real estate Archives - annarborappraisal

Why price per square foot is not the appraisers choice

Often, buyers and sellers are under the impression that it is simple to price a house by its square footage. Nothing is further from the truth, unless of course, all the comparable properties considered are within a couple square feet of each other and have the same quality and condition and are in the same immediate neighborhood with no variation in the value of the site.

Underneath all is the land. This means that a house that sits on a hypothetical 60×120 sqft site should have the same underlying value if the house were 1,000 sqft or 2,000 sqft. If land is selling for $50,000 for this 7,200 sqft lot, then the value of the land does not change in value because it has a larger or a smaller house on it.

Take this following visual for example, it includes median sales prices over time for all sales in an area, as well as median sales prices over time for houses that are between 800-1200 sqft. Notice how the smaller houses measured with the moving average trend line, are sold for quite a bit less than those that encompass the entire market (in this case, a school district). The median size for the houses within the school district as a whole in this sample, were largely between 2,050 and 2,250 sqft. The median size of the smaller houses was largely between 950-1050 sqft. Therefore, the median price would be expected to be half for the smaller houses than the market as a whole, but that is not the case. The median price of the larger market sales was around $360,000, while the smaller houses was around $225,000, or 37% less, not 50% less.

Take the same information looking at price per square foot, and the scenario is now flipped on its head. The blue moving average line is that of price per square foot, which favors the smaller houses, running around $225 per sqft on average while the wider market was showing around $170 per square foot, or around 24% less per square foot.

Another way to look at this is, what is the value of a Tesla per pound? What is the value of a Yugo per pound? Obviously, they are not the same. This is the same idea behind price per square foot for real property valuations. If you have questions about how an appraiser values a property, please reach out to your local appraisal expert and ask questions. Better yet, if you need to know the value of a property, engage a professional to help answer your questions.

Hopefully this helps clear up why it is that appraisers do not simply use the price per square foot method in determining the value of a property.

Why the contract?

Why does the appraiser need the sales contract?

This is a question we hear over and over again. It seems counter-intuitive, that if an appraiser is hired to come to an independent opinion of market value in a sales situation, that they would require a copy of the contract. There are a couple reasons that the appraiser will request the contract.

One is that it is a requirement of the Uniform Standards of Professional Appraisal Practice (USPAP) to which appraisers must comply. Specifically, the appraiser needs to comply with Standards Rule 1-5 (a), which is:

When the value opinion to be developed is market value, an appraiser must, if such information is available to the appraiser in the normal course of business: analyze all agreements of sale, options, and listings of the subject property current as of the effective date of the appraisal; and (b) analyze all sales of the subject property that occurred within three (3) years prior to the effective date of the appraisal.

This is the development standard, meaning when the appraiser is doing the analysis portion of the assignment. The reporting standard, the meat of what the public sees, applies to Standards Rule 2-2(a)(viii). In it, the comment section, third paragraph is:

When reporting an opinion of market value, a summary of the results of analyzing the subject sales, agreements of sale, options, and listings in accordance with Standards Rule 1-5 is required. If such information is unobtainable, a statement on the efforts undertaken by the appraiser to obtain the information is required. If such information is irrelevant, a statement acknowledging the existing of the information and citing its lack of relevance is required.

As noted above, analyzing and reporting on the contract is a requirement of USPAP. This is the primary reason you will be asked for a copy of the sales contract.

Another reason that you will be asked for a copy of the contract is to analyze what the meeting of the minds was, as the negotiation process can be meaningful. If the house was listed for $250,000 and there were five offers from $250,000 to $260,000 and it sold for $260,000, then the seller was in a very strong position and it is evidence of a seller’s market. If it was listed for $250,000 and sat on the market for six months, before getting an accepted offer at $200,000, then the buyer was in the best position. What if this house sold for $240,000 and the appraisers’ sales were from $220,000 to $245,000, and the value indication was $238,000? What if the adjusted range of the sales was from $235,000 to $240,000, but the most similar of the sales was $240,000 and adjusted at the same? Even if the indication from other sales was $238,000, that $240,000 was also supported, and it was the most relevant sale. If the appraiser opted for that $238,000 value instead of considering the negotiated contract between willing buyer and willing seller, they may be remiss. It is one data point in a series of other data points, and should be considered. Now of course, if the best indicator was $235,000 and there was only one odd sale supporting $240,000, we would expect the opinion to be at $235,000. There is normally some swing in range, in which one sale will stand out as better than the others. This is one of the reasons that the appraiser asks for a copy of the contract. It is also one reason that appraisers do not average adjusted sales prices, as there is often one or two sales that are more similar to the subject property than the others.

