News

THE APPRAISAL BATTLE – A NEVER ENDING CONFLICT

As much as the market has been straining to break out of the recent recession and regain lost property values, one component of the market has been acting as an anchor, holding back or at least significantly slowing the positive progress. That component is the dreaded appraisal. I say dreaded, because it has become the biggest obstacle to sales these days. The house can be in move-in ready condition with a clean bill of health from the home inspection and still have the sale queered by a low appraisal. That’s happening a lot these days. Why is that?

One of the constant battles that go on in the real estate market is that between the Realtors involved in listing the houses and the appraisers over what the market value of the house should be. Appraisals can be the cold splash of reality in the face for many sellers. Appraisals take all of the emotion out of the process of putting a market value on your property.  The battle over market value is one that is likely to continue forever, just due to the different natures of the two sides in this arguement.

Realtors, especially listing agents, tend to be optimistic and they also tend to bake the direction of the market into their listing pricing. In a rising market, like we have now, it is quite easy to miss the market on pricing, either low or high. If the listing agent prices the property too low, it might sell quickly; but, the seller will not have gotten the most out or the sale. If, on the other hand, the listing agent is too aggressive with pricing the property for a rising market, he may price it too high and it will just sit there, waiting for the market to catch up. Listing agents almost always start high and hope that they haven’t gone too high.

Appraisers go at value pricing from a different perspective. They are required to use sold comparable properties as a barometer of the market; thus their data is always trailing the market, sometimes by as much as 6 months. In a rapidly rising market that almost always means that they miss the value on the low side. For a long while appraisers were also forced to include the sales of foreclosed and short sale properties in their comparable properties. Fortunately much of that business is behind us now, but there are still a few of those types of sales that were done in the last few months that can affect appraisals. The scarcity of inventory has also caused a problem for appraisers, since they must more often go outside of their normal comfort zone to find “comps” to use. 

Another major factor in many appraisals is something that the seller can’t do anything about – the style of the house. House styles come and go, with each decade usually having some dominant style. There are a few “classic styles” – ranches and colonial, for instance, that never really go out of style, but which might be less desirable than a more modern architectural style. For the past couple of decades the 1 ½ -story or Cape Cod seems to be the preferred style. Split levels, which were all the rage in the late sixties and seventies, have really fallen out of favor as a style. Those style preferences show up in the appraisals. Bi-levels, tri-levels and quads definitely appraise lower than ranches, colonials and Cape Cods of the same size. Homes that were sometimes classified as modern or contemporary when built can also fall out of favor, since many of them have very unusual floor plans.

What can you do about all of this as a homeowner who wishes to sell? Not much about the style issue; but you can make sure that your house is the best one of whatever style that it is on the market. A house in great, move-in ready condition will still attract buyers. Another thing that sellers can do is to compose a list of the updates and upgrades that they have put into the house, hopefully not too long ago. It is not obvious to the appraiser exactly when the roof was replace or a new furnace put in, but those things make a difference. Some updates, like granite countertops will be obvious, but many others may benefit from being pointed out for the appraiser. Taking care of the many little “deferred maintenance” items that you may have been putting off can also help by removing those value detractors.  Another thing to do is seek professional advice. Get a good Realtor to do a Market Analysis for your home and then follow his/her advice. You don’t need to fight with both the Realtor and the appraiser. Call me and I’ll help you understand more about the market value of your home and what yo can do to improve it.

Source: http://realtytimes.com/archives


Share and Enjoy

Posted In: EHR News

About The Author

Joseph Sabeh Jr.

Please let me introduce myself, I am Joseph Sabeh, Jr a full time licensed professional realtor. I have been with Executive Homes Realty for over 13 years and was trained by my late father and Broker, Joseph Sabeh. I recently incorporated the company and we moved the office to 43513 Mission Blvd just last summer. I could not have found a more honorable place to work. After earning my experience selling high end Ralph Lauren suits and studying business management in southern California, I decided to pursue my dream of selling real estate and working with my father. He had already had such an excellent reputation and established a niche market of high end clientele that catered to the very best. I wanted to become the consummate professional just like him and have strived to become just that being just a phone call or email away from getting back to my client’s immediate needs! Known by my clients for my tenacity, perseverance , and excellence in negotia- tion(Certified Negotiation Expert), I have always strived to meet my clients high demands and goals. As a result of my professionalism, I have achieved an extensive portfolio of referrals from past and present clients. I credit my current values from my upbringing of my parents and the credit is due to them without question. Their integrity, pride, and willingness to sacrifice for the better of my life and my sister’s always left a mark on me that one day I will pass on. Their desire to achieve a better life and live it to the fullest is one that some families dream of and I certainly am appreciative of all of the education and etiquette I have learned from them both. I have sold condos up to 3.2 million dollar homes and I am here for any and all of your future real estate needs and wishing you the very best experience in your future real estate endeavors with me.

No Comments

No comments yet.



Leave a comment

RSS feed for comments on this post. TrackBack URL