Here is my problem with it. - We are appraising current value- what the buyers are willing to pay. Options/upgrades buyers are including them and paying a premium for them- they pay dollar for dollar for these upgrades and we are given an accounting of the upgrades, most offer for the subject and the comps. We have that info-- its not like a resale where we dont have an accounting for the difference in carpet levels, tile groups, granite upgrades, ect. ect. We are given that data with a new home in many cases. So how do you justify not adjusting dollar for dollar? The adjustments are supported by the buyers themselves in the upgrades/options they choose. In the scenario that I gave to start the thread-, I had changed the values, sf ect. ect.
Actual values are the following (all single store 3 car garage) - subject base price 136.34 sf. ; model A -$134.47 sf; model A(+) - $143.84 sf. Model B. $139.91; Model B(+) $156.33. - So there is a significant difference between models, especially if the subject base price is one of the lower range base price.-- How do you justify using the more expensive model - without making some kind of adjustment for the difference? I understand as a resale comp that this difference will be hard to prove and support. But when we are given the data which supports the price difference. How do so many appraisers justify using the higher sf comps to make value fo the lower prices model? Its easy to complete an appraisal by just using the higher priced comps and everyone is HAPPY. HAPPY,HAPPY- - The AMC, THE LOAN OFFICER, THE LENDER, THE SALES AGENT and THE BUILDER. - The buyer is happy because they got into the house on time, but nobody explains that he just paid over market for the house.
As a Realtor and Appraiser I know that many realtor and buyers/sellers have no idea how to properly price/value a property. When the appraiser just hits the number to make the deal work- does the buyer realize that he is buying at the top 5% of the market? That the appraiser used the only 2-3 comps out of 20-30 that would make the deal go through? No, does the agent understand or relay to the buyer that information. - Most likely not. By just making the deal work ( hitting the number) as appraisers I think we take away the buyers opportunity to negotioate to a realistic value. Years ago, some of you may remember the market took a turn for the worse. Since things were slow I had the opportunity to take assignments that required posting notices on doors of homes being foreclosed, I talked with some of those loosing there homes- and I don't buy into the idea that all those who lost their homes didn't know what was up, but in many case it wasn't 50-100k that caused them to loose their home. 5-10,15k made the difference.
They are market participants and making market decisions, to which we are to consider. Any agent that instructs their client to over pay and pray that the appraiser comes in low to use as a bargaining chip should be fined and have their license suspended. Indefinitely if they're a repeat offender.