Valuation Gets Tough When Sales Slide

· Known concessions provided to buyers to facilitate sales.

· Personal interviews with real estate agents on what they're experiencing with sellers and buyers.

Even some of these factors can be tricky. For example, Crabtree said, some agents increasingly are playing what he calls "the re-list game." Because multiple listing system data reveals how long each property has been on the market, agents with unsold houses now sometimes cancel the listing -- take the property off the market for a short period of time -- and then list it again with a different price and MLS code.

"Now the house no longer looks like it's been sitting dead in the water for months on end," Crabtree said. "It looks like a new listing," and it's reported in that misleading way in the data that appraisers use to gauge the overall market.

Crabtree said one house he tracked was first listed in October at $299,900. It sat unsold for 122 days. Then the listing agent pulled it out of the system briefly and brought it back as a new listing, but this time at $269,000. When it didn't sell in 30 days, the agent again yanked the listing and reported it as a new one with an asking price of $259,000.

The house is now on the market for $229,000, "but it's still not selling."

Crabtree also is constantly on the prowl for concessions that may have puffed up the price of houses he's using as one of the six to nine comparables for an appraisal.

"There's just a tremendous number of them out there right now" -- some of them under the table and tough to detect -- "but they've got to come off the valuation."

In other words, if the recorded contract price on a pending or recently closed sale is $395,000, but the seller is kicking in $25,000 in concessions, the value of the property for comparable purposes is $370,000.

Another emerging challenge for appraisers in cooling markets: Some relocation companies and lenders are asking for not only current market values but also forecasts of where the property value will be in the coming 60 to 120 days.

Crabtree does that by feeding all the data at his disposal into a computer spreadsheet program to produce a linear regression "scatter pattern" chart showing the most probable valuations during the months ahead.

Lately, Crabtree's scattershot trend lines have been pointing down. But like most experienced appraisers, he knows that real estate moves in cycles. Booms typically have been followed by corrections, but not busts.

The unanswered questions: Where exactly are we in the correction phase? And when do prices stabilize and move up again?

Kenneth R. Harney's e-mail address isKenHarney@earthlink.net.