If the lender underwriters could make a decision based on the adjusted and unadjusted range of values, it would make this contract analysis less important. Unfortunately, a range of values has not been accepted by the government sponsored entities as a viable position, in spite of it being most relevant from the appraisal standpoint. As long as a point value is required in the reporting of the value opinion (and required by USPAP), appraisers will need to keep analyzing the contract. It bears repeating however, that an appraisal should never be a “bulls-eye” and if the value falls lower than the sales price, then it is quite simply possible that the property sold over market value. This happens in particular in highly undersupplied markets, or with buyers who are unduly motivated or lack knowledge of the market. The appraiser’s role as the unbiased third party is critical at that juncture. Reading the tone of the market and completing a true market analysis is vital, as markets are fluid.

Regardless of whether the appraiser is able to obtain a copy of the contract, they still need to address what steps they took to obtain it, and they need to analyze the listings of the property. Although USPAP addresses listings current as of the effective date of the report, the Fannie Mae/Freddie Mac forms go further with the specific question “is the subject property currently offered for sale or has it been offered for sale in the twelve months prior to the effective date of this appraisal?” That means that even if it is not offered for sale today, but was offered for sale six months ago at $200,000 and is now under contract for $250,000, there is going to be a need to discuss what happened in the interim. Did the market change drastically in those six months, such as the city being awarded the second Amazon Headquarters? Did the house undergo substantial renovation? Was it taken off the market six months ago in order to mitigate the problem points with buyers, such as installing a new roof and a new kitchen after complaints indicated those were huge sticking points? The appraiser is going to have to address it regardless, if the report is for mortgage financing.

Even though it may seem strange that the appraiser is requesting a copy of the contract, or even asking about prior listings, it is part of our due diligence process. It is a requirement of our professional standards. Please be forthcoming with all information that has been negotiated, including any sales concessions or repairs that may be on a separate addendum. Afterall, it is part of what is required of the appraiser in their analysis of the sale.

Vernon Downs

Situated north of Scio Church Road and south of Avondale, on Ann Arbors West Side, Vernon Downs is a long popular development built in several phases between 1955 and 1965 by George Airey. The houses are well-built, and a mixture of ranch, split-level, capes and colonials. The majority of houses are ranch style, between 1,200 and 1,400 sqft in size. The oldest parts of the subdivision along Winsted, Sanford, Weldon and Waverly are primarily smaller ranches with varying degrees of off-street parking including carports, detached, attached, and no garages. The later part of the development along the west side, towards Maple Road (Waltham, Agincourt, Covington, and others) have more mixture and larger houses, with attached garages standard. The primary school is located on the northwestern side of the subdivision, and the area high school is less than one mile east across Seventh.

The Ann Arbor Area Board of Realtors no longer retains hardcopy MLS books, but does retain fairly robust data back to 2005, and in some instances earlier. Doing a search for the word “Vernon” in the legal description of all sales found online, and then restricting these to ranch style only, it is easy to track movement in price over time, including the Great Recession that hit Ann Arbor as well as the nation in general. The first graph shows price reductions for individual sales over time. This was included as price reductions are a leading indicator of a changing market. Using this information, it was clear that price reductions had started in 2005-06, and that they had increased in number between 2007 and 2010, then a second spike in 2012.

The next data run was related to net sales price over time, showing increases at a significant level over the past few years, and the largest dip in prices here between 2009 and 2010.

Because there were varying size houses in the mix, and because the neighborhood is spread out in phases with the newer larger houses tending to sell at higher prices, price per square foot was also run. This data also shows a dip in prices in 2009 and 2010.

Because there were so many sales using this method (204 in total), it was also broken out year by year, and finally comparing current activity in the neighborhood using the same criteria of “Vernon” and ranch style houses. This is displayed in average price over time, as median and averages were largely similar.

In observing this data, what is particularly noted is that right now, there is only one active and one property under contract, but both are lower priced than the past two years sales. Of course, the contracted property is smaller than the averages and likely in the older section, but it is worth noting.

