Acceptable Differences In Appraisals

[Jim Onderisin]

Hal, I agree with you. I rarely accept requests to appraise for homeowners to detemine asking price. I'm too fixed on finding the "most likely price someone will pay". I try to steer the person toward local real estate agents. Those are the people who shoot toward the top of the market. If they are experienced, they know how to get the highest possible price in the lowest possible time.

 

[Lobo Fan]

That is a great point. Right now the $187K value is only a rumor. Until you have a hard copy in your hands it remains a rumor. Getting a copy of the second appraisal could prove problematic. Suing the first appraiser may backfire until you have a copy of the second report. You can hardly go in front of a judge and claim, well I heard that this second appraisal exists and is valued at $187K. Even with the second appraisal, you still have to prove negligence by the first appraiser. The spread is not wide enough for that. Had there been a 20% difference, then maybe.

Another good point was that the first appraiser did not have a target like the second appraiser did. If you knew that there were willing buyers out there, why bother with the first appraisal at all?

 

[eric cogswell]

You have two minds that are given two different assignments with two diferent opinions.... Would we still have this discussion if the two appaisers came in at 1 %
(2000 grand) which would it still spark opposition? Opinons are opinions. Is the first appraiser in contempted of doing his/her job??? I think his/her assignment did not have a benchmark to meet. Its funny how we pick each other apart to be unbiased in giving our opinion. It is however, our responsiblity to predict the future the best we can. If you hired an appraiser, then beware due to the nature of the business. Buyer beware. It's is like hiring a carpender... Some are dinomite(sp) ,some are in business because they built a birdhouse in third grade. We, appraisers , are licenced so we are automaticalyy experts, Right? Not so... We have resumes just like everyone else. Please, do you think that just because the govenment says we are qualified means that we are really qualified? Is everyone in the govenment qualified ?????? I would opt to say ne on that subject. But that's America. The land of ignorance bliss. Which keeps the county churning due to our brash of our future; compared to the other industrail countries that are too smart/pessimistic and consequently, sceptical of every little thing that hic-ups.... Sorry my 2 cents

 

[NC Old Guy]

A slightly different take. Why on earth would the buyer's bank (lender) share the appraised value with you? A few years ago, I helped a person buy a house, loan was applied for, house inspection was conducted. We were in the middle of negotiating some home repairs when the lender's secretary blurted out to the seller what the property had appraised for (a few thousand over sales price). Needless to say, negotiations were over. I suggested to the buyer that she should ask the lender to pay for the repairs since it was their rep that screwed it up. They were too nice to pursue that & I guess they were concerned that something might happen to their loan.

 

[Pamela Crowley (Florida)]

I'll sure agree with that Leon. It's really not the sellers right to get a copy of or know the value of the appraisal completed for the buyers lender. I consider it a grave disservice to the buyer for anyone to have let this information out, and totally stupid of the buyer if they did it.

 

[Mike Boyd]

With only a 6% difference in value, I doubt you would get the State to censure either appraiser. As far as suing is concerned, it would likely cost MORE than the 6% in legal fees let alone your time in court. If the low appraiser has errors and ommissions insurance, their attorney could blow you out of the water. You do not have written proof that other buyers would have paid a higher price or what TERMS they may have demanded. There are dozens of issues that could interfere with the successful closing from another buyer.

Often, the first offer you get is the best. This buyer may have been waiting in the wings for a home in your neighborhood to become available. The next buyer might have a home to sell first or not have credit good enough for financing. Or, another buyer might ask for concessions or various reports. The possibilities are endless. Rather than worry about wringing every nickel out of your old house, you should move on, be happy with the new home you will be buying and be thankful that you were able to sell your old home quickly so that you CAN move on. Your husband is taking a new job. It would seem that the last thing he needs is to get in a lawsuit over what amounts to be a trivial difference in appraised values that you are unlikely to win. You SAVED the same amount by not going through a broker.

However, if I was the first appraiser, I would have counseled you to set an asking price somehat higher than the appraised value. You can always come down in price but it is very difficult, if not impossible, to go up.

