Does Sold Price Reflect Market Values?

Carla Muss-Jacobs, Principal Broker/Owner, unfortunately it does happen and they do affect other properties in the neighborhood, you and I both know some appraisers will choose lower priced/sold homes as comps. IMHO, SS listings should not be used on appraisals. 

I'm not an appraiser but I don't think they incorporate short sales in with their comps.

Hmmm, interesting, here in Connecticut these properties usually get multiple bids and up the price close to market value.

I've seen under-priced homes cause so many problems.  Appraisers need to do a very good job checking into the history of comps to ensure they're reflecting the market in the best way.  Short sales and atypical circumstances should never drive a neighborhoods value.

Sold price does not always indicate true market value. Why it sold for the price it did must be known. I recently had an agent make a very low offer on a lot. He used a comp from a unique lot. I asked him if he had ever been on lot? Answer-No. I asked him if he knew why it sold for the price it did? Answer: No. His client was with him on the lot they were looking at. I met them there to show them corners. Anyway, his client was a bit... I mean rude. He proceeded to tell me he had done extensive research on comps to get his price per acre. blah, blah. I knew the previous 2 owners of the lot he was using for comp. The current owner had been killed in a plane crash. His heirs didn't want lot and just wanted to get rid of it. They sold it for around $65,000.00 less than what he paid for it, so of course that was entered into MLS as" Sold" price. I didn't bother telling them that story because of their attitude.

I think that buyers will decide what the value is - if it's underpriced there will be a bidding war.  If it's overpriced, it will have long market time.  Occasionally, listing agents under price on purpose although I'm not sure it's a good strategy.

I truly don't see Short Sales selling for lower than market. They sell in our area based on condition, unless there just happens to be a sweet spot where the lender isn't incredibly upside down.

Supply and demand is a big factor regardless of what comps would consider market value.  Here the supply is so tight and demand so high that prices keep getting driven up.  Listing agents are often blown away with where they end up because they price the listing fairly.

Glad to read the last homes sold over $350K. I don't think appraisers use short sales or foreclosures in their comps. I use to do BPO's and I wasn't allowed to use unless the homes was a short sale or foreclosure.

Carla, certain things in life and in real estate are reasonable to expect. Some appraisals will use short sales as comps on appraisals … although I am told by many “we are not supposed to use short sales.” In any event, that was a nice return. 

Hi Carla: You must be so relieved to find out that the SS did not affect the valuation especially you live in that neighborhood. You want it to be high up there where you want it to be, if possible.

Carla - I think we've all had that feeling before, but I'm glad the low priced home didn't impact the later sale. 

Hello Carla ... I think the whole comps, etc is messed up across the nation. Short sales, foreclosed homes, etc. In Las Vegas 3-4 years, you could get into a home for a reasonable price and now the prices are inflated ;o(

Carla

The number of short sales has declined here fairly substantially in general but some communities still have 5 - 10% on the market at any one time. The sales prices these days, on average, seem to be pretty much market value, without spending too much time analyzing. Unless there are a bunch if them in the area seems to me they should not be part of the appraisal, or the appraiser needs to make an adjustment

Nice to see the SS in your area did not impact the market.

Jeff

Good morning Carla, many opinions on the subject, I guess it all boils down to who the appraiser is.

These are very interesting figures. Appraisers need to be careful when using short sales as comps.

Hi Carla, so glad the short sale did not affect the other sales in the neighborhood. I know you are relieved since you live there.

As Chris says, here short sales usually go at market price. I can't imagine the banks letting the go for less. But happy that that underpriced property didn't affect your market.

Here, they do take short sales into account when appraisers do market analyses.  But, I suspect it depends on the criteria that the lender has in place.  This post will garner a great deal of attention.  Nicely done, Carla.

Carla, I usually think thatif an appraiser and the other Realtors do their homework, one short sale shouldn't affect the neighborhood market too much. Seems to have worked out fine here too.