Using the data above on a yearly run, It is easy to see how the list price to sales price ratio widened over time to a low point in 2005 (too few sales) and 2010, and rose over 100% in 2016 and 2017. So far, 2018 is lower, just over 97%. Part is likely due to the increasing prices however. Again, this could be a bellwether indicator of a market in transition.

Average sales price over time shows a decline from 2004 to 2005, but again there were too few sales in the MLS at that time to be meaningful, and an increase slightly in 2006 and 2007, followed by a decline to a low point in 2009. Because markets are very location specific, this is very interesting to observe, as the condominium study that was completed last week showed a decline in prices starting in 2005. Those condominium properties are on the southwest side of Ann Arbor, only a couple miles from Vernon Downs. It actually makes a lot of sense to see rates of decline and increase at different times, because so much of what we see related to price fluctuation can be related to supply and demand. In areas with ample supply, the market may change at a greater rate, and at an earlier time. The average sales price per square foot ratio is much the same as the average price ratio, so is not posted in addition, but there is a leveling of price per square foot noted between 2017 and 2018.

For the real estate professionals reading this blog, how does the current market “feel” to you? Does it feel like a normal winter slowdown, particularly with some early cold snaps we have had, or are the interest rates and price increases over the past couple of years perhaps taking a toll? Probably none of us can pin this down at the moment, but it is worth watching what is going on with the market, particularly the properties that are on the market and not going to contract, the price reductions, and the list prices of the contracted listings.

Hope everyone had a great Thanksgiving, and be safe out there!

Rent versus buy?

Real estate social media shows a constant narrative about the benefits of owning a property versus renting. This brief synopsis addresses how this is not always true.

In real estate, it is location, location, location. What is true in one area may not be true in another, and renting is not always more expensive than owning. So many articles that compare ownership versus renting costs do not account for the necessary set-asides that have to be factored into homeownership. They do not address the flexibility of renting; meaning that if someone is still in an upward career trajectory, they may not want to be tied down to a property. They do not factor in what could happen if markets change and prices move downward. Of course, values could continue to rise and rents could continue to increase, so each person considering owning versus renting needs to consider their own unique needs, as do the professionals assisting them.

To make a comparison, look at the most recent rentals within a series of condominium complexes, and compare them with the most recent sales. The data is segmented into three different unit sizes and uses the rental cost versus the cost of ownership with a 20% down payment and 4.5% interest rate. Many buyers are not going to have the 20% down payment, so the cost would be higher, as the loan payment would increase not only by the amount of the mortgage, but with the added cost of private mortgage insurance (PMI).

The above table shows rents between $1,400 and $1,700 per month. The yellow highlighted properties are the ones that are compared to cost of ownership, as there were sales of the same models available in the same period.

The next chart shows the sales, with the stated homeowners association fees and monthly tax burden, plus what a 30-year, 4.5% interest rate mortgage at 80% loan to value would equate to. The “total” column is the mortgage plus taxes and HOA. Insurance is not factored in as it is variable. These stated taxes were largely incorrect however, as they were the seller’s taxes, not the taxes that the buyer would be paying once the property reset to the State Equalized Value as opposed to the lower Taxable Values.

Factoring in the reset to taxable values for the properties that were highlighted above shows a different scenario. In this scenario, the actual tax burden was added, plus a 10% set aside for repairs and upgrades, and a “true total” comparison made. Because the 1,126 sqft unit was renting for $1,500 per month, the difference is only $1 per month in savings. The 1,376 sqft units showed a better buffer of between $76 and $140 per month, but the larger 1,382 sqft unit would have been more expensive to purchase than rent.

It bears repeating that the data above factors 20% down payment, and not everyone who is looking at renting versus buying, has these resources. Not every situation is the same, and it is very important to look at each case individually to make comparisons between renting versus owning. Although national data can be enticing to make a case that one is better than another, it is not the case in every situation.

Consult your local professionals for advice related to what works best for your situation.

The boomerang

Condominium developments offer a perfect opportunity to measure what has occurred in the market over time. Ann Arbor has four condominium developments that are adjacent to each other, built in rapid succession between 1991 and 2000 by the same builder. They have largely similar floor plans and amenities. Although the properties within the developments vary somewhat, they are not too varied for comparison purposes. The only exception to this being properties that have attached garages. The units on that street were eliminated from the study to retain better consistency. In total, 506 sales were used to conduct this market study.

