How Subjective are Appraisals?

By
Real Estate Agent with RE/MAX 1st Class 0542725

 

Appraisals... just how subjective are they?

I had the recent pleasure of dealing with a 5 digit gap between appraisal and sales price.  My market research was thorough.  I know my market.  I know we got a bad appraisal in.

We got a second appraisor to go out and give a second opinion, but what I'm really wondering is - Should appraisors be allowed to listen to national media? I'm kidding, but I feel confident that the first guy was listening to too much doom and gloom on the national level or something.  I don't think I would have had this same problem 6 months ago.

Which comps does the appraisor have to use?  Which ones can they ignore?  I always thought that if foreclosures were not common in a neighborhood (less than 30% of available comparisons) that they wouldn't be included.

Also if 12 month is the cutt-off for a comp...

There are few sales in this particular neighborhood.  It's not a big neighborhood.  But, is a 10 month old comp okay to use?  If so, what's really wrong with using a 13 month old comp?  Where do you draw the line?  When is it okay to go outside the neighborhood and find comps?

Looking too closely

It seems that underwriters want appraisors to use comps in the neighborhood if at all possible.  I get that.  But, it seems that also looking beyond the neighborhood is vitally important to knowing the market value.  The bottom line for this is- what homes are available to a buyer in a market?  All homes that are comparable should be considered to be comps if they meet a certain criteria that make them very likely candidates for the same buyer.

 

Please share your recent appraisal stories by replying!

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Brian Worrell - GRI, CNE
Bayou Properties Realty  |   The Worrell Team, Realtors
Cell  281-948-7042  |  Fax  832-514-7029  |  www.BrianWorrell.com

 

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    (Awarded for excellence in Sales, Leadership, and Community Service)
 
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Comments (1)

Robert May
Robert W May - Lethbridge Real Estate - Lethbridge, AB
Real estate consulting

I have had good ones and bad ones, the worst being the ones where the appraiser did not listen to our objections or corrections to the recorded data.

 

I had a $160k acreage with 2 offers, the appraisal came in 20k below the lowest offer, I called the appraiser and said obviously something is wrong because 2 independent buyers believe that it is worth substantially more then your estimate.  He refused to review his data, refused to look for different comparable sales, refused to take the offers into account.   In the end the high offer bought the home, but their financing was difficult due to the appraisal.

Jan 25, 2009 04:42 PM