The ongoing discussion/thread regarding removing foreclosures from appraisals (See the comments under Nevada moves to ban foreclosures from appraisals) got me thinking: 1) is there an inherent difference in value between the different types of sales; and 2) if so, how great a difference?
As a start to answering these questions, I pulled 2011’s first quarter sales (1,250 units) and looked at the median and average sold price per square foot broken out by sales type. Here’s what I found:
||units sold||median sales price||median sold $/sq.ft.
||average sold $/sq.ft.|
|2011 Q1 total
Certainly, some dramatic differences in the price per square foot can be observed. For example, the difference in median sold price per square foot for bank-owned (foreclosure) properties, at $83.54, and non-distressed sales, at $115.25, is a whopping $31.71. That’s huge, folks!
Just to lend some perspective to such a difference, the average size of the houses sold in Q1 2011 was 1,972-sq.ft. Multiplying that size by the $31.71 difference above yields a price differential of $62,532.12. The median size of the houses sold in Q1 2011 was 1,769-sq.ft. Multiplying that size by the $31.71 difference above yields a price differential of $56,094.99. Either number is substantial.
Now do these differences warrant excluding certain types of properties from appraisals? I suppose that’s up to the legislators to decide.
Note: The median home price data above covers the cities of Reno, Nevada and Sparks, Nevada [NNRMLS Area #100]. Residential data includes Site/Stick Built properties only. Data excludes Condo/Townhouse, Manufactured/Modular and Shared Ownership properties. Data courtesy of the Northern Nevada Regional MLS – April 2011. Note: This information is deemed reliable, but not guaranteed.