126. OBLIGATION TO ANALYZE WITHDRAWN OR EXPIRED LISTINGS (NEW)

Question: I was asked to appraise a single-family residence for refinancing. I am aware that the property had been previously listed but did not sell. During my data investigation and analysis, I noted that the owner’s estimate of value was $375,000. When I looked up the listing history, I found it had been withdrawn from the market at the asking price of $325,000. What are my obligations under USPAP regarding a withdrawn or expired listing of the subject property?

Response: Standards Rule states:

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:

(a) analyze all agreements of sale, options, or listings of the subject property current as of the effective date of the appraisal.

Therefore, there is not a specific requirement in Standards Rule 1-5(a) to consider and

analyze a withdrawn or expired listing of the subject property, prior to the date of the

appraisal.

However, a listing of the subject property prior to the effective date of the

appraisal might be significant in that it indicates the property’s availability in the market

and the market reaction to that availability. Likewise, agreements of sale and options are

generally significant to the appraisal problem in that they involve a meeting of the

minds relating to the property’s value between the potential buyer and seller.

In the development of an appraisal, an appraiser is required under Standards Rule ,

to not commit a substantial error of omission or commission that significantly affects an

appraisal. If information about a withdrawn or expired listing is known by the appraiser

and that information is relevant to the appraisal problem, it must be considered.