Why do Real Estate Agents think they are Appraisers as well???

By
Real Estate Agent with Exit Realty Laredo 657593

Why do Real Estate Agents think they are Appraisers as well???

Real Estate has had so many changes though out the years, and  it's hard to keep track of everything.  One thing that to me  has had a significant change is "appraising a property" as we all know, we are not appraisers, but we can come up with an average market value for what the property should sell, or at least we were able to do it.

Not all estimates of value are made by professional appraisers, an agent often must help a seller to arrive at a listing price or a buyer determine an offering price for property without the aid of a formal appraisal report. In such a case, the agent prepares a research of the marketplace, primarily similar properties that have been sold known as a competitive (comparative) market analysis.

The agent must be very knowledgeable about the fundamentals of valuation to compile the market data. The competitive market analysis is not as comprehensive or technical as an appraisal and may be biased by an agent anticipated agency relationship. A competitive market analysis should not be represented as an appraisal.

But now, I have noticed that it is very hard to come up with the value, and there are so many things that contribute to that factor, for example the HUGE amount of foreclosures, the economy, market (whether is a Buyer's or a seller's market), the popular desire, etc

Unfortunately, there are many agents that don't take the time, to consult a "Licensed Appraiser" to get an estimate of the property, and because of that, so many deals die, because agents submit contract without really checking if the asking price reasonable.

So what I suggest, is always consult an actual appraiser, they know what they are doing, way better than we do, and that will save you and everyone who is involved in the transaction so much time, and trust me...then will appreciate it!!!!

Aurora Colorado Real Estate Homes for sale in Colorado Spanish Speaking Real Estate Agent Realtor 

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Rainmaker
317,819
Monika McGillicuddy
Berkshire Hathaway HomeServices Verani Realty - Hampstead, NH
Southern NH & the Seacoast Area
I know that many times I do know more than the appraiser about a particular house/area...often they ask my advise.  I have successfully challenged appraisals and won.  I always look at it as a team effort....I respect them and the knowledge they bring to the table and they respect me.
Nov 26, 2006 12:00 AM #15
Anonymous
Lenn Harley

I believe that the job of the listing or selling agent and the appraiser is totally different.

Listing agent do market valuations to recommend list prices for sellers.  Buyer's agents to market valuations to recomend an offering price to our buyers. 

The dynamics of what to ask and what to offer are more complicated than just the price. 

The appraiser does a valuation to protect the lender's investment.  I don't believe that there is any similarity in what we do. 

Agents who have problems with market valuations need more experience or training. 

 

Nov 26, 2006 12:18 AM #16
Rainmaker
1,144,792
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Good post Ray, Your writing in English is improving quite a bit. I know that was one of your reasons for blogging so just wanted to point out that it is working:)

I think it definitely dependa on the experience of the Realtor whether or not the appraiser would do a better job. The important thing to remember, in this more difficult market, is that apprasied value and market value are not the same thing. An appraiser is using historical sales where as a Realtor should also be using active, pending, withdrawn lsitings and more current market data. As a Realtor I am trying to establish what a property will sell for NOT what it's worth.

 

Nov 26, 2006 12:21 AM #17
Ambassador
947,195
Kristal Kraft
The Berkshire Group Realtors - Denver, CO
Selling Metro Denver Real Estate - 303-589-2022

Ray, I agree with Bryant on your improving English.  While I only know you from AR and not the spoken word, I have noted your written messages have improved. (look at all the comments you have received here! )

Now to the topic.  There is a huge difference in a professional appraisal and a CMA. The difference that concerns me are not the lack of details but the fact that an appraisal is based on HISTORY not the MARKET.  So as an agent we have to be sensitive to that fact.  As in Jay's illustration above, pricing now based on old comps and not taking into account a declining market is a huge mistake.

With that said, since you (Ray) and I are in the same market, I know what you are talking about.  We have an abundance of poorly trained agents and managers that haven't got a clue how to handle this market. There collective ignorance of the job at hand is hurting the market, the industry and the consumer.