 

[Jen Merryman]

Interesting perspective. I pay a yearly legal fee to have a lawyer on retainer. It pays for itself just for things like will updates etc., but it also gives me the option to use her in court should I want to do so. That said, there aren't any out of pocket costs for me if I do sue. other than any applicable court filing fee. It is just a matter of question of competence. I wouldn't sue a competent appraiser just because I didn't like his outcome, but I'm not much on paying for incompetence either. I initially called the guy and asked for a refund of my $350. When he said "no" I thought I'd look into my options. I closed the deal on the house and the buyer got a copy of the bank appraisal for me (which the buyer paid for in their closing costs and thus are entitled to receive). I will review and proceed accordingly based on whether my appraiser missed anything major, or whether it was just a difference of opinion. I am aware it could have gone the other way, I could have paid for the second and appraiser, gotten the high appraisal price, listed based on that info and then had the other appraisal come in way under the sales price. It would have been bad either way. The really irritating thing is that I paid for advice that caused me to list the house cheaper than I would have without the appraisal, all because I thought I couldn't realistically expect a buyer to get a higher loan....

 

[Carnivore]

Jen,

You have received some good advice from the some of the forums biggest guns.

I may have missed something, so forgive me if I did. When you sought advice from several Real estate agents, What did they advise?

 

[jeff samolinski]

The few opinions of value i have done so far have all contained the statement that this is merely an opinion of value and the final decision as to the asking price is to be determined by the seller-this is a good example of why someone somewhere is going to have to educate the public about what an appraisal is and what it is not!!!

While I can appreciate and somewhat sympathize with this poster I also must point out that if one does not take the time to educate oneself before buying or selling one of the biggest assets they have, then part of the blame for their ignorance must be shouldered by them.

Lesson learned- An appraisal no matter how good and accurate should never be the sole determinant for the asking or accepting price-it is merely an informed opinion of the market value and the more unstable yhe market is the less reliable it is.

 

[Fred]

someone somewhere is going to have to educate the public about what an appraisal is and what it is not!!!  Lesson learned- An appraisal no matter how good and accurate should never be the sole determinant for the asking or accepting price-it is merely an informed opinion of the market value and the more unstable yhe market is the less reliable it is.

Sorry, Jeff, but to suggest that the public should not expect appraisers to know what stuff will sell for flies in the face of common sense. One of the standard defintions of appraising is "to call the market."

From this thread

Among the standard premises in a lending appraisal is that value is what the property would already have sold for (today or earlier) marketed in a typical fashion. These premises are not applicable to a sale appraisal. For one, you are not locked into an assumed marketing effort. For example, in analyzing what a home WILL sell for instead of what a home would have sold for, one would look at different listings and look at listings differently. Also, the report could introduce ideas about “staging” a home for sale. This can result in several value conclusions for each of the several sets of premises. A report to a potential seller, in my view, should have stressed that the home is the larges in the neighborhood (which always creates uncertainty) and offered that in a strong market, this could used to create a bidding situation.

I rarely accept requests to appraise for homeowners to detemine asking price. I'm too fixed on finding the "most likely price someone will pay". I try to steer the person toward local real estate agents.

Our standards require us to tailor the scope of work to the specific client decision (so-called intended use). The predomination of mortgage work in some appraisers’ practice and the exclusive use of fill-in-the-blank form report make a lifelong ritual out of one set of appraisal premises and turn people into like one-trick ponies. So, I disagree that we need to “education the public about what an appraisal is,” because our standards require us to do the work that answers the client’s exact questions instead answering a question not asked.

FWIW, Jeff, some of what I think has been my best work was dont for buy-sell. Last year, I correctly predicted that a buyer wouuld be quite willing to pay at least 45% over his own appraiser's market value apprasisal (and 40% over my market value estimate). His frist offer was 25% over his own appraisal and three days later his second offer was 45% over. That led to a wee bit fo after consulting, since the offer matched what the seller "wanted," but was still 20% short of the ask, the wanted to know if they should hold firm, lower the ask or take the money. I gave them spiel about risk tolerance: theirs and the buyer's. I feel sorry for other appraisers who use this sale as a comp.