What an estate sale leaves in the comparables

TypicallyMotivated is the default.

It is the value that goes into the sale type field when nothing unusual happened, and the data standard defines it as a sale that is not under distress and aligns with the definition of market value. Eight other values sit alongside it in the same list. One of them is ProbateSale, defined as property sold as a result of disposition of assets of a deceased person, and noted in the standard itself as also termed an estate sale in some areas of the United States.

Put those two definitions next to each other and the standard has already made a judgment. A probate sale is not a typically motivated sale. Somebody wrote that into the schema years ago and it has been sitting there since, doing almost nothing.

The field records the category, not the cost

Here is where it stops being useful.

The sale type field answers one question: what kind of transaction was this. It does not answer the question that matters to the next valuation, which is how much the kind of transaction moved the price.

Compare it with concessions, where the instruction is precise. Fannie Mae requires that comparable sales including sales or financing concessions be adjusted to reflect the impact on the sales price, and defines that adjustment as the difference between what the comparable sold for with the concessions and what it would have sold for without them. That works because the concession is a number somebody wrote on a settlement statement. Subtract it and you have the counterfactual.

There is no such number for a sale out of an estate. The counterfactual is the same house, sold by the owner who lived in it, who could answer questions about the roof and the basement and who was under no obligation to be finished by a particular date. That sale does not exist and never will.

What survives in the record, and what does not

Condition attached to a sale	What the record carries	Can the size be recovered later
Seller paid closing costs	A figure on the settlement statement, and often in the listing	Yes. The amount is written down
Rate buydown funded by the seller	A figure, where it was disclosed	Usually. The cost is quantified
Short sale or lender approved price	A flag, plus a lender decision somebody made on the file	Partly. The approval has a reason attached
Sale out of an estate	A flag, and sometimes a line in the public remarks	No. The amount was never calculated by anyone
Condition at the time of that sale	Photographs, if the listing carried any	No. No disclosure was required

The last two rows are the problem, and they compound each other.

Why the condition half is the worse half

Most states require a written seller disclosure and most states exempt estates from it. Texas excludes a transfer by a fiduciary in the course of the administration of a decedent's estate, guardianship, conservatorship or trust from the seller's disclosure notice, at Property Code 5.008(e)(5). California exempts sales ordered by a probate court in the administration of an estate, and separately exempts transfers by a fiduciary administering a decedent's estate or trust, at Civil Code 1102.2(b) and (d).

The exemptions are reasonable. An executor in another state cannot warrant facts about a house they never lived in, and a required guess would be worse than silence.

The consequence for the comparable set is still real. The one document that would have described the roof, the water history and the unpermitted work is absent from the file for exactly the sale where no living person could supply it. Whatever deferred maintenance moved that price is now permanently unquantified, and the sale still closes at a number that looks like every other number.

Where it lands is on your listing

Six months later an agent across the street is pricing a similar house. That estate sale is in the set, because it is recent, close and similar on the measurable attributes.

The public remarks may well have said estate sale, and a careful agent reads that and allows something for it. Allows what, though. There is no rate, there is no pair to derive one from, and the file carries nothing about the condition that produced the discount. Two capable agents can pull the identical comparable and reach materially different numbers, and neither of them can show the working, because the working does not exist.

That is not a failure of either agent. It is a sale that entered the record carrying information that was never written down.

What an agent can do that no software can

The window to capture this is open once, and it is open while the property is on the market.

If you walk an estate property, write down what you saw at the time. The age of the kitchen. Whether the roof looked original. Whether it was vacant, staged or still full. Whether the listing agent mentioned four heirs in three states and a date they needed to be finished by. None of that is confidential and all of it disappears within a season.

Then, when you use that sale as a comparable, keep two statements apart on the page. The sale type is a fact and belongs in the record as a fact. What you observed about the property is your judgment, and belongs in the record as yours, with your name on it. Collapsing the two into a single unexplained adjustment is what produces a grid nobody can audit, including you in a year.

And when the evidence is this thin, the range is the honest output. A set containing a probate sale with an unknown discount inside it should produce a wider answer than a set of ordinary transactions, and the report should say why rather than quietly narrowing to sound confident.

Should I use an estate sale as a comparable?

Often you have to, because in some submarkets the estate sales are the recent sales. The question is not whether to use it but whether to say so. A sale out of an estate carries two things a typical sale does not: a seller operating under a duty to convert the asset, and a property whose condition history nobody could supply. Both affect the price and neither is recoverable from the record afterwards. Using the sale and naming what it is leaves the reader able to weigh it. Using it silently puts an unmeasured discount into your own number.

How do you adjust a comparable for a non-arms-length sale?

Fannie Mae requires that adjustments reflect the market's reaction to the difference in the properties, and for sales or financing concessions it is specific: the adjustment reflects the difference between what the comparable sold for with the concessions and what it would have sold for without them. That instruction works because the concession amount is known. For a sale out of an estate there is no equivalent figure, because the counterfactual is the same house sold by an owner who lived in it, and that sale does not exist. The honest treatment is to disclose the sale type, state what was observed about the property, and widen the range rather than invent a percentage.

What sale type does an appraiser select for a probate or estate sale?

In the MISMO data standard the value is ProbateSale, defined as property sold as a result of disposition of assets of a deceased person, and the standard notes it is also termed an estate sale in some areas of the United States. The default value for an ordinary transaction is TypicallyMotivated, defined as a sale that is not under distress and aligns with the definition of market value. The two sit in the same list, which means the standard has already decided that a probate sale is not a typically motivated one.

This is the kind of thing that only survives if it is written down against the property at the moment somebody knows it. CMAflow keeps the agent's commentary and the reason for every adjustment in the report itself, printed where the client reads it, so a judgment about a comparable arrives attached to the person who made it rather than buried inside a figure. That does not solve the underlying problem, which is that the estate sale entered the market carrying a discount nobody measured. It does mean the next reader can see which part of your number is evidence and which part is you.

The schema has had a value for this since before most of us noticed. What it has never had is a second field for how much it cost.

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The Independent Agent
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