Verifying MLS Shown Sales Price
Verifying property sales data is a key element and requirement in doing appraisals correctly…
Verifying property sales data is a key element and requirement in doing appraisals correctly. We cannot just assume the MLS reports sale prices correctly.
One aid to help do this is by using one of the ‘data download’ software providers which prefill many property data items in the report comparable grids. These companies have direct interties with the local MLS (most, not all across the US), and public data from either your jurisdiction recording or assessor office, or an amalgamation company such as Realist. Two ‘data download’ providers are DataMaster and SPARK; there may be others.
I’m involved in a current report, using 4 comparables. I am a subscriber to SPARK.
I pre-selected my comparables in the MLS, then directed SPARK to capture relevant data for those, and from public records.
Before exporting that data to the actual report, both ‘data download’ software providers flag data points that conflict, and show those on your computer.
In this case, a comparable sales price in the MLS was reported $11,500 higher than the ‘public’ record. That caused me to examine ‘public’ records from our Assessor and Treasurer more carefully – which we can do easily using their web sites (thank goodness, and I realize others across the country are not so fortunate).
Indeed, the Assessor’s sale transfer price was shown to be the lower figure. To verify that, I looked at the recorded Excise Tax document on the Treasure’s site. That only shows the gross Excise Tax collected, but not the actual sale price. In our case, the Excise Tax is 1.78% of the sale price, which I also had to research using the WA State web site which shows the Excise Tax percentage in all counties, and cities that vary by location.
When I multiplied the ‘lower’ sale price by 1.78%, the result equaled the recorded Excise Tax amount on that document. At that point, I knew that the lower price was correct, and not the MLS shown price.
The last thing I did was send an email to the MLS office ‘listing input department’ with the above info, and asked them to correct the listing. I received a message back that the change was made.
But the real story here is this MLS error existed for nearly 18 months! Apparently no other appraiser in this span of time bothered to actually verify the sales price info, and notify the MLS. That also tells me that appraisals using this particular property as a comp may have been over-valued, especially if the appraiser didn’t verify the sale price using available public records.
You should become very familiar with the various ways you can verify sales prices, and other data, in your own region. And don’t be afraid about sending your info to the MLS, to request a correction be made.
To repeat: “Verifying property sales data is a key element and requirement in doing appraisals correctly.”
Dave Towne on e-AppraisersDirectory.com
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When others make a living teaching appraisers how to churn out 4 to 9 appraisals a day while spending as little as 30 minutes doing a review (thank you Philippines), it’s no surprise that others are skipping the truth while they seek profits over principles.
Seek the truth.
The buyer, the seller, the agent sometimes have different views of the price and other things. Not infrequently the agent delivers the package where negotiations continue.
MY #1 RULE—
Always verify, never assume, and always use supported facts and figures.
Keep it simple
I call the listing or buyer’s agent on each comp regardless if the public records agree. Don’t assume the public record is correct either. I have had agents give me the full story on the price in several occasions in which their closing statements say one thing and the public records say another. You should be calling the agents to make sure of any concessions which may or may not be indicated. BTW, concessions will not be discussed in public records. Also, about 1 in 30 comps, an agent will tell me about a seller-to-buyer concession agreement that did not show up in the MLS that often take place after closing to reimburse repair costs or whatever. About 1-10 comps I see do not have the right price. About 1 in 10 omit any concessions, or have the wrong concession amount. Again, don’t assume the public records are correct either. Make a sale profile discussing the comp and the transaction and with whom you verified the details. Then discuss the comp as it relates to the subject. It takes longer, sometimes much longer, but it is due diligence to get it correct.
Oh, and to the author: You assume the MLS price is incorrect. Why not call the agent to verify if this is the case? It takes the same amount of time to call the MLS to claim the price printed is incorrect as it does to call the agent to verify. I would rather verify and be confident than just assume I am correct. We all know the definition of ASSUME don’t we?
The author’s example claiming, or asusming the MLS price is incorrect. On the contrary, it could be correct. You said it was higher than public records. It could be the MLS did not disclose a concession. If it is a repair concession, perhaps the condition rating needs to be readdressed. Not all concession are for closing costs.
Some of these concerns are mitigated by mandated state forms which require clear disclosure of concessions, and disclosure rules through both state regs and MLS group regs.
This is where automation works against the appraiser. It only takes a few minutes to verify, however is necessary in your particular location. Then it takes approximately 30 seconds to type all that data into the grid accurately. Or per the software guys, just map the data, automate the process, outsource the duty, and call it a day.
Line 10 on page 5 of the URAR should be the guiding light on verification. Regardless of the difference observed between those 2 data sources stated. Yes, they can in some instances be a verification, however they don’t address the motivation of the buyer or the seller. Yes, it is easy to just rely on the MLS or the tax records but they don’t meet the requirements on Page 5 of which you certify and agree when you sign the form on Page 6.
I always verify sales price with public records it’s called CYA LOL.
if you will read line 10 on page 5 of the URAR you will recognize the public records will not CYA LOL.
I’m talking about recorded deeds, not assessors information.
We have the Affidavit of Property Value that is recorded at close of escrow here in Arizona. That Affidavit is signed by both the Seller and buyer. I get a copy from the county recorder’s office and use the purchase price stated on that Affidavit. If it doesn’t match MLS, I contact the agent. The other problem in my specific area is that 46% of the sales are FSBO in my main county and 64% in the other one. I search the internet for listing in some type of FSBO website and Zillow. Many of the FSBOs have more photos and more description than a typical MLS listing. The seller is very anxious to describe any thing that they think might encourage a potential buyer. The listing also has phone numbers most of the time for additional verification. Data bases like Core Logic , etc. don’t have all the sales and the correct information. The local MLS does not police listings, so it is not very reliable.