The sad thing is, these agents don't recognize the fact they are clueless.  I think that is what Ray is trying to state.  Only he said it nicer. 

kk

 

Nov 26, 2006 12:34 AM #18
Ambassador
557,430
"The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL

"Hi Ray"

As my husband, Broker Bryant, beat me to the punch. I will have to do a little twist on your post...

Here in Florida the Realtors are real big on Multiply Licensing. They have both licenses Realtor aka Appraiser...

You can only imaging the FAKE power they try to throw around in a deal!

They submit their offers with their own Appraisal. The houses they used for their FAKE Appraisal are normally no where near our listing.

Over the years we have learned to have a little fun with the Multiply Licensed Realtors...We enjoy messing with them. :0)

TLW "The Lovely Wife"...Like I Said On Another Post FAKE Is Funny...ROAR!

Nov 26, 2006 12:52 AM #19
Ambassador
379,994
Karen Hurst
RICOASTALLIVING.COM - Warwick, RI
Rhode Island Waterfront!

Ray,

Most everything has been said before I got here! I would like to point out though, that in my area, Broker's are also allowed to appraise homes.

Also, for myself, I do a lot of Broker Price Opinions on foreclosed properties and reevalutaions which I think gives me an edge over some Appraisers in the area.

I have to agree that the more experience whether being a Realtor or an Appraiser, the better they will be at pricing.

This is a very tough market right now and prices (here at least) have been dropping.

The final word: The House is only worth what someone will pay for it!

Nov 26, 2006 01:29 AM #20
Rainmaker
404,864
Suzanne Marriott
Keller Williams Arizona Realty - Anthem, AZ
Associate Broker, CLHMS, e-PRO

As Bryant and Krystal pointed out, there is sometimes a big difference between what a property will appraise for (and differences between sale and refi appraisals) and what a property will sell for in a given market.  Agents factor in current market activity, while appraisers are only permitted to rely on history.

Nov 26, 2006 01:33 AM #21
Ambassador
379,994
Karen Hurst
RICOASTALLIVING.COM - Warwick, RI
Rhode Island Waterfront!

Suzanne,

Are you saying that an Agents have a better handle on it, using current market activity? And Appraisers have "actual value"?

Nov 26, 2006 01:44 AM #22
Rainer
45,055
Michael S. Mackey
CENTURY 21 All Islands - Mililani, HI
REALTOR ABR, CRS, GRI, RSPS

There are a lot of valid opinions expressed here, and some of them are conflicting. I can't believe there are places where appraisers don't have to be licensed! I thought about going for an appraisers license, but after looking at the cost of classes, and the amount of time required, I nixed that thought. Also there is a two year internship required, and the classes are not taught here in Honolulu on a regular basis, so we have to plan on spending weeks if not months on the mainland just to get the required training.

I also agree that as realtors we have a handle on market value, which can vary greatly from the appraised value, especially in shifting markets.

Nov 26, 2006 02:02 AM #23
Rainmaker
603,467
Jim Lee
RE/MAX Shoreline - Portsmouth, NH
Portsmouth NH Realtor, Portsmouth, NH
"Jim, does this new licensing requirement apply to refinancing appraisers as well?

Lucky"

The appraiser licensing law has been in effect several years so it's not brand new.

I believe it applies to anyone that performs an appraisal in the state of Tennessee and collects a fee for it.

I know as real estate licensees we can't use the word "value" in relation to the..............well, the "value" of a home.

We're supposed to use phrases like:

  • "this is a recommended listing price"    
  • "this is a recommended listing range", or
  • "this is a recommended purchase price."
Nov 26, 2006 02:21 AM #24
Rainer
96,154
Jason Price
Mortgage Financial Group, Inc - Eustis, FL

Ray,

Being a mortgage broker, I am a outside looking in on this post.