In short, this particular market has boomeranged and is now higher than it was at the apex pre-crash.

The Ann Arbor Area Board of Realtors MLS retains data robustly to 2005/06 at this point, but there is still information available online in some instances as early as 1998. Running a map search of the developments turned up sales as far back as 1998, which offered an ideal dataset to show trends in this market over a longer period of time than normal.

The data above shows that the number of listings retained do increase in 2005, but there were sufficient sales prior to that to show the run up in prices between 1998 and the peak around 2004 for these condominium units. The trend towards declining prices is clear by 2006, and the lowest point of the market is between 2010 and 2011.

If sales are arrayed by average and median price per year, the differences become much starker. Bear in mind, that the data up through 2002 was spotty, but trends can still be determined, showing the height of this market in 2004, starting a decline in 2005, and then rising again starting in 2012. The blue bar is the average price and orange bar the median prices. While the mortgage crises were largely said to have started in 2008, in the Ann Arbor market, the decline was evident much earlier, easily seen with the data below.

This is another example of why national trends cannot be used uniformly, and why each market has to be looked at on a local basis, even hyper-local. This is because condominium properties do not necessarily move at the same rate as single unit properties. Different price ranges may have different market trends, and different property types different market trends. Trends can also reverse quite quickly, therefore paying close attention to current activity is important.

There are currently 11 condominium units on the market in these developments, with three under contract. The average asking price of the units available is currently $200,025 while the median asking price is $196,950. The average asking price of the units under contract is $194,617 while the median is $194,000. This indicates preference to the lower prices in general.

What is particularly interesting in this data, is that only three of eleven are under contract, meaning the contract-to-listing ratio is 27.27%. That is stable market activity. In the past twelve months there were 30 sales (excluding the garage unit street), meaning that there were 2.5 sales per month, so the eight remaining units not under contract would be expected to absorb in 3.2 months, again a balanced market. The interesting piece of this puzzle is that the average sales price of these 30 sales was $202,037 and median sales price was $195,500, with list prices a fraction higher.

If the units that are under contract have lower asking prices than the previous twelve months sales, are we starting to see a shift occur again? After all, the properties on the market, and particularly those under contract, are leading indicators of where the market is going. Couple that with supply of over three months, and normal contract-to-listing ratios, and the market could be showing softness above the normal autumn slow-down.

Affordability in Chelsea Fairways

Affordability and rising prices

We have seen rapid price appreciation from recent market lows in 2007-10 in this particular submarket. Rising prices are great for sellers, but are they good for buyers? How do the increasing prices affect affordability?

Chelsea Fairways is a newer subdivision on the southeast side of Chelsea in Michigan. It has had a handful of developers active over the years, with the initial sales starting in 2002 and stalled around 2006 when the market slowed down locally. The final build out was completed in 2016 by a different builder, but throughout, the housing stock remained similar in quality and scope. Arraying the sales by price less concessions, it is easy to see how the bottom of this market was towards the 2008-10 period, with rapid increases from 2014 through 2017.

Other than completing the build-out of the development, not much has changed in the subdivision. The houses remain similar, the housing stock has aged somewhat, but the area is well maintained and continues to be a popular subdivision.

How do the increases in price affect affordability? We hear arguments about how the low interest rates made payments much lower, allowing buyers to stretch their housing dollars, but interest rates have been increasing slightly over the years based on the data found through Freddie Mac (see link below) which references historic interest rates by month.

One sale sold and resold a few times during this period, and is a good indicator about how payments would change over time with the hypothetical same buyer, with 20% down payment and prevailing interest rate for the time. In June 2012 the house sold for $226,200 and had taxes equivalent to $427 per month. Interest rates showed as 3.68% at that time. In May 2017 it sold for $335,000 and taxes of $493 per month. Interest rates showed at 4.01%. In July 2018 it sold for $359,000 and had taxes of $480 per month. Interest rates showed at 4.53%.

Based on the old rule of 28% housing-debt to income ratio, the following tables shows how the increasing interest rates and mortgage payment, increases the amount of income necessary to afford the same house. Although the 28% rule no longer applies, it is relevant in gauging changes in affordability. The same house purchased today would have an increase of almost $500 per month compared to six years ago. Does the typical buyer have the additional $500 per month to spend on mortgage payments, and would it affect the amount they could set aside for eventual needed repairs on the house? The increase in the properties sales price in six years was 58.71%. The rise in property payments over the same period was 54.25%. Have incomes increased over 50% in six years?

