2011 was a good year for my office, but many of our listings were hit with appraisals that required the purchase price to be reduced. This is great, if you are a buyer, but really hurts if you are seller just trying to get what little equity you have left out of your home. It hurts more and is really difficult to explain when the home has multiple offers obove the list price and the initial list price was made based on other comparable sold homes.
I know that the appraisal industry was hit hard and changed dramatically so that appraisers are more accountable for the work that they do, but if a home is truly in superior condition over the run-down bank owned homes or short sales with deferred maintenance that are the only comps in a neighborhood, why can't that home be priced above any of those? I've had several appraisers tell me that they will NOT price a home higher than the highest sold comp. So, back to the title of this blog, how will the market ever improve with this type of thinking? Even with reduced inventory levels (supply and demand) improving housing stock, and increased number of buyers?
The market is definitely improving in the Sacramento area and I certainly don't expect things to just take off, as in years past, but proper use of appraisal adjustments, based on improvements, applied toward other comparable homes should show some increases in value for some homes. Makes more sense than just a flat out refusal to price above any existing homes regardless of condition.
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