Summary
A price is set when the parties agree, not when the deed records. Adjust from the closing date and you understate the market movement by the length of the escrow. That's usually a month or two, and much longer on new construction. Where the contract date isn't available, estimate it, say that you estimated it, and check how much it moves your answer.
The two dates describe different events
Your MLS export gives you both, and it sorts by the wrong one. The closing date records when the deal settled. That's an administrative fact, driven by financing, inspections, title work and everyone's calendar. The contract date records when a buyer and a seller agreed on a number. That's the moment the price was actually set.
For most of the report, closing date is fine. For a market conditions adjustment it is the wrong tool, because what you're measuring is precisely when the price was set.
How much the choice moves your number
The error isn't random and it doesn't average out. Every comparable in your set carries a date later than the event it stands for, by about the same amount, in the same direction. In a rising market that makes every comparable look more recent than it is, so your trend gets applied over too few months and the adjustment comes out too small. In a falling market the same thing shrinks the negative adjustment.
The size of it is just the escrow period times your monthly rate. A forty-five day settlement in a market moving half a percent a month understates each line by about three quarters of a percent. That's small on one comparable and consistent across all of them, which is the kind of error that shows up in the reconciliation rather than in any single cell.
The same goes for the data you measured the trend from. Plot closing dates and the trend itself sits later in time than it should. Use the same date on both sides, and make it the contract date.
New construction is a special case
A builder sale can be contracted before the house is framed and settle six months to a year later, at a price agreed under conditions that no longer exist. Treat that closing as a current sale and you've put an old market in your grid and labeled it recent. If your set includes new construction, either find the real contract dates or take those sales out and say why.
When the contract date is missing
Not every board publishes it and not every record is complete. Work through these in order.
- Look for the field under another name. Boards call it pending date, under-contract date or off-market date. Any of those usually lands within days of the agreement, which beats the closing date by a wide margin.
- Back into it from days on market. Where the listing has a list date and a DOM count, list date plus DOM puts you close to the day it went under contract.
- Estimate from the local escrow period. Take the median gap between contract and closing across the sales that report both, and subtract it from the closing date on the ones that don't. State the median you used.
- Ask. On a small set, the listing agent will usually just tell you.
Estimating is fine. Estimating without saying so isn't. One sentence naming the method and the interval turns an assumption into a disclosed one, and it costs you nothing.
Check whether it changes the answer
Run the adjustment both ways. If the two sets of indications land close enough that your reconciled value wouldn't change, say so and move on. Precision that doesn't affect the conclusion isn't worth a long defense. If the results split apart, you've found something worth a paragraph, and you know which way the error would have run.
This is the same habit as the range test in supporting a market conditions adjustment. Change one input and see whether the answer holds.
What to put in the workfile
Three things, and they fit in a short paragraph.
- Which date you used, and that it is the contract date.
- For any comparable where you estimated it, how you estimated it.
- The gap between contract date and effective date for each comparable, since that is what your rate was applied over.
Written while you work, it's a two-minute note. Rebuilt after a revision request comes in, it can take an afternoon. More on that in writing support a reviewer can follow.
Common questions
Is the closing date ever the right date to use?
On a cash sale that closed almost immediately, the two dates sit close enough that the difference stops mattering. Closing date isn't forbidden. It should just be a decision you made about a short escrow, rather than a default you inherited from the sort order of your export.
What about a price renegotiated after inspection?
Then the agreement is the renegotiation, not the original contract. It's uncommon enough that you usually catch it by noticing a closed price that differs from the contract price. Where you can see it, date it to the amendment and note that you did.
Does the grid have to show the contract date?
Form requirements vary and aren't the point here. Whether or not it appears on the grid, the date your adjustment was calculated from belongs in the support. It's an input to the number, and nobody can reproduce the number without it.
