selling your house with no "comps"

Sparticle · #1 03/12/07, 12:08 PM

I had a contract pending on my house. now we are running into the problem with 2 appraisers saying there are no comps. the closest they can find is 10 miles away where the land is worth $5,000 per acre. in my area it's $13,800 per acre. The property they used for comps is in an area with no trees and in an area with mechanic shops and run down homes etc.. My land is full of trees in a gorgeous area with 80 foot high pecan trees. You can't even compare the two areas, they are only 10 miles away but might as well be 1,000 miles away they are so different. So they used that property 10 miles away to come up with the comps for the bank.

so now it looks like the sale won't go through. the cost analysis method, of course, shows a much higher appraisal. BUt, the buyer's bank won't use that. The appraisers both said the banks use comps only traditionally.

any ideas?

cfabe · #2 03/12/07, 12:14 PM

Well if there are no comps, how do you know your land is worth $13800 an acre?

If you go to www.realtor.com you they have a tool that looks up recent sales in the MLS in your area. Maybe you can use that to find a few comps that the appraiser overlooked for some reason.

SteveD(TX) · #3 03/12/07, 01:07 PM

Quote:

Originally Posted by cfabe

Well if there are no comps, how do you know your land is worth $13800 an acre? ...

Exactly my thought.

citilivin · #4 03/12/07, 01:08 PM

This is the problem with traditional lenders. They need to understand that not all properties fit the traditional guidelines. I would see what lenders other owners in your area are using. A comp may be apples and oranges compared to your property, but adjustments to the comps should take that into consideration. I would also ask the appriasers to include older sales and to explain market conditions to show that the older sales are viable.

tiogacounty · #5 03/12/07, 01:37 PM

We had this problem and in my opinion the appraiser was flat out lazy and nearly cost me a great deal of money. We wanted to build a modest ranch house and need an appraisal for the construction loan. The appraiser went to a different county in a different market area (because it was easy to find comps there.) The only issue was that they that entire market was generally priced 20-30% lower. We had a battle with the bank who commissioned the appraisal and told them if they didn't find comps in our market area we wanted a new appraisal at the banks expense, and we would find somebody competent to handle the work. This gave the bank enough incentive to resolve the problem. Instead of going downmarket and attempting to adjust upward, they found bigger, closer homes to work with, and developed a figure that was more accurate. Good luck.

Maura · #6 03/12/07, 04:09 PM

Get comps for vacant land in your area, if you can. This will establish the land value, which should be adjusted for. It sounds as though the appaisers are not adjusting very well.

SteveD(TX) · #7 03/12/07, 04:17 PM

Quote:

Originally Posted by Maura

Get comps for vacant land in your area, if you can. This will establish the land value, which should be adjusted for. It sounds as though the appaisers are not adjusting very well.

I thought the whole property was: there are NO comps in her area.

But really, what the appraiser is saying is: there are no RECENT comps in the area. What he needs to do, is go back to a time when there were comps in her area, and compare them to sales that sold in the same time period in the area where there are current comps. That way, he can come up with an appropriate location adjustment, then apply that adjustment to the recent comps.

Rocky Fields · #8 03/12/07, 05:15 PM

Hey.

How did your homeowner's insurance company appraise and insure you? Did they give a replacement value?

RF

Sparticle · #9 03/12/07, 06:06 PM

There is only one semi-recent sale of land with home out here and it was worth about 7 times what this place is.

LAND is all that has sold and is for sale here. There are very few homes out here.

The closest land w/ home that has sold was 10 miles away and is in no way comparable, which was noted in the report. The land that is selling out here is going from $12,500 - $15,000 per acre unimproved. Across the street 5 acres just sold for $13,800, also unimproved. The 3 properties they used for comps, the acreage goes for $5,000 per acre. My neighbor that just sold 5 of her acres gave me the HUD sales contract showing the $13,800 and neither appraiser can use it because there is no home on the land.

Both appraisers said they can't consider the difference between the land value here and land value 10 miles away. The only thing they can use is land with a home on it comparable to mine, no matter the differences of the land value. Then they can make some adjustments for the house, but not for the land portion.

I would never Chop the trees down to sell them. The insurance company insures me based on what it would cost for replacement value of the home, not the land.

So even though i have nature trails, $2,000 worth of wrapped goat fencing, a driveway that doesn't flood (unlike ALL of my neighbors), fruits, nuts, berries, onions and the most beautiful trees - no one cares but me and the buyer.

This has been a good learning experience. Don't put more money into a place than comps will allow because you won't get it back out.

Now to decide what to do. Either way, I'm not going to get anywhere close to what I needed. Oh well, the door closed and now looking for that open window.

I know things will work out the way they are going to work out. I've called everyone I know and done all I know to do. It's no longer in my hands. Thanks for the input.

agmantoo · #10 03/12/07, 06:18 PM

What about the county's tax apprasial? Too low in respect to what you want for the property?

LagoVistaFarm · #11 03/12/07, 08:05 PM

Around here the market went dead for about six months. Lenders will only accept comps that are less than six months old, so people are waiting for sales to close in order to get a comp or two.

Sparticle · #12 03/12/07, 08:49 PM

Quote:

Originally Posted by agmantoo

What about the county's tax apprasial? Too low in respect to what you want for the property?

their website still shows my property as being owned by 3 owner's ago from 2001 or 2002. they are so behind. i called them and they said, yeah it's outdated.

