Realtors- Providing "Comps" for Appraisers can backfire on you!-Appraiser Reality Series Part V

I have to tell you a story, but first, Realtors need to know that providing "comps" to Appraisers for review can Backfire on them big time!

Unless as a Realtor, you understand the principles of Substitution, when to make adjustments and how much those adjustments should be for variances between the Subject property and the comps, you may want to tread lightly when it comes to asking for a review of more comps.

I can tell you in the many years I have been appraising, about 90% of the time when Realtors provide me with other comps, they are NOT comparable and they only make matters worse. If I used these comps, not only would the value be lower, but the aggregate adjustments as we call them in the business, would be UNACCEPTABLE to most lenders/underwriters and they would want, you guessed it, MORE comps to justify the value. 

I totally agree there are appraisers out there that have no clue about the area in which they are appraising and comparables provided by the Realtor may be a good thing, but lenders, at least the good ones are cracking down on incompetent appraisers. They will always exist but they are being weeded out. 

Here is my story, unbelievable but true. I appraised a home for $126,000. Unfortunately below the sales price.  Realtor then sends me an email saying don't you think this one comp which she provided is better than my comp #1 in the report? I look at it. It sold for $120,000! It was a good bit smaller, but newer in age, superior in quality, much larger lot and superior in location. So by the time I adjusted for variances it would come in BELOW my $126,000 Value. Why she was using a sale that was lower in price than my appraised value is beyond me, when she was trying to get my value higher, but I do see this happen frequently.

So then she writes back and says don't you feel the home is worth more than $126,000?? Hello! I said you just gave me a comp that sold for $120,000 and that made it worse and if I thought the home was worth more than $126,000, I would have appraised it higher. In reality the MARKET would have dictated a higher value and it did not. Sad but true story. You gotta shake your head sometimes and say WHAT??

So if you are going to provide a packet of information for the appraisers and include comps, be careful what you wish for as you may be in for a rude awakening. 

Thanks guys, just trying to minimize surprises and more work for both you and the appraisers out there.

Have a great week.