Appraisal values on real estate purchases and sales
Determining VALUE is the real goal of a full appraisal. This can be done at various stages of the home buying and selling process. A Seller could have a third party appraisal company that they hire and pay for prepare a full appraisal valuation on the property, home, business or farm that they are selling. That subject property, meaning the one they are going to market and sell, is then compared to multiple properties, typically somewhere between three and six other similar or like properties within a certain radius as the crow flies from the subject property. The appraiser has many guidelines to follow as the secondary real estate mortgage guidelines continue to change and tighten up on valuation in particular. Of all the things that caused the real estate depression some 6-8 years ago, the FAULT of VALUE being done by unqualified appraisal companies, making a number be a number type of deals were instrumental in the problems the real estate industry had and have worked toward correcting and improving.
A Buyer when they purchase a home, even if it is a cash purchase, should still review the benefits of having a contract subject to an appraisal being done. It is leverage in the event the appraised valuation does not come in at the contract price, and becomes a contingency to let the Buyer walk away from the deal some times. A note to remember is that even though appraisal companies have certain specific guidelines that they must follow on every appraisal, there are still what I refer to as 'gray' areas that allow subjective opinions of value adjustments. These opinions are up to the appraiser him/herself so even if you do five appraisals, you may get five different valuation statements from them. It should give you a very narrow range of VALUE but the numbers being exact will probably not happen because as humans we all have things that we like, dislike and LOVE about specific real estate types.
When the BUYER has an appraisal done, the appraisal company is HIRED by their LENDER if there is a loan involved. This way the third party appraisal evaluation cannot hopefully be influenced at all, and the appraisal is supposed to be more accurate and non-biased. The LENDER to make it even more non-biased, I believe Lenders rotates appraisal requests and orders through a list of certified approved appraisal companies. In concept that is great, but not always in reality. Sometimes out of town, or even non-regional appraisal companies may be chosen in this rotation selection process which may or may not prove to have an ACCURATE VALUATION.
As you can see by the writeup, this is not a flaw proof system. There are improvements made but I believe the secondary market is learning from the past and making decisions to improve the process overall, especially to use appraisal companies at are NEIGHBORHOOD and FAMILIAR with the area where the subject property is being purchased and SOLD.
AREN'T I REALLY HAVING TO SELL MY HOUSE TWICE? When I work on a listing appointment, I like to make education and knowledge key to assisting my sellers make this process as seamless as possible. One thing I always talk about is the VALUATION process. I like to do some preliminary work online BEFORE I arrive for my listing appointment, but then I do a thorough walk through, make some extensive file notes, and then come back to the office and fine tune what I believe based on SOLD data online with the local MLS and maybe other selling portals online that reflect the value of properties similar that have SOLD. Finding good comparables to the subject property I am listing can sometimes be a chore. I am basically doing a backwards appraisal to determine a comparative market analysis of the overall VALUE of this property that the sellers want SOLD. Not always easy and certainly not a 100% science for sure. Together with the Seller and myself, we usually can come up with a figure that makes sense. When you sell a property, you really are SELLING IT TWICE, the FIRST time to the BUYERS, and the second time to the APPRAISAL COMPANY who really leads the decision of what it really is worth based on those comparables we tried to find earlier.
Be Patient as a SELLER with us, as we present your property 'to the market' the first time. The first 30 days are pretty critical as to what the market says in showing feedbacks and in comments of agents that have shown the property. Multiple showings with NO OFFERS, either written or verbal, traditionally mean that the property is OVER PRICED based on its current condition and location. If you don't get any showings at all, it usually means the exact same thing.
SELLING REAL ESTATE is all about two things, LOCATION and PRICING.
Let's talk real estate when you are ready to sell or purchase real estate. You can reach our TEAM at 314.808.1712 and we work hard for YOU whether you are a seller we represent or a buyer we are assisting in finding the right piece of real estate for you and your loved ones. Hope you have a Blessed Day as we are "Selling a Little Bit of Heaven Here on Earth!" Donna Joerling