I would have to agree with what Broker Bryant stated.  You are comparing apples and oranges.  The appraiser bases his/her values on what has recently sold.  The realtor uses what is active, pending, withdrawn, sold, etc.  The realtor is creating a starting price or bid.  The buyer negotiates with the seller to reach a value that is fair to both.  Once the contract is drawn, it is given to the appraiser to make an official final statement of value.

I do not believe that realtors think of themselve as appraisers.  I do think that it is their job to provide a fair market price as to what a house is worth.  It is their job to do the research to determine this.  If part of their research is to use CMAs, that it is a fair and safe way to determine value.  If they want to consult an appraiser, again this is ok.  No lender will take a realtors word as what a house is worth.  That is the appraisers job.

Nov 26, 2006 02:44 AM #25
Rainmaker
206,324
Chris Tesch
RE/MAX Bryan-College Station - College Station, TX
College Station, Texas Real Estate
I had a neighbor who put her house on the market FSBO.  When I found out how much she was asking for the property (210K, 5 acres, 2000 sq. ft house, barn...in awesome school district") I told her she was shortchanging herself.  She was adament that the price was right...why?  Because she had paid for an appraisal.  To make a long story short, I listed the property, sold it in 10 days for 265K and it appraised with no problem.  Different appraisers, way different opinions.
Nov 26, 2006 03:45 AM #26
Rainmaker
662,746
Randy Prothero
eXp Realty - Mililani, HI
Hawaii REALTOR, (808) 384-5645

I have seen some really stupid appraisals in the last year or two.  Last year for example every single VA appraisal I got one either side of the transaction was low several stupid low.  In one case the condo I was selling was the most upgraded unit in the complex.  the VA appraisal came in $30,000 below the contract price yet there were closings for lesser units higher than ours.

The good news, was I successfully challenged ever one of those appraisals.

Would I use the opinion of one of them? Not on your life.

On the conventional side I have seen much better results, but even there I had two where the appraisal was so off that it didn't even resemble reality.

As a professional Realtor helping establish market value is one of my main functions.  In the end it is always the clients call on the final price.

I do consistently recommend an appraisal on custom and unique high end properties.

My final thought:  It may differ in other areas, but you see here several types of appraisals.

  1. An appraisal for a loan will come exactly at the price needed to get the loan, no matter how much more the home is worth.  The appraisers never stick their neck out any higher than they need to.
  2. If you shop around for appraiser, which most good Realtors and loan officers do, you can always find an appraiser to agree with you.
Nov 26, 2006 04:28 AM #27
Rainmaker
298,347
Ray Saenz
Exit Realty Laredo - Laredo, TX
Homes for Sale in Laredo, TX - Texas, Realtor

Linda: You do the right thing, some not :) that's good to read this.

Marc: I agree with you, thanks for your comment.

Sharon: I have seen also some sellers take their appraisal when they refinanced just a few months, that's something that we can never take, Refi appraisals, are usually pushed when needed money.  Thanks for sharing your thoughts and support.

Lucky: thanks for sharing your comment and your support and I am reading that post.

Jay: You are right in your way how you think, I am not saying that I am right or wrong, here in this state, most properties are totally different specially for the market.  thanks for sharing your thoughts, I appreciate your honesty.

Carol: True, not all opinions are the same, thanks for sharing your thoughts.

Monika: that's good to have someone like you, I always learn something new with my appraiser, he is a very professional and well knowledgable, many years of experience with great opinions and advises. Thanks for your support and sharing your experience.

Lenn: Totally agree, thanks for sharing your thoughts.

Bryant: thanks for your compliment and advises, I appreciate always your writings, someday I wish to have the experiece that you have You are Sr Bryant. The good thing  is that you are here for us, thanks again, I appreciate every word.

Kristal, Woowwwww,   you understood me, even when I have troubles with my writings, I am trying to improve my blogs for better, so all of you can read my blogs. Yes, I wanted to say that no offending anyone. thanks for your support and experience.

lovely wife, thanks and I did not know that what they do, thanks for the update and stop by and write on my blog.

