Do You Know What Your Home is Really Worth?

Our market research has shown that, due to the stable values during the past several years, properties should be listed based upon selling prices up to the last 3 years.  The secondary market doesn't accept that, but the excessive number of listings when compared to sales is due to sellers listing their homes with 3-5% appreciation per year during the past 3 years which has not happened in the market as it did the previous 10-15 years.  As a result, it appears to be an over-supply of listed homes while the properly priced homes are indeed selling.  The volume in the listing data base is due to sellers listing at 12-15% above market values.

Sara - Sold prices are an important part of determining a competitive list price for a home, but you can't just look at sold home prices.  The home price needs to be a competitive price.  Looking at solds, pendings and what's currently your competition (active) will give you a better picture of where the market is going and where the house needs to be priced.  If there are 25 similar homes on the market then you need to be priced to compete with those other homes and yes you may need to price it below market value to get offers on your property.  There have been several homes in our area that had appraisals done, but by the time the home went on the market at that price the home prices had already dropped.  So that appraised price no longer applied to the home.  Agents should definitely be looking at more than just what's active on the market - you are right about that :)

JIM  -  I disagree with what you said - "Most appraisers never question appreciation".

During the start of the "boom" when prices and values started increasing rapidly, many appraisers including myself were most definately looking at appreciation and the trends at that time and prior trends.  Much the same as looking at depreciating value trends during the market decline.  By doing so, appraisers can see the false increase in values and over-inflated selling prices feeding the frenzy and determine the actual market value of the property.  In order to correctly value a property one needs to look at sales data, listing data, current market trends (1 month, 3 months, 6 months, 12 months), and past market trends (1 year, 2 year, 3 year, -- 10 years) whereby false values can be exposed and determine the actual rate, normal rate, and inflated rate of appreciation or depreciation.  Of course there were many more appraiser, lenders, realtors that were only looking at what was selling and for what at the time, to determine what the next deal would produce.  There were many reports that showed the acutal market value of properties but were ignored due to the feeding frenzy.

Jim, your reply to David, the only thing I could say is "WOW". I had to read it 3 times, and I thought the appraisers in Miami were bad! Thats just sick.

Jim  -  Very similar situation in Arizona.  Many used car sales people turned loan officers were getting loans funded strictly on comp checks by appraisers and the word of agents.  I have also done several reviews for homeowners that were suckered into overpriced homes during the boom times (that still had copies of the "valuation" document it was based on), some were CMAs and some were just AVM reports with no visual inspection by an appraiser!!  So I believe what you are saying.

Jessica - Yes, I did fail to mention that pending and active listings are still important in both selling and appraising a home.  I just run across home owners that often assume that if a house was listed for $500,000, it sold for $500,000 when in reality it may have been on the market 9 months and sold for $400,000. 

Jim & David - Our state appraisers board would take away our first born for something like that.  The more horror stories I hear the more I'm actually glad at how vidulant the ACLB is here.

Sara  -  That will happen here also, in less than a heartbeat.  Problem is, they can't act, on what they don't know has been done.  Unless someone files a complaint.

Not saying there aren't terrible and criminal appraisers out there but, in light of the many unethical and illegal practices which are now coming to the surface which have taken place during the past 5+ years, I wonder how many of those appraisals may have been identity theft appraisals where signatures were lifted and placed on false reports or data altered after the appraisal was submitted?  More and more of this is being reported and I can only guess how much is yet undiscovered.

Jim, I think all HUD statements should have to be posted, like county tax records. It would cut down a lot of the crap thats been going on. I love when I call a realtor to confirm a sale and they tell me that they can't or will not release any infomation about the sale. Then there are some great agents who post the concessions on their Closed Sale listing or are very helpful when I call them.

PS, I've heard of builders down here passing out bogus HUD Statements