Complaints On Appraisals
I was struck by and Article in The Orange County Register by Marilyn Kalfus titled Real Estate Appraisals Under Scrutiny.In the article is a complaint from a home owner early this year when all the homes were distressed property.Hers was a standard sale.
The homeowner explained how there was a difference in the distressed properties and hers that was upgraded.The appraisal came in low.The difficulty starts with the agents, homeowners, and press that do not understand appraisals.The agent stated the appraisals were hurting the market.Really?
Surprise, some agents state that the appraisals were lagging behind the property values.The appraisal must look at the market and state the value of the home at that point in time.If at that time there are only distressed properties selling then that is the market and the price used.
Why?Well let’s go back a few years ago and the market turned to the negative.Early in that market the prices were coming higher than the next sale.On the turn it is hard to get the price exact.But only when the market turns do you get the values skewed in the wrong direction.Back then the appraisals were looked at as hurting the lender and the buyer.Today it is the seller who is likely to have the complaint.
Yet two months ago I sold a property for $50,000 more than the last sale in the tract.We had multiple offers and there was no way the appraisal would come in.We did sell the property appraisal came in higher than thought and the buyer had to come in with some extra cash. We set the new value in the market someone has to.
The value of real estate depends on what a buyers and sellers are willing to negotiate (higher or lower) cumulatively it establishes the market value.Not an individual but the whole of the market.
The market has changed in our area. A lot of the agents has never been in a positive market. Many have never seen prices move up as fast as this and they have difficulty guessing on the value. We actually have been through hyper positive markets before. That means we have the ability to price where the homeowner will get the best price in the shortest amount of time.