Common Mistakes When Analyzing a Real Estate Deal:  Trusting The Appraiser
by John Occhi, Hemet CA REALTOR®  
Mission Grove Realty  

If you Want to Read More about Other Common Mistakes Made when Purchasing Real Estate, Follow This Link.

Another common mistake in analyzing a real estate transaction is to put too much emphasis on the appraisal.

Granted, there is a time and place for an appraisal, but unless you actually hire and pay the appraiser, how can you be sure of what you are getting.  When you hire the appraiser to analyze a Hemet real estate transaction then you control what criteria they are looking at.

For example, lets say you want to buy a Hemet preforeclosure home for sale through a short sale.  The homeowner may have recently taken out a loan that has them n trouble, once their 6 month introductory teaser rate reset.

I have a listing right now that appraised for $395,000 in July of 2006.  It has been on the market since March, 2007 at $299,000.  So how valid could that appraisal actually be?

If you were buying that Hemet home for sale and relied on the appraisal that the seller provided then you would be in a lot of trouble.  First, an appraisal is typically not valid for more than 3 months.  I don't know about your market, but the market in Hemet CA is a lot different today, than it was 3 months ago.  So how valid is an appraisal that was done so long ago.

Another home I recently sold was owned by a pool contractor -they type that builds elaborate rock pools.  His yard was large, at .38 acres.  He had a fellow pool contractor estimate that it would cost in excess of $500,000 to duplicate the pool, hardscape and landscape that graced every inch of this space.  Now this was a track home that recently had a model match sell for $340,000.  So, my client believed he had a home worth more than $800,000.

To provide a dose of reality, we hired a local appraiser and wanted him to squeeze out every bit of value he could.  The appraisal came in at $650,000 in October 2005.  We listed at $695,000 - disclosing the appraisal and the contractor estimate to all who toured the property.

By the summer of 2006, we resisted the property at $595,000 when the new appraisal came in at the lower price, because of the comps that had fallen off of the radar.  I ultimately found a buyer for the home who offered $520,000 and the seller snatched it up.

My point is - how valuable is the appraisal when someone else has paid for it? - Especially if it is the sellers appraiser.

As an investor, it makes perfect sense to develop a relationship with one appraiser who understands what you are looking for in a property and a real estate deal.  Always make your offer subject to an appraisal by the appraiser of your choice - and then you know what you are getting yourself into.

I hope this helps.  Do you have an appraisal horror story you would care to share - please chime in.

Now Have a Blessed Day,

by John Occhi, Hemet REALTOR®  
Mission Grove Realty  
Preforeclosure Specialist