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Appraising For Sale

Discussion in 'General Appraisal Discussion' started by Michigander, Nov 26, 2003.

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  1. Michigander

    Michigander Senior Member

    23
    Oct 23, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Michigan
    Just curious what percentages folks are seeing out there that don't appraise at sale price. I just looked through my year-to-date sale appraisal and found, much to my suprise, that over 40% of the appraisals I have done so far this year did not appraise at sales price! I would have thought it would have been closer to 10%, but for one reason or another, there have been some big discrepencies this year:

    One the sale was really out in left field and still sold at sale price even though I was considerably under (can't use it as a comp as it is way off the rest in the neighborhood).
    Another was close, but sales concessions on two of the comps were noted (they were high sales, the other two were not, mine had concessions, guess what happened).
    Another one I did for a purchaser thinking they were paying too much; they were, didn't get the house, and someone bought the house for only 5K more than I appraised it for (and it was about 45k under the first sale price, or within 2% of my value opinion).
    Another one the buyer went ahead and bought it anyway, and said she knew she was paying too much, just wanted to know what it would appraise for.
    One was a condemned nightmare with almost all the value in the land....
    Another looked like it had major basement problems and was in fair condition on top of not appraising.
    Another was 4% off, but it was a half million plus sale, the buyers are still purchasing it.

    So, of these seven sales (out of 15 I have done so far this year), two did not go through. Just because it doesn't appraise at sales price doesn't mean the sale is going to die (and doesn't matter to me anyway, that is not my job, my job is to be unbiased). Not one of the agents called me to scream on any of these appraisals. Perhaps they went and got Skippy, but perhaps they knew that the prices they had obtained were optimistic and lucky.

    Anyone out there have a similar statistic? I am really curious! There was a post out here today saying something about 99% of all sales appraised at sale price, and it just certainly didn't smack of any truth that I had in my files.

    Maybe I'm just an old low ball..... :huh:
     
  2. Ryan Nyberg

    Ryan Nyberg Senior Member

    0
    Jan 15, 2002
    Professional Status:
    Gvmt Agency, FNMA, HUD, VA etc.
    State:
    Washington
    Rachel,

    The 99% if my memory serves correctly and it might be a little fuzzy right now :beer: comes from FNMA. They stated that 99% of all appraisals appraise out to contract price so why have an appraisal on a sale. What they are not seeing is what we see with alot less coming through at contract price and the contract price having to be rewritten or droped. But hey when your on the receiving end of the finished product wouldn't they all look good and a way to speed up the process on a sale.
     
  3. Mike Garrett RAA

    Mike Garrett RAA Elite Member

    9
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    I do mostly VA...both existing and new construction. This year 1 in 5 did not appraise for the contract amount. Interestingly, 1 in 6 came in over the contract amount.

    Dare I say..."yippee skippy!?
     
  4. Jungle Boy

    Jungle Boy Senior Member

    0
    Oct 30, 2002
    Professional Status:
    Real Estate Agent or Broker
    State:
    Florida
    Does that mean that 3.33 % came in under contract ? <_<
     
  5. Mike Garrett RAA

    Mike Garrett RAA Elite Member

    9
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    No, it means 20% came in under contract....that's my story and I am sticking to it.
     
  6. Oregon Doug

    Oregon Doug Senior Member

    0
    Jan 15, 2002
    Professional Status:
    General Public
    State:
    Oregon
    Rachel - If you have only done 15 appraisals so far (mid November) this year, I'm not sure that you have enough data upon which to base your conclusions.

    I don't do a large number of appraisals either (175 +/- so far this year). The majority are to aid in the disposition of REO homes, for estates and divorces - almost no refinance or sale/lender appraisals. I have observed that the REO homes often sell at my value opinion, sometimes a little less. In my case, I find that my appraised values are at or very slightly above the market sale price, not usually below. But, in my case, any sale comes after the appraisal - not before.

    Oregon Doug
     
  7. Richard Carlsen

    Richard Carlsen Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Michigan
    My numbers are consistent with years past. Only a few that did not come in at sales price and several of these are FSBO's. That tells you something about the buyers thinking when dealing directly with an owner? "Any price is a great price because I'm saving the 7% commission!"

    One of the things I've noted over the years is that there are very few brokers in my market area who do not do a good.....no, make that a great job of pricing their listings. I often have brokers call me wanting to bounce their thinking off me on setting a selling price. These calls are always welcomed and taken as a compliment.

    Oh there are a few big hitters, mainly in the Boyne City area who like to throw numbers around and a couple who will take a listing at any price. These properties far more often than not end up as expired listings rather than sales so they are not of concern to me.
     
  8. Michigander

    Michigander Senior Member

    23
    Oct 23, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Michigan
    15 appraisals that were for financing of sale! I've done 140 so far (less than average, due to death in family and such), and most of them are for divorce, estate or relocation. It was just interesting to look back at what the statistics were for the sales.
    Actually, come to think of it, the only two FSBO's I had did not appraise. Yes, I find often that buyers think they are getting a good deal on a FSBO, when in reality they are not.

    Actually, one thing I have been noticing that some of the really high sales have involved buyers brokers.
     
  9. Pamela Crowley (Florida)

    Pamela Crowley (Florida) Elite Member

    3
    Jan 13, 2002
    Professional Status:
    Retired Appraiser
    State:
    Florida
    Yup, notice both here. I'll check on doing an analysis of mine to see where they compare.
     
  10. Jim Onderisin

    Jim Onderisin Senior Member

    8
    Sep 15, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    I haven't tallied them up, but I have noticed a significant increase in the number of purchase appraisals that have "come in" below the contract price. I've noticed that some of these purchases involved buyers financing 90 to 95% of the agreed purchase prices, so maybe they just don't care about the total price and are more concerned with their required monthly payment.
     
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