Good comps, bad comps
By Matt Carter, Monday, August 27, 2007.Bookmarking Sites
Inman News columnist Bernice Ross writes today about the importance of getting good comparable sales to an appraiser so that a low valuation doesn't derail a sale. Appraisers who aren't familiar with your area may choose properties that are nearby but in different markets, she says, or they may not know about properties that are still under contract. As Ross notes, the best time to deal with these issues is before the appraisal is done.
At the NAR convention in New Orleans last fall, a Rels Valuation executive shared this statistic: only about 20 percent of disputed appraisals result in increased valuations, and the average increase is just 5.2 percent. If you'd like to read more on the subject from the point of view of appraisers, see the Inman News story on the NAR panel discussion, "The Low Appraisal: Recourses and Remedies."
The appraisers on the panel offered tips on finding comps that won't be laughed at. Don't, for example, expect an appraiser to accept at face value a house that's been remodeled as a comp for a house that has not, or a new home as a comp for a house that's 20 years old.
Of course, all such tips are offered with the goal of achieving an accurate appraisal -- not pressuring appraisers to hit a predetermined price.
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Submitted by Anonymous on August 28, 2007 - 7:54am.
Too low appraisals not a problem. Too high appraisals are:
In my market in Austin, TX, where we are just starting to see a downturn in home prices and sales, I am finding that the problem with appraisers is not that they are appraising homes too low, but that they are appraising them too high.
I have many high end listings, and these pricey homes are not moving, given that there is so much inventory now and so few serious, qualified buyers. Sellers, however, are still hanging on to the "good old days" mentality of the last few years of booming sales here in Austin, and don;t want to lower their prices. Many point to a recent appraisal they had done for a refinance and some even paid for a recent appraisal to determine the fair market value. The problem is, when a market is in the midst of a downturn, the appraisers are completely blind to this fact, and they base their evaluations solely on data that is 3 months, 6 months or even a year old, when the market was on an upswing.
I had one listing where the seller was convinced he could get $800,000 or more for his house. I knew, based on comps and the way the current market was, that he could not get more than high $600,000's. I suggested he get a professional appraisal done, which he did. Unfortunately the appraiser came back with a value of $750,000! So, what was I to say? We put it on the market for that, and it eventually expired months later without any serious offers.
Submitted by Anonymous on August 28, 2007 - 8:58am.
I AM BOTH A STATE CERTIFIED APPRAISER AND A REALTOR. WHAT YOU HAVE TO UNDERSTAND IS THAT CONTRARY TO POPULAR OPINION NO APPRAISER DOES A LOW-BALL APPRAISAL.IF HE DOES HE WILL RECEIVE NOTHING BUT GRIEF AND WILL LOSE ANOTHER CLIENT FOR LIFE. APPRAISALS COME IN LOW FOR ONLY ONE REASON. THE COMPS DO NOT EXIST TO SUPPORT THE SALE PRICE.