Of course, this example may be extreme, but since the sale was recent, and it sold several times over the past six years, it was germane. Interest rates rose, taxes declined slightly from the 2017 to 2018 period, making the payment a bit less than would otherwise be expected. In 2012, most of the houses sold were in the mid $200,000’s. There were a few REO sales that brought median and average lower, but the five non-distress sales had an average price of $236,274, therefore the sale used as a test was in the range of the others. In 2018 there were five sales with an average price of $372,300, also indicating an increase of over 57% in that same period.

Is this type of increase, coupled with the increasing interest rates and increasing taxes (for the most part) partly responsible for the current slowdown we are seeing? Is it just that we are entering a traditionally slower time of year? I do not have a crystal ball for the future, but throw out the question about affordability, since most people I know did not have a 50% increase in income over the past six years that would be what is needed to afford the same house.

Historic interest rates found through the following website:

http://www.freddiemac.com/pmms/pmms30.html

What is a comparable sale?

You have been working with your buyer now for five months. They have written six offers and have lost out on each in a bidding war. A new house comes on the market which meets their needs, and frankly, they are tired of making offers and losing out on the deal. This time they decide to come in with an offer substantially above asking price in order to beat out the myriad other offers they expect are coming. The strategy works and they win the deal. Trouble is, they still have to obtain financing. The offer does include a three percent concession for closing costs, which the seller was happy to agree to considering they accepted an offer that was twelve percent higher than asking price. They were particularly happy as the only other offer they received was slightly less than asking. This happens. The seller’s agent is not under any obligation to say how many offers were received nor what the offer prices were. The weary buyer offered in good faith to secure the property. They simply did not want to lose out on yet another property.

Along comes the appraiser for the buyer’s mortgage lender. The appraiser studies the market, notices that the market has started to cool, and that instead of houses receiving ten or more offers at a time, now they are receiving only one or two, if any. Houses are starting to remain on the market a bit longer than they were. The sales the appraiser analyzes are good comparable properties, but they all sold slightly lower than the asking price for the property, and 12-14% lower than the agreed upon sales price. After analyzing the market and the sales, the appraised value falls short of the sales price by 12%, in line with the asking price. The question is, do you try to renegotiate the contract immediately, or do you take the route of requesting a reconsideration of value claiming the appraisal was inaccurate and submit several sales that you say are better than those included in the report?

How are they better? Is it just that they sold higher than any of the sales the appraiser used, or are they actually comparable properties? Are they already addressed in the appraisal report? Sometimes there is a narrative section which addresses sales that were considered and were not included in the comparable sales grid for one reason or another. If you have the opportunity, read the appraisal report in its entirety first, as you may find the report had a compelling discussion related to why the sales included were the best available and how the value was arrived at.

A comparable property is one that is a substitute for another property. It is uncommon to have properties that are directly comparable since every house has something unique about it. A car analogy might help you in choosing comparable properties for your market analysis, or to provide appraisers on your sales when you meet them at the property (and no, we do not mind having sales offered as long as there is no expectation that we are going to use them, just consider them).

Most people will want to buy as much as they can for as little as possible. If you have a budget for a new car of $25,000, it is unlikely you would be out looking at BMW’s or Mercedes, whereas if you have a budget of $60,000 and want a German car, you are unlikely to be looking at VW Bugs. Is the VW Bug comparable with a BMW 5-Series? Not likely. Are they both German Cars? Of course. Would the buyer of a VW Bug choose a BMW 5-Series if they were the same price? Most likely. Would the buyer of the BMW 5-Series buy the VW Bug if they were the same price? Highly unlikely. You get the picture.

This is the same idea with comparable properties. While a buyer of a good basic 1,500 square foot tract house would likely jump at the chance to buy a 2,500 square foot semi-custom house if they were the same price, in equal locations, the converse would not be the case. The reason for these basic terms is that we have all seen agents provide appraisers “comparable” properties that are anything but. To be comparable, the likely buyers of one would have to consider the other, so it is not only that the buyer for the subject will consider a far superior property, but the buyer of that far superior property would want to be reasonably considering the subject.