Online it shows the last value as 1/2 of what it was going for over 3 years ago. Just trying to figure out how low I can go based on these numbers. I'll hear from the bank tomorrow. the agent has presented the cost analysis on this place to see if they'll consider it.

SteveD(TX) · #13 03/12/07, 11:53 PM

Some of what you are saying doesn't make sense. You say that they can't make adjustments for land, but what about size differences? Are you saying that if you have, say 5 acres, and the comp has say, 9 acres, there is no adjustment for the 4 acre differential? No.

There's really too many unknowns for me to say very much, but I have been an appraiser in TX for 24 years. The adjustments for differences in land must be made based upon land value, BUT...... one solitary comp does NOT make a market, and is not necessarily a reliable indicator of value for the whole area. The appraiser can adjust for trees, view, etc.. But an adjustment of $8800 per acre based upon one solitary sale would be ridiculous.

You said that all that is selling is land in your area. Do the other vacant land sales support $13,800 per acre? Do you have the land comps similar to yours in size in the other area that support $5,000 per acre? Try to find land comps in both areas to support your theory. Only using the highest sales per AC in your area and lowest sales in the other area won't work.

What part of TX are you in?

TedH71 · #14 03/13/07, 02:46 AM

Steve,

I believe she has land near Houston outside the city boundaries. I do know she has land in East Texas....I consider Houston to be part of East Texas.

minnikin1 · #15 03/13/07, 04:44 AM

:baby04: What a circular argument they're using!
If there are no comps, then the property they've arbitrarily selected to use from some arbitrary elsewhere is, in fact, not a comp and so it shouldn't have been used to value your house, either. :baby04:

So basically they've said, "here is a place that is not a comp; let's use it."

sheepish · #16 03/13/07, 05:58 AM

There are always comps. If you aren't looking at a subdivision with cookie-cutter houses that are selling frequently, then whoever is doing the comparing has to be more creative, more capable and do more legwork.

If the only similar sales are in the distant past, then they can raise or lower the value by the percentage the market has changed recently.

If the only comparables are in a different area, then the historical difference between the two areas is factored in to determine the value

If the only comparables have different property sizes, then a knowledgeable appraiser should know the effect of property size.

If the only comparables are different age or condition, then this can be figured in.

A combination of methods would work the best. With a difficult to appraise home, more points of view is more reliable.

If your specific property has sold 3 times in the past 5 years, I think that those prices should be part of the consideration.

Mallow · #17 03/13/07, 07:02 AM

I ran into the same sort of issue trying to get a loan for my underground house construction. No appraisal because of no comps. Finally found some ways to work around but man can it be a pain.

fantasymaker · #18 03/13/07, 09:15 AM

Tell the aparazer to get off his butt and go find a comparable property he might have to drive more than 10 miles!

Sparticle · #19 03/13/07, 09:23 AM

Quote:

Originally Posted by SteveD(TX)

Some of what you are saying doesn't make sense. You say that they can't make adjustments for land, but what about size differences? Are you saying that if you have, say 5 acres, and the comp has say, 9 acres, there is no adjustment for the 4 acre differential? No.

There's really too many unknowns for me to say very much, but I have been an appraiser in TX for 24 years. The adjustments for differences in land must be made based upon land value, BUT...... one solitary comp does NOT make a market, and is not necessarily a reliable indicator of value for the whole area. The appraiser can adjust for trees, view, etc.. But an adjustment of $8800 per acre based upon one solitary sale would be ridiculous.

You said that all that is selling is land in your area. Do the other vacant land sales support $13,800 per acre? Do you have the land comps similar to yours in size in the other area that support $5,000 per acre? Try to find land comps in both areas to support your theory. Only using the highest sales per AC in your area and lowest sales in the other area won't work.

What part of TX are you in?

I am not an appraiser so excuse me if what I'm saying doesn't make sense to you. All I know is that two appraisers have told me the same thing. I can't hire another one! Maybe I'm not explaining it well enough and at this point I'm just frustrated with the whole thing. i am not trying to keep information out of this thread and i've explained this situation as well as I can.

the fact stands that they picked 3 homes of like size and materials that were all 10 miles away. The homes were older, one was 11 years old, mine is 3. In the appraisal, it is commented that there are no homes like mine in this area. the homes they picked were on 5 acres like mine (well not like mine, they have no trees) which is why those properties were selected.

I'm not trying to get them to base the land value on one solitary sale. I used that one as an example because it just happened and it's right across the street. Other land has sold recently in my area for even higher than that and some a little lower. But over all, $13,800 is about average for out here.

SteveD(TX) · #20 03/13/07, 09:23 AM

Problems like this are the reason that there are 3 approaches to value, not just one like some underwriters like to think. Sometimes the Cost Approach is more reliable than the Sales Comparison Approach, esp. if the house is relatively new. If there are plenty of land sales in your immediate area, the house is not very old, and there are no "good" comps in your immediate area, the appraiser should lean more heavily on the Cost Approach. The problem is, underwriters tend to hate this, and Fannie Mae and FHA guidelines also disfavor doing this, despite the fact that it may be the most reliable indicator of value in some instances.