Home Appraisals: Not an exact science

Real Estate Agent with Better Homes & Gardens Real Estate Cal-BRE # 01734464

If you have recently bought a home or sold a home, you know from experience that appraisals are not an exact science.  You could have 3 appraisals done on one house and come up with different values.  Granted, they should all be within a close range, but due to the fact that they are subjective, it would not be uncommon to have different values.  The most important aspect of the appraisor is that they are very familiar with the area.  Otherwise, they might end up using recent sales from outside of the neighborhood that should not be used or need adjusting.  The best way for an appraisal to be accurate is using: the most recent sales that are of similar size, quality, location and age.  Here's an article i found discussing appraisals.

clear skies,

Doug Reynolds


What You Must Know About Home Appraisals

By: G. M. Filisko,March 12, 2010

Understanding how appraisals work will help you achieve a quick and profitable refinance or sale.

1. An appraisal isn't an exact science

When appraisers evaluate a home's value, they're giving their best opinion based on how the home's features stack up against those of similar homes recently sold nearby. One appraiser may factor in a recent sale, but another may consider that sale too long ago, or the home too different, or too far away to be a fair comparison. The result can be differences in the values two separate appraisers set for your home.

2. Appraisals have different purposes

If the appraisal is being used by a lender giving a loan on the home, the appraised value will be the lower of market value (what it would sell for on the open market today) and the price you paid for the house if you recently bought it.

An appraisal being used to figure out how much to insure your home for or to determine your property taxes may rely on other factors and arrive at different values. For example, though an appraisal for a home loan evaluates today's market value, an appraisal for insurance purposes calculates what it would cost to rebuild your home at today's building material and labor rates, which can result in two different numbers.

Appraisals are also different from CMAs, or competitive market analyses. In a CMA, a real estate agent relies on market expertise to estimate how much your home will sell for in a specific time period. The price your home will sell for in 30 days may be different than the price your home will sell for in 120 days. Because real estate agents don't follow the rules appraisers do, there can be variations between CMAs and appraisals on the same home.

3. An appraisal is a snapshot

Home prices shift, and appraised values will shift with those market changes. Your home may be appraised at $150,000 today, but in two months when you refinance or list it for sale, the appraised value could be lower or higher depending on how your market has performed.

4. Appraisals don't factor in your personal issues

You may have a reason you must sell immediately, such as a job loss or transfer, which can affect the amount of money you'll accept to complete the transaction in your time frame. An appraisal doesn't consider those personal factors.

5. You can ask for a second opinion

If your home appraisal comes back at a value you believe is too low, you can request that a second appraisal be performed by a different appraiser. You, or potential buyers, if they've requested the appraisal, will have to pay for the second appraisal. But it may be worth it to keep the sale from collapsing from a faulty appraisal. On the other hand, the appraisal may be accurate, and it may be a sign that you need to adjust your pricing or the size of the loan you're refinancing.


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Dawn Crawley
Dawn Crawley Realty - Pinehurst, NC
Find Pinehurst Homes

You comment about how important it is to have a local appraiser can not be emphaszed enough.

May 02, 2011 07:33 AM #1
Allen 2222
Austin, TX

This list has some good points - and the geographic competence of the appraiser is paramount in whether or not an appraisal is accurate to market value.  Sometimes small differences in location can make a big difference and only an experienced appraiser is likely to make the "right" call with regards to the compans that are truly comparable.

May 02, 2011 07:35 AM #2
Victor Zuniga
Berkshire Hathaway Home Services California Properties - San Diego, CA

From time to time we'll see an appraisal that's out of the norm. Though it's not an exact science they tend to fall within a range just as home prices do.

May 02, 2011 08:30 AM #3
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Doug Reynolds

Realtor - Sacramento, CA
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