Time Lag Between Appraisal Report and a Changing Market

By
Real Estate Agent with Compass

    Dealing with Time Lag Between Appraisal Report and a Changing Market

Make sure you have prepared your seller early on by discussing comps and appraisals. When an appraisal comes in low,

•   Look at the prior sales:

•   Was it an Arm's Length sale (example: parent giving child a discounted price)?

•   Was it a Short Sale?

•   Was it a Distressed Sale?

•   Take stock of how the appraisal affects the deal- if your buyer has 50% Loan to Value, it won't really matter.  All that is hurt is ego.  If the Loan to Value is high enough that it does matter, you may need to ask for a second appraisal, or to renegotiate your price.

•   Don't be adversarial toward the Appraiser.  Remember you're a team, and you need to help each other.

•    Low appraisals may also be due to:

•   Inexperience- Appraisers have public licenses, so check how long the appraiser has been in business. 

•     Ask about their experience, and find out, for example, what their experience is doing appraisals in Manhattan. 

•     If you have an appraiser who seems too inexperienced, delay the appraisal- tell the appraiser that the seller had a problem and needs to postpone.  This way you might be able to get a better appraiser.

•   Inaccurate data- Some appraisers end up using bad comps, such as using a 2 BR to comp a 3 BR.  Sometimes the bank will conduct 2 appraisals with the same comps, and the adjustments will be quite different.

•     There is a time lag between the most recent comps you find and what the appraiser receives.  Things that just went into contract, for example, you'll know about, but the appraiser won't.  Provide the appraiser with these comps.

•     Make sure you attend the appraisal, so you can provide information to help the appraiser come to an accurate number.

•     Remember that the market is constantly changing.  In the time between the comp sales and yours, the value of the apartment will have fluctuated.  Always take current market conditions into account.


(presented by Manhattan Mortgage)

courtesy of:

Mitchell Hall, Associate Broker, The Corcoran Group

 

 

 

 

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Rainmaker
716,233
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Appraisals are almost a crap shoot sometimes.  These people are covering too much turf - how on earth can they be expected to know the intricacies of all of the markets they are forced to serve?

Jun 21, 2011 06:10 AM #1
Rainmaker
4,358,969
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Mitchell,

Great post and my favorite part of this is not to be "adversial", as it sets the tone for disasters to occurr.  By the Way, Barbara is great on the Sharks.  She holds her own and stands out with class, Fridays ABC at 9PM here. A

Jun 21, 2011 06:57 AM #3
Rainmaker
597,761
Mitchell J Hall
Compass - Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

Ruthmarie, I had a recentl appraisal by a company based in L.I. but appraiser was coming after another appraisal appointment from upstate NY. I though it went well until the bank  notified me that because the coop had a 25% net profit flip tax, the appraiser deducted 25% off the contract price. The bank and the managing agent had to write letters to appraisal company explaining what net profit means.

Tagrid, Amazng they can be $100,000 off. Good thing you know how to appeal the value

Alexandra, Thanks, I'm always nice to them I give them comps on a spreadsheet, floorplans, building info etc. They usually thank me for doing my homework. I will watch Barbara Friday night.

Jun 21, 2011 12:28 PM #4
Rainer
51,121
Ann Bellamy
Hard money lending for investors in NH and MA - Tyngsboro, MA

Appraisers are now getting paid only $25 to $50 to do desktop appraisals, so they are not very motivated, I don't think.

Jun 22, 2011 03:01 AM #5
Ambassador
1,980,305
Michelle Carr Crowe,Altas Just Call...408-252-8900!
Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

Lots of good information here for people involved in short sale.

Jun 23, 2011 06:46 PM #6
Ambassador
2,737,312
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

"•     Make sure you attend the appraisal, so you can provide information to help the appraiser come to an accurate number."

From your lips to . . . . .   So many problems could be avoided if only listing agents would perform this simple duty. 

If only.

Jun 24, 2011 04:43 AM #7
Ambassador
3,674,552
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Hey, Mitch!  I included this post in Last Week's Favorites.

Jun 26, 2011 02:55 AM #8
Rainmaker
1,517,838
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Real Estate

Great advice & explanations.

Jun 27, 2011 08:49 AM #9
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Rainmaker
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Mitchell J Hall

Lic Associate RE Broker - Manhattan & Brooklyn
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