I recently read a blog from a fellow agent in another state. He was talking about appraisals and how to fight against the low number you receive when the number is unjustified. It made me think of the last few transactions I was a part of recently. In four of the last five transactions that have closed or are scheudled to close the appraiser number was lower than the agreed upon sale price.
It made me think are the appraisers affecting the home values and helping or hindering the market today? One can make an argumeent that they go to school and become liscenced in their practice. I am fine with the schooling and most times the comparables they utliize to justify the price of the home.
When I read the previous agents blog and talked to fellow agents i have had transactiosn with and in my office I got an overwhelming response of the same issues I am facing on a daily basis. The appraisers get a copy of the offer to purchase in NC before they go out and appraise the home. So, they know what the sale price is up front instead of giving an appraisal on the home for what it is worth. And most of the agents all had the same comment to make; "if it is not a foreclosure we are sweating out the appraisal for the purchase price of the home." I know from personal experince that 60% of my deals this year the appraisal either came in lower than the agreed upon sale price.
Where it gets tricky and very subjective is when the appraiser needs to make an adjustment to the comparable home. Ideally you want the fewest adjustments possible on the comparable homes. With that you are getting a true reading of the value of the home. I have gone over appraisals with and noticed comparable properties that were almost an exact match that were not used. The difference in that can make a deal stay together or could hurt your deal if you do not know your market.
I have had some moderate success in getting appraisals adjusted... I am not Houdini and sometimes I make mistakes when I am figuring out comparables (though rarely). I believe if you are justified in your approach and the appraiser sees the value in the comparable you have you can get it adjusted accordingly.
Where I have an issue and have not been able to get anywhere with an appraiser si when they check the box that says this home is located in a neighborhood that is decreasing in value. Thus they throughout the 90 day comps and adjust the price LOWER for the market conditions.
Hello. Did you just wake up and realize that we have been in a housing bust for almost two years now? The worst part about it is when I argued in writing about this on one of my homes; I got it removed. I was able to show a trend for the past year where in actuality the housing prices had gone up.granted not much, only 1% to 2%. But taking out the "depreciating neighborhood factor" put the appraisal in line with what we were selling the home for.
The biggest factor is making sure the Realtor knows the market they are selling in or their buyer is purchasing in. Otherwise the deal could not materialize...
Dave diCecco
Realtor/Broker
www.davedicecco.com
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