So what do appraisers use as guidelines anyway?
I hear this question all the time from agents. They are concerned about houses appraising before putting offers in and oftentimes don't even bother having one put in. This is unfortunate because even in this market, there are a lot of houses that in spite of the company are worth more than we think they are. So what is the answer? Well I have learned there is a correct answer to this question even in this market...
'It just depends.'
Pretty exciting, eh? Ok not really but I have learned much from multiple appraisers we've worked with over the years and have discovered the following:
- Depends on the recent sales - recent can be up to one year if it is in neighborhood, one year if nearby, or six months if more distant because the area is more 'spacious' (meaning not a high density of homes)
- Depends on the condition
- Depends on the upgrades/extras we put in
- Depends on how much of your house is like new
- Depends on what your competition is and how does that compare to recent sales
- Depends on bed/bath count
- Depends on home layout and style
- Depends on if the market is declining, stable or appreciating
- And a ton of other things if we wanted to list them all out.
If there is one thing I have learned, if you are putting out good quality products whether renovations or just clean seller homes, they are appraising more often than not for what we often put them under contract for which is full retail price. Thankfully, we have never had a resale house not appraise for the list price when listed retail. Renovations and clean homes sell when priced reasonably! And thankfully reasonably does not equal low! We are humbled just in our remberance of this.
How have we done it? A good practice we have been doing for some time now is to know what the appraiser(s) are thinking. Do your homework with the comps from THEIR perspective, NOT OURS and there is a good chance the appraisal contingency will be the last thing you have to worry about when you put the offer in. Have a conversation with the listing agent beforehand about valuation before the offer if necessary to understand why the house is listed where it is. There is a 100 reasons why this would be the case that you won't know or get by looking at the listing or pictures. Conversation is bliss.
If you're buyer wants the house and the only concern is the appraisal, give them the peace of mind through the knowledge obtained from such a conversation. Or perhaps a conversation with another appraiser which while they can't value the house, can at least give you knowledge into how they think which in turn helps you as an agent. It can make all the difference between getting an offer accepted and hopping back in the car to look at another 20 houses when the buyer already knows they have found 'THE ONE!' Save the trip and put the offer in!
Happy valuation!
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