With so many questions coming from my clients and Realtors about how these appraisers are coming up with the values they are, I gathered the details! This is only the policy of my appraisal administrating company. Seeing that we are the biggest, I'm sure this is a decent rule of thumb guide.

I'll start off a little off-topic. We are in a market that is experiencing an influx of short sales and foreclosure (bank owned property) sales. Many of these properties are in , well, less than perfect condition. But how much is too much to get the loan closed? There is much gray area here, however, there is one general rule of thumb. Anything considered a health or safety issue must be repaired prior to closing. A hole in the wall or a deck that was removed and not repaced is not a big deal, but no furnace is unacceptable. No refrigerator (shockingly) is OK, but mold is not okay. Just a few examples.

Here are the rules of thumb my appraisers are operating with at the moment...

Single Family Homes

Appraiser will first use any sales in the past 90 days to 6 months of comparable property. Ideally the comparable sale is within one mile from the subject property. If they need to go farther out in location or time on the market, this is what they do. Typically, however, the appraiser will list the area with a marketing time over 6 months, or a declining market if this is the case. This could trigger the lender to have an automatic loan-to-value reduction at higher loan-to-values. This is a feature of the new "soft market policy" many banks have adopted.

Condominiums and PUDS (town homes)

There is a little less of a focus on time-frame of comparable sale here. The appraiser will first use any sales in the past year in the building as comparable sales. Ideally 2 sales in the building at minimum, and one sale outside the building. Appraiser is using comparable sales within the past 12 months, ideally within the past 90 days to 6 months.

I hope this helps a bit. For purchase transactions, I have noticed that the BEST thing a real estate agent can do to alleviate issues with the appraised value is to show up at the appraisal appointment with the facts in hand. Don't leave the appraiser to his devices, support the value yourself!