What does this mean when you provide sales to an appraiser? First, look for what the typical buyer for your property would truly look at as a substitution. When you do that, look at those sales in the same vein, as whether your property would be a reasonable substitution. Sometimes there is nothing even approaching comparable to your property. In this instance, look to what else has sold that has some element of comparison, such as location, or quality and size, and then try to find something that is obviously not as good as your property as well as something that is better. In that manner, at least you will know that the property should be worth more than something and less than something. Appraisers will do this on those unique circumstances when there is truly no comparable property to chose from.

This bit of wisdom will help you choose the comparable properties for your market analysis, and give you a good basis of comparable properties for the appraiser should you wish to share them.

Saline MI market trends

While the market appears to be moving at breakneck speed in parts of the country, even in some of the most popular markets, it is not exactly so. Changes occur constantly, with submarkets having different appeal at different times.

The data below is that of my community, Saline MI, just south of Ann Arbor. Although the data presented does not break out submarkets within Saline, what it does is break out by price range. I could have expanded the price range above the $501,000 mark, but chose to keep it at this level for simplicities sake. The way the data reads is as follows:

The chart shows the number of total active listings, then those under contract, one years’ worth of sales, and supply compared to the past year. Finally, it shows the Contract-to-listing ratio (CTLR) of percent of properties on the market that are under contract. This is relevant as it gives an overall pulse of what is happening in the market, with 20% or less being a buyers’ market based on my experience, and over 35% a seller’s market. I have run these in price ranges as shown below, and have been tracking occasionally to see any changes. This particular grouping is interesting because what we are seeing is the early spring market, the height of the market, the early fall market, and now the late fall market. I will keep running these types of studies throughout the year to see if we have changes that start to happen, but what I am seeing from this is the expected slow-down as we head into winter.

Comparing March to June, the rate of absorption overall has increased and inventory in general has increased. The price range between $201,000 and $300,000 showed a slight slow down in absorption, while anything over $301,000 showed an increase in activity.

Compare early fall to late fall and the market again is changing, with the CTLR dropping and showing more balance. The greatest absorption has generally been in the $401,000-$500,000 range based on this information, with the exception of the current activity in the under $200,000 range. In both of these cases, over $501,000 is much lighter absorption in general.

We have gone from 34.58% CTLR in March, to 41.29% in June, then 29.35% in September and 28.88% as of today. That is for the entire Saline market, with different price ranges showing different absorption rates depending on when the data was run.

What does this all mean? Long and short is that it shows how the markets change as far as activity based on the time of year, as well as in what particular price ranges the market is hottest at each one of these periods. It shows that although the market may be “hot” in one segment, another may be quite cool. Of course, this is by price range as opposed to an actual submarket, but the logic behind it remains the same.

Hope everyone finds this interesting. If you have any questions about appraisals in the Washtenaw County market and beyond, please let me know. Feel free to visit my website at https://annarborappraisals.com for the types of services provided and the coverage area.

Data culled from the Ann Arbor Area Board of Realtors MLS

Dissolution appraisal reports

Appraisals for marital dissolution

There are many reasons to obtain a professional valuation on your property. One of the most difficult and sensitive reasons is for marital dissolution. Since the marital home is normally one of the most valuable jointly held assets, taking on an appraiser to do the work should never be done lightly.

As in all appraisal reports that are completed, utmost care should be taken in considering factors that influence the value of the property. Knowledge of the local market, including understanding supply and demand, absorption into the market, and pulse within the subject’s submarket is very important. Equally important is an understanding of buyer preferences in the submarket which the property operates within. For example, if the market expects two full bathrooms but the property has only one, how does that affect the value as well as the marketability of the property? If buyers expect a three-car garage in newer homes, but the subject has only two, does it change the buyer pool altogether? Is the market slowing; is it increasing; are buyers out in droves looking at properties or are they pulling back and waiting? These are some of the types of questions appraisers examine as they study the market related to the appraisal report.

The written communication, the appraisal report.

When we think of the word “Appraisal”, we often think of the communication of the appraisal. The appraisal is actually the act or process of developing that opinion of value. What you, the consumer, will see, is the “Report”. The report is the communication of the appraisal (or appraisal review), which is transmitted at the completion of the assignment. As a party who is not typically reading appraisal reports on a daily basis, the communication should be addressed in a manner that is clear, understandable and not misleading. This means that jargon should be minimized, or if used, explained. It means that there may be no need to provide a mile-high analysis of the nation’s economy, but stick with specifics that relate to the property itself. Of course, it is important to discuss what is happening with the market, but for a single-unit residence, what is happening in California will not be relevant to what is happening in Ann Arbor, in most cases.

