Days-on-market effect on appraisal value?

Asked by Akhowe, Essex Junction, VT Tue Jul 7, 2009

How should - or rather, how does - the days on market value affect the consideration of a comparable home in an appraisal? We are selling our townhouse and just found out that the appraisal came in ~$9000 lower than our contract price. The comp that is closest to ours (a unit in the same condo complex, of the same age and construction value) had a DOM of 9 (yes, 9), while the average DOM value for our area in the past 3 months is ~120. Should the sale price of this house really be taken 'as is', even though it was clearly 'priced-to-sell'?

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Tue Jul 7, 2009
An excessive (more than 90) DOM usually negatively effects the appraised value, because that is an indication of a home being overpriced. The opposite (less DOM) doesn't work in reverse though.

Unfortunately, homes that are "priced to sell" - foreclosures, short sales, relocations, etc - are most representative of the current real estate market in most areas nowadays. And lenders want to err on the side of being conservative, even if it kills a deal between a willing buyer and seller.

When there are an abundance of similar comps in a 3-6 month time frame then an appraiser may have the ability to overlook one bad apple. But when there aren't (like now), then they have to report things back to the lender best they can even if it upsets the buyer and seller. The new HVCC (home valuation code of conduct) adopted recently makes it even tougher to dispute an appraised value as well.

So unfortunately it sounds like you're stuck between a rock and a hard place here. Best of luck
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