Join Toni for a discussion regarding home value determinations and, what items give value and what items do not. You may be surprised.Web Page 1
Sales history along with location perimeters are the main factors in determining a market value. In most cases an Appraiser will attempt to pull comparable sold properties from within the same neighborhood as the subject property. Furthermore, they will attempt to find comparable properties from within the neighborhood and within a limited amount of time (say, no further back than 3 to 6 months). If they are unable to find suitable comparable properties within these perimeters they will 1. look beyond the neighborhood 2. look further back in sales history.
Unfortunately, many upgrades done by sellers are not considered in an appraisal. Standards such as Square Footage, Age of Property, Condition of Property, Amenities such as Swimming Pool, Garage (size), etc. are commonly used.
A real estate agent should make it a priority to review the appraisal once complete and contest if there are clear issues with the established market value.
Choosing an Appraiser
This has become a sticky subject since the mortgage market fell and it was determined that lender fraud had taken place across the country. Originally, the lender would order the appraisal – the buyer nor the seller could order an appraisal because this could be deemed a conflict of interest. In other words, the appraiser could not be ‘working for’ any particular party to the transaction. Now, even the lender cannot order the appraisal and in many cases a third party company is used to choose an appraiser for a transaction. The appraisers are chosen by what is near to a lottery system in order to ensure a random choice.
Unfortunately, this sometimes results in an appraiser being chosen that is not as familiar with the local market as each party would like. Appraisers are generally very knowledgeable about how to establish market value. Sometimes, the agents can offer some supportive factual material to help support the appraiser’s determination, but this is a touchy subject too.
In the end, everyone simply ‘hopes for the best’.