The report should contain enough information that, you the client, can understand completely how the appraiser arrived at their opinion of value, whether or not you agree with that conclusion. Sometimes clients will not agree with the conclusion, but it is critical that they understand the logic and reasoning behind it.

There are many steps that are taken to arrive at an opinion of value, and to communicate that opinion in a manner that is clear and understandable. Choosing an appraiser to handle this very important piece of the dissolution problem should be done with care. Your attorney should have suggestions for whom to use. If you are not working with an attorney, consult those who do see appraisal reports with regularity such as REALTORS, loan personnel, and other appraisers. In fact, one of the best ways to hire a competent professional to handle this sensitive need, is to ask other appraisers whom they would recommend. Time and again, a couple names will surface. Interview those appraisers and go with whom you feel most comfortable. Other avenues of finding competent appraisers is to search appraiser databases from different appraisal organizations. The Appraisal Institute has the Find an Appraiser search function found here The Relocation Appraisers and Consultants has a directory search found here , and the American Society of Appraisers has a search section here.

Fees and turn times.

Every appraiser sets their own fee schedule and turn time for completing assignments. Considering the time that is involved in properly identifying the problem to be solved (which includes the different factors that influence value), determining what is necessary to solve the problem, implementing those processes, and then communicating the findings, do not expect the appraisal report to be an inexpensive part of the dissolution process. Given the hourly rate of most attorneys, expect to pay somewhere between two and five hours of your attorney’s fee for the appraisal report itself, and an hourly rate for any testimony that is needed in the event of a court or deposition appearance. If the marital home is the greatest asset that is jointly owned, this is a small price to pay for peace of mind of a job well done.

Bromley Park updated

Bromley Park is a subdivision developed and built by Pulte Homes from 2002 through 2004, south of Geddes, north of Clark and east of Harris in Superior Township in the Willow Run Public school district. It encompasses the streets East and West Avondale Circle, Ravenshire, High Meadow, Wexford and Glenhill Drives. The subdivision has open green spaces to the west and to the north up to Geddes Road, and along the south and east there are many wooded views. Along the interior streets there are some areas with woods and walking paths. The development has a shared pool with the condominium development to the west. There are 266 homesites within this detached single-family development.

Further information about Bromley Park can be located by accessing the development website at
http://www.bromleypark.org/

In 2015, dues were $425 for the year.

On 1/13/14 I ran statistics related to changes in the market from 2011 through 2013 in Bromley itself, showing a decline in short sales and foreclosure properties and an increase in arm’s length sales, as well as an increase in sales overall. Sales prices also showed as on the increase, rising from a median price of $135,500 to $169,500 over that three-year period. That information is found on an earlier blog post found here.

So how is this development faring in todays’ market? Recent sales are higher than the previous peak around 2005 (or statistics do not go back adequately that far and I ran 12-years’ worth of sales). The low part of the market in this development is between late 2009 and late 2012, and prices reached previous peaks around 2015-16, rising since then as shown by this chart.

Over the past two years, the increase has been strong as well, rising from an average sales price of $229,315 to an average of $254,167 from one year to the next (10.84% increase). The median price has increased from $225,000 to $250,000 (11.11%) with the same information, with similar average and median gross living area.

Currently there are three houses offered for sale in the development with a median asking price of $279,900 and an additional one house under contract, which has an asking price of $244,900. The gross living area for the house under contract is 1,795 sqft, which is in line with the median and average sizes of the sales in the 2-year study. The median size of the active properties is higher, at 2,156 sqft, which may account for the higher asking prices. With only one out of four houses under contract, the market shows 25% absorption, which is not robust and could indicate a shift, in particular as the one listing under contract points to a lower price than average and medians.

As there were 12 sales in the past 12-months, the current inventory indicates a 3-month supply. These factors point to a stable market, to possible pressure downward due to the one pending sale. This means, that although the trend lines show increasing, the market could be changing. Looking deeper into the sales that sold last year and the current contracted property, shows similar style houses in the same price range overall, indicating stable. An appraiser would not be faulted for calling the market either stable or increasing based on all of this information.

For any questions related to this, or other information on this website, please contact me at rachmass@comcast.net