appraisal $22,000 less than purchase price

[Mike Siegfried]

Any thoughts of sending a nice fruit basket to the honest appraiser who saved you 10 grand by appraising your home accurately the first time ?

Mike

 

[redfish]

Hello all,

A quick update and thank you for your input. After much research, including informal opinions from this forum and from 2 other local appraisers who would have appraised "our" property at $207,000, we stood firm with our offer of $197,000. The seller accepted last night. Majority opinion seems to agree that our original appraisal was quite conservative but sound and unable to be legitimately contested at this time, because the other relevant comp (selling for $213,000 after seller concessions) is sale pending. The more generous appraisers would have given greater credit for the excellent condition of our property and considered the sale-pending comp (it's scheduled to close in two weeks and the appraisal came in at $220,000 and was accepted by the bank).

So we feel that the $197,000 is a fair price and we get to stick with our own bank with their excellent service and interest rate. BTW, a friend of mine who is a bank manager said that he is starting to see more Rochester appraisals in the last month or so come in about 15% below price. In this case, I think our financing package--we got probably the last 80-10-10 (with low-interest-rate HELOAN) available--was a factor in the bank's assessment of the situation. They just are not willing to take the risk on lending 10% against the equity in this climate. Calling around to 4 lenders and speaking with a broker, it became clear that no one was willing to do home equity financing at the time of sale anymore and that it's quite difficult to even get a second mortgage in this area, no matter how attractive you look to lenders.

So, thanks to all those who wrote to me, I appreciate it.
Best,
L.

I would really like to check back in with this poster in 6 months.

 

[Brisco58]

I can't help but wonder how on earth one would know the future sales price of a pending sale which includes seller concessions. I was under the impression that disclosing details about a pending sale was off limits. However, I guess if one were a psychic then giving the most weight to a pending sale would be a legitimate option. One could just list their verification source as "the astral plane". I however, exist on a simple physical plane so that option is clearly out of the question.

 

[timd354]

Sure would hate to be either one of those appraisers....they are labeled as conservative.

quote]

Consider the source!!!

 

[Bill_FL]

Seems to me, Ms. Linathinks sounds like a pretty educated buyer. She stated she had walked through many of the "comparables", we do not know if the appraiser had or not. In many of the markets I have and do appraise in, condition is a HUGE factor. As is location. similar homes on the same street, but one is on the corner where the street meets a busy road would be a HUGE factor.

I know there are several people here applauding the appraiser, but if the facts are as stated by the original poster, I am not so sure that appraiser did a good job. It sounds to me like there have been a lack of recent more comparable sales, so the appraiser used the sales that were there. Not adjusting for condition and location when it would be a positive adjustment is just as bad in my book as over-looking them when they would be a negative adjustment.

Did nobody else get that same gut reaction when reading this?

 

[Willie]

Seems to me, Ms. Linathinks sounds like a pretty educated buyer. She stated she had walked through many of the "comparables", we do not know if the appraiser had or not. In many of the markets I have and do appraise in, condition is a HUGE factor. As is location. similar homes on the same street, but one is on the corner where the street meets a busy road would be a HUGE factor.

I know there are several people here applauding the appraiser, but if the facts are as stated by the original poster, I am not so sure that appraiser did a good job. It sounds to me like there have been a lack of recent more comparable sales, so the appraiser used the sales that were there. Not adjusting for condition and location when it would be a positive adjustment is just as bad in my book as over-looking them when they would be a negative adjustment.

Did nobody else get that same gut reaction when reading this?

Bill I see it exactly as you do. This is why I trust few appraisers. The original appraiser was likely wrong. Who knows how many appraisals he cranks out a day. The original poster's post is exactly why I only trust a small handful of appraisers, though I know many. Even so, if a lot of money on my personal real estate was at stake I likely would want 5 MAI appraisals or 5 residential appraisals from those who are on my shortlist of trusted appraisals. I probably would through out the low and the high.

The original poster had a valid question and concern. I would have advised her to present all of her information before the appraiser went out, for him to process the information. The first comp had condition issues, and the other two had location issues, apparently that were not taken into consideration. Also, the seller telling the buyer to take a hike at the appraised value is a clue. They were confident of their asking price to tell them to go fly a kite, they'll find another buyer. Furthermore, I think the original appraiser is guilty of pigeon holing the subject by only using less than 12 month sales. The poster has stated the market is stable or increasing. If this is true, the older sales are quite valid and the appraiser was derelict in not considering them. Again, the poster/buyer's only fault was not giving this information to the appraiser. They really should not have had to, but the appraiser did a ****ty job, and maybe it would have helped. It's sad that users of appraisals sometimes have to do the job of the appraiser, but other professions are similar. If you go to a doctor, you should be highly prepared, or you might just get generically processed. Appraising is no different in that regard.