Karen, Yes, the appraiser that I use usually tells me that, that the house value for what they are willing to pay, but that it is just cash, and this does not happy usually, everything it is through lenders, I am refering to normal buyers and not investors.  thanks for this thought, you support it.

Michael, thanks for the post, I appreciate your comments.

Nov 26, 2006 05:41 AM #28
Rainmaker
298,347
Ray Saenz
Exit Realty Laredo - Laredo, TX
Homes for Sale in Laredo, TX - Texas, Realtor

Jim Lee:  Sorry it was not my intention to skip you, there are a lot of writings that I need to see what is everybody opinion, when you are appraiser that's fine all my respect, if you are doing a professional work, I do not say anything, as lovely wife wrote, I did not know that,   thanks again for your comments and sorry to skip you, but I like to comment of everyone who help me to see and learn different point of views.

Jason, thanks for comment.

Chris, thanks to share your experience.

Randy, We think very similar, thanks for share your thoughts.

Finally, thanks guys for every post, your positive, negative comments and sharing your experience, I appreciate every word, I take postive advises to improve my knowledge. and I use the negative comments to improve myself.

thanks again

 

 

Nov 26, 2006 05:50 AM #29
Rainer
463,892
Maureen Francis & Dmitry Koublitsky
Coldwell Banker Weir Manuel - Bloomfield Hills, MI
Coldwell Banker Weir Manuel

Ray,

I can't tell you how many times I have had a client tell me what their home appraised for only seconds after I told them it would attract a buyer in today's market at a significantly lower price.  We have to caution our sellers that refi appraisals are often 'optimistic.'  Unfortunately, the number they've heard from the appraiser has influenced their idea of what their home is worth, not to mention they've often borrowed against non-existent equity.

I do think that many agents need more training on determining market value.  I am never ashamed to bring along a few colleagues when I need extra help.  In fact, I think it impresses clients that I am able to bring through some of my market's top producers before the home goes on the market.  For higher priced homes (over $1,000,000) it's pretty much our SOP. 

Nov 26, 2006 07:43 AM #30
Rainmaker
298,347
Ray Saenz
Exit Realty Laredo - Laredo, TX
Homes for Sale in Laredo, TX - Texas, Realtor

Maureen,

thanks for sharing your thoughts, again, bad apples are everywhere LOL :)  that's the reason that I decided to write about this.

Ray Saenz

Nov 26, 2006 07:58 AM #31
Rainer
67,067
Lauren Corna
Archway Realty, LLC - Southlake, TX
Broker

Ray-

Great Blog !!  I like to let Appraisers be the Appraisers, the Inspectors be the Inspectors and the Loan Officers be the Loan Officers, etc... 

There is a mini appraisal that you can request from an Appraiser.  It's called a Drive-By.  It doesn't cost as much as a full blown appraisal but it can confirm if your CMA is close without paying $450.

Nov 26, 2006 09:08 AM #32
Rainer
67,067
Lauren Corna
Archway Realty, LLC - Southlake, TX
Broker

Ray-

Great Blog !!  I like to let Appraisers be the Appraisers, the Inspectors be the Inspectors and the Loan Officers be the Loan Officers, etc... 

There is a mini appraisal that you can request from an Appraiser.  It's called a Drive-By.  It doesn't cost as much as a full blown appraisal but it can confirm if your CMA is close without paying $450.

Nov 26, 2006 09:08 AM #33
Rainmaker
298,347
Ray Saenz
Exit Realty Laredo - Laredo, TX
Homes for Sale in Laredo, TX - Texas, Realtor

Lauren,

I like the same, but  we need to be very knowledge in our CMA and value opinions.

thanks for posting

Ray Saenz

Nov 26, 2006 10:10 AM #34
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Ray Saenz

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