Foreclosure in 34292>Question Details

Pamela Perry, Home Seller in Venice, FL

Can recent sales (mid Sept. 07) of new condos built by the same developer and exact floor plans be used for

Asked by Pamela Perry, Venice, FL Fri Nov 23, 2007

comps if pre-construction contracts were signed 1-2 years ago?

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Appraisers are required to use the most recent sold comparables that are within the same building or area (if none are available in the building) for their appraisal regardless of when the contract was written. They take current listings and most recent solds that are most like the unit in question. Then they make additions and subtractions. A top floor unit is higher in value than a first floor unit. New construction sells for more than resale. The appraisal is there to protect the banks investment in the event of future foreclosure. If prices for the area increased since you contract 1 to 2 years ago then you will have no problems with the appraisal. If prices fell and your financing contingency period which should include an appraisal stipulation has expired and the property does not appraise then you would have to bring more money to the table.
0 votes Thank Flag Link Fri Nov 23, 2007
You asked a very good question. A Realtor has more leeway in his or her choices of comps for a market analysis or broker price opinion than an appriaser does.

The new condos could have closed at a higher value than todays market value because the buyer had a non-refundable deposit. For example if the buyer had a sunk cost (non -refundable deposit of $50,000; the contract and closing price was $300,000. --- It would made economic sense for the buyer to accept delivery of the condo even if the market value had dropped all the way down to $260,000.

So while that transaction made sense for that particular buyer, the sale recorded at $300,000 does not justify a valuation of another unit at the $300,000 price.

A proper valuation estimate would explain in the narrative and in the valuation columns the higher price due to the buyers sunk costs
0 votes Thank Flag Link Fri Nov 23, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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