Again, I'm taking the original poster at his/her word in forming my opinion that the original appraiser may have been at fault.

 

[BRCJR]

Sure would hate to be either one of those appraisers....they are labeled as conservative.

quote]

Consider the source!!!

You and I may understand and consider the source, but what about all the others that do not have an understanding of the process, that hear this person talk about an appraiser and use the word conservative and/or liberal?

It is not good to be labeled as either, IMO.

 

[Webbed Feet]

Again, I'm taking the original poster at his/her word in forming my opinion that the original appraiser may have been at fault.

Willie,

The last time in this forum section, when I read an original poster's post that was supposed to be coming from just a member of the general public, and the O.P.'s posts were too clear, too well worded, too full of just the absolutely right buz words, and expressed better than half the appraisers on the forum can express........ it turned out the O.P. was not just any "member of the public." ... The O.P was a builder with a legit question, but a person that did NOT disclose they were a professional member of the real estate community.

Sorry.... My opinion? ... This poster is too, too, too, and too also. That's ok. But I would prefer understanding how this person is coming up with specific data about unclosed pending sales when bunches of appraisers are complaining the real estate brokers will not even disclose that sort of information to real estate appraisers. But here, somehow, a buyer of a different property, this buyer not involved at all with a transaction going on with a different pending sale the O.P. says is a possible comp, knows all about the nity grity details of a pending transaction. And knows them when brokers tell us this is confidential information.

You bet, a typical, everyday, buyer just wanting the opinions of some appraisers. ...

Webbed.

 

[Brockway]

Webbed, she might be a "typical, everyday, buyer just wanting the opinions of some appraisers." My gut feeling is that the original poster is exactly who she says she is, which is why I responded to her when she pm'd me.

Sometimes the pending price of a property is available to us. I am able to get that information from agents at least 50% of the time and, yes, I do include pending sales in my appraisals as additional comps and do feel they should be considered when valuing a property because they represent current market conditions. It is also possible that the poster's broker sold the property so they would be privy to that information.

fyi, I am not one of the appraisers who told her I would have appraised her property for $207,000. I was careful not to discuss value in my response to her and I'm very surprised that two local appraisers were willing to give her a value without inspecting the home. I did look at the sales used by the original appraiser, did my own search for activity to see if he missed anything, told her about the sale pending and said her agent should research it.

Based on the information I was given I told her she is probably dealing with an honest appraiser who used due diligence in his research. For those of you who assume the appraiser did a poor job by not looking at older sales, I will just say that it has been 2-5 years since similar homes in this area have sold in the $190,000's to low $200,000's. Just how far back should he have gone to show CURRENT market conditions?

I was bummed when my research showed values going down in her neighborhood. Further research shows several neighborhoods of higher priced homes with declining values. I guess it was only a matter of time before Rochester was hit. It will be interesting to see the next economic watch report that is put out by our local MLS. I guess I'd better get used to the declining box like the rest of the country.

 

[Webbed Feet]

Brockway,

I understand. I am pretty successful with brokers too in getting information. But I am also a broker and I would never tell a buyer I am working with on a uncompleted transaction the specific details of some other uncompleted transaction I am also working on. Telling an appraiser working on an unrelated assignment is one thing, telling a buyer that may still end up in the market is something entirely different.

In a way I am complimenting the O.P. as her information is almost too good, and that was my point. I would not skip a beat for a second to find out this person is really a real estate broker and not just any buyer off the street posting on this forum. However, such information would alter the view I would have of the questions being asked.

Also, I would seriously hesitate to be darning some appraiser because a "general public" post was telling me what the market conditions are and I wanted to use that information to blindly agree the appraiser deserved to be darned. Now you post the market is actually declining and my attitude about that was just proven to be the correct one.

Glad you did not get into a value opinion with her, and yes like I said, those other appraisers were beyond foolish to do so. I wanted her to know that presenting the information that two idiots shot their mouths off, without actually having real estate appraisal assignments or being in compliance with USPAP I would say, is not something to be telling a forum of appraisers as if that supports diddly in favor of her opinion. It only shows two appraisers aren't very bright if they really opined value, from their office chairs, to a disgruntled buyer in a transaction they weren't even hired to work on.

Sounds like you did good.. .. But again, I have become quite the cynic, and I don't find a member of the public, without a real estate background who is able to post more intelligently than quite number of appraisers on the forum can post, something to just blindly take as a happy sign of competency of a lay person. I'll always suspect something was not disclosed about the person.

Webbed.