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I recently applied for a line of credit from my local bank. I know...what am I stupid?! Who wants to give a line of credit to a self employed individual? I mean - I have 14 years of proven business income, and I put 20% down on my home when I bought it 3 years ago - so there is still SOME equity there I thought! And, as a certified real estate appraiser, I checked the sales in my area before I even considered it, to see if I could take some of that equity back out. What I didn't consider in this equation was the bank's reliance on an internet "valuation". I told the sweet lady at the branch, "I am a local appraiser and I feel confident that my value is at least what I paid for the home. I know I have lost some value - but I did put $50,000 into the home after I bought it as well". I figured that had to count for SOMETHING?! Nope. The sweet lady from the bank regretfully informed me their lending criteria was tighter than normal. (I figured that). And they can only lend on 70% of my home's value. (I figured that too) Then came the shoe drop - "we did an appraisal and the value only came back at "$$ - a price way too low - $$ " I was REALLY surprised and inquired, "Well, did you do a real appraisal?" Nope - the "appraisal" was an online valuation similar to Zillow.com. I have checked my home's value at www.Zillow.com as well as www.Cyberhomes.com and also http://www.realestateabc.com/home-values/ , where you can even "tweak" the estimate a little by adding in upgrades, etc. While checking all of these sites, they are a helpful "guide" when you have a lot of data in the area to consider. But it doesn't take the place of a real, live, qualified human in the transaction. I know the media has also certainly highlighted bad appraisers who have inflated values, and contributed to the demise of the housing market (along with bad regulators, underwriters, etc, etc). But when you are making some decisions for real estate valuation - please recognize the difference between a "FREE online appraisal" and a true professional appraisal by a credible, qualified appraiser. If you have a true need for a valuation of your home, be sure to check those FREE sites. But don't base the value of your home on those sites alone. Always realize that a TRUE valuation from a professional can be worth MUCH MORE than the fee you may pay! If you hire an appraiser, be sure they are truly qualified - not just the cheapest or fastest! Be sure to ask questions about their qualifications, coverage area, training, and experience. It is good to know if they belong to any professional associations such as the Appraisal Institute - this is not the end litmus test for sure...but it would indicate if the appraiser is committed to higher education and associating with other qualified appraisers. If you are working with a Realtor - be sure to ask those same questions. Folks who are new in the business are often very zealous and will be useful to you for their energy and passion. But be sure YOU, as the consumer, feel confident about their knowledge of the market as well - and always feel free to get second opinions from their broker or other valuation professionals. As professionals, we ought to be seasoned enough as well to get some "push back" questions. If you as the consumer don't feel like you understand where our values are coming from - "push back" a little and get more information. You can always tell when a professional is truly confident in their knowledge...they are typically humble enough to go slow and teach you what you need to know. I truly believe that government bail outs and new regulations will not change the problems facing the housing industry. In the end it is YOU, the CONSUMER, who drives the market. Educating the CONSUMER should be every professional's ultimate goal - because it is from the CONSUMER that real change comes. Knowing the value of your home should not be left to those FREE services mentioned above. In the end, they could COST you a lot more than you know!
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AUTHOR: Richard D Ferris - AmcAppraisalsinc.com
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Richard D. Ferris Residential Appraisals in Lake, Orange, Osceola, Polk, and Seminole Counties. Also servicing Deltona, Deland, and Orange City in Volusia County. Florida State Certified Residential Appraiser #RD4088 FHA Certified : Associate Member Appraisal Institute |
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