Harder Than it Looks

By
Real Estate Agent with Keller Williams Realty 302690

HARDER THAN IT LOOKS

 

With markets so rapidly changing, it's easy to imagine how property appraisers might sit in a darkened room, waving their hands over a crystal ball, and producing the mysterious and all-powerful document of a home's value. Let's dispel the notion of magical figures and look more carefully at the process.

When comparing against similar properties, it's not just the final price that counts. Appraisers also factor in any "incentives" offered, such as sellers who pay closing costs or remodeling allowances.

Perhaps the most important factor that lenders review in an appraisal is the closing dates of the "comparables" (other homes by which yours is measured). Unfortunately, with today’s stricter lending requirements, most "comps" must have sold within the last 60 or even 45 days to carry weight. Markets change so quickly that any sale price over two months old may be completely irrelevant.

Now a few words about how foreclosures in a neighborhood affect determination of value. Technically, appraisers shouldn't consider them, because they don't fit the Appraisal Institute's definition of "a property reasonably exposed in a competitive market." However, if several area homes have been abandoned, we know the negative effect that can have on a home's “perceived” value.

If you're planning to sell, express your concerns about the appraisal process to your representative, who will offer explanations and suggestions for improving your report’s results.

Posted by

Blake Rickels, Realtor

The Blake Rickels Group

Knoxville Realtor Blake Rickels 

KELLER WILLIAMS REALTY

CLICK HERE TO SEARCH for "Knoxville Homes For Sale"

Each office is independently owned & operated

 

 

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Ralph Gorgoglione
Maui Life Homes / Metro Life Homes - Kihei, HI
Hawaii and California Real Estate (310) 497-9407

I often wonder about how foreclosures really effect appraisals.

 

Nov 11, 2009 04:55 PM #1
Rainer
62,295
Alix Pinzon
Open Mortgage, LLC NMLS # 2975 - Downey, CA
(562)743-6086

To answer Ralph's question, foreclosures are just another sale.  If the appraiser can "prove" that there was distress, perhaps an adjustment can be justified.  Now property condition, and other factors can be adjusted for, but not just simply because it's a bank owned property.

Nov 11, 2009 05:13 PM #3
Rainer
36,137
Bonnie Kappler
Century 21 Lake Tulloch - Copperopolis, CA
GRI, Copperopolis, Ca

The real problem is that in most markets it is difficult to find any sales that are not bank owned or short sales!

Nov 11, 2009 05:25 PM #4
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Rainer
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Blake Rickels

"The Name Friends Recommend"
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