cases offer incentives like this to attract homebuyers.

concessions from builders in Sacramento area - photo by Sacramento Appraiser

If you’re in real estate, how have you seen concessions in a purchase price impact the market? Do you see a difference in price level between conventional offers asking for no concessions and FHA offers asking for 3% back? Which tends to be higher? If there is a difference, what does that tell us? Lastly, do you think the HOA fees above are really free or is the price inflated to cover the cost of the fees?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

But the model match down the street sold for…

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Just because a model match sells at a certain level does not necessarily mean it’s a good comp, right? Obviously model match sales are great for comparison because they have the same layout, but there are so many factors  why model matches do not always sell at a similar level. This point is particularly evident in the graph below of all MODEL MATCH sales in the Lincoln Crossing neighborhood. Isn’t it amazing to see nearly a 25% difference in price level for the same floor plan?

Here are my observations:

  1. There is a vast range of prices among model match sales.
  2. The neighborhood has seen a decline in value over time.
  3. The range of sales is about $85,000. This range has been seen more or less over the past few years, which is important to note.
  4. The sales at the top tend to back the greenbelt and have premium upgrades, while the ones at the bottom tend to be short sales. In this neighborhood short sales are tending to sell for less than foreclosures (for this model anyway).
  5. The appraiser could botch the value if simply using model match short sales as “comps” while ignoring traditional sales at the top. At the same time, there could be money left on the table if the property is marketed against the lowest sales in the neighborhood. Also, the home owner could use all the wrong comps in a tax appeal too, right? This brings up the importance of working with local professionals and sifting through bank-owned, short sales and traditional sales to establish market value.
  6. Having such a large range of sales means it may prove challenging for online valuation websites like Zillow and Cyberhomes to render a credible value. Granted, a reliable value is not always easy for human appraisers either to be fair, but actually seeing the property and understanding the market makes all the difference.

What stands out to you about the graph? What scenarios have you seen cause a huge difference in price among model match sales?

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

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