ROV - "add comments why you didn't hit the sales price".

[Andee]

Unless there is a specific reason for that deal, I have a standard drop in comment "The SC price is above the MV opinion, which could be due to individual negotiation, other possible offers, inventory shortage and low interest rates. "
"The appraisal market value opinion uses the most similar and recent sales as adjusted to derive the market value opinion. The appraiser also has considered additional sales and market conditions . "

The RE agent "comps" they give me are typically superior properties that sold for more high $- supposed to justify the high sale price for an inferior subject. The last one -the RE agent gave me 5 sales , - the subject was a 15 year old avg upgraded house,...4 of the 5 sales she gave me were C 1 , brand new, very upgraded brand new houses.

I really wish RE Agents were required to take a class in understanding the appraisal process and what we look at for issues like this, really make them understand that C1 new construction does not equal 15 year old construction that is not upgraded or updated. They are famous out here for taking an old appraisal and adding in the ADU sf to up the size of the property, then of course we get questioned why it's much smaller.

 

[Terrel L. Shields]

why I liked Realtors to give me their comps to justify the price.
1. I mentioned them in the report so that they have nothing on an ROV to shoot at me

Good strategy

 

[Tim Hicks (Texas)]

I was given some sales yesterday. The assignment was a 2600 sf house, the sales provided by the agent were 3542 sf, 3502 sf and 2,990 sf but on five more acres.

 

[residentialguy]

I was given some sales yesterday. The assignment was a 2600 sf house, the sales provided by the agent were 3542 sf, 3502 sf and 2,990 sf but on five more acres.

Did you ask him or her if those were the Comps that they used to price the subject house?
I would have been all over that

 

[bnmappraisal]

What do you say when your client asks why your market value estimate differs from the contract price?

Direct from a recent report I completed (some info redacted for confidentiality):
"Note: Subject listed 04/09/2021 through ********* for $879,000 (also current list price). Subject is pending contract for $884,000. This is an arms length transaction with conventional financing and no unusual circumstances. At this time, the subject's purchase price is considered above market value based on the closed, comparable sales available. Properties selling at or above the subject's contract price have been recently significantly renovated/remodeled, are significantly larger in GLA, located on waterfront or a variation of the three factors."

 

[Fernando]

Lately, I have been appraising at contract price since prices have been increasing using most recent sales.
I admit I was astonished a home near me sold for so much but I was able to appraise at contract price.
Same for another property near my rental properties. Prices going up! Yeah.

 

[Overimprovement]

Another relevant example. Small 2BR cottage under contract for $140K. Went under contract in 3 days. I start looking at potential comps to snap pix while in the area. Most are in the $80K-$90K range. I then notice the subject sold for $87K only 8 weeks ago. OK, thinks I, some updates since then right? Nope. Nothing. So I call the prior list agent--anything special about that sale? It was a cash sale with several other offers, all in the general ballpark. A few were a bit higher but had contingencies, so seller went with the cash no inspection offer.

So what causes a home to 'increase in price' 60% in 2 months? I have no idea, but I called the client, told them something didn't smell right, they said go ahead and do it anyway, even if value is near the last sale (which it will be). This may be the highest percentage under contract price I have ever been. Yay, a new record!

I talked with the current list agent too, and asked why they thought all of a sudden the house is worth so much more--"well we knew it probably wouldn't fly, but do what you can with it".

Hello, what? So these agents are talking people into A) over-inflating list prices, and B) encouraging their buyers to over-bid the price when they offer to buy them. All the while knowing that is in no way what the house is worth, and certainly will not appraise. He even admitted having to go way outside the neighborhood for comps. The prior list agent, who sold for near market value, was incredulous that this house was under contract for $140K. Sounded like they might even do something about it. Man she was fiery mad! Maybe those who think all buyers are well informed need to rethink that premise--I continue to believe buyers in general have no idea what a house is worth, only that they want it and can they get it?

Now if there are multiple offers which can be verified, that does carry more weight than the one quick offer, which this particular home had this 2nd time around. One stupid buyer improperly influenced by greedy agents doesn't define market value. A lot of them at once? Well...it does beg the question a little more doesn't it?

Interesting times to be an appraiser for sure...

 

[Sadie]

Direct from a recent report I completed (some info redacted for confidentiality):
"Note: Subject listed 04/09/2021 through ********* for $879,000 (also current list price). Subject is pending contract for $884,000. This is an arms length transaction with conventional financing and no unusual circumstances. At this time, the subject's purchase price is considered above market value based on the closed, comparable sales available. Properties selling at or above the subject's contract price have been recently significantly renovated/remodeled, are significantly larger in GLA, located on waterfront or a variation of the three factors."

That's a super polite way of saying they're paying too much for the house. I like it.

 

[Mejappz]

You know I'm getting ticked off with these purchase appraisals. Again, this morning, I called the List Agent to schedule an appointment. I asked her some basic questions about the unit if it was updated, needed repairs, etc. She said no, it was not updated, and no repairs are required, which the MLS photos confirm to be true.

Then she goes on about the spectacular view of the condo unit. And I would agree that this unit has one of the better views in the building. And it is the prime driver of value in the building, as you can see from the screenshot below. She says she would be stunned if the unit did not appraise at contract price or above.

Well, the unit is listed for 519K and is under contract for 520K. After doing my analysis, there is no way this condo is appraising for more than 480-490K. I am starting to think that Realtors, because of the severe lack of inventory, have gotten together and said, let's go for it, try, and get the highest price for your client.

I would advise appraisers to do some deep analysis if you are about to kill a deal. This market is crazy and will eat you up alive if you don't.

 

[Terrel L. Shields]

Prices going up! Yeah.

If you are selling...otherwise it is your property taxes up. Your home insurance up... and try to find a repair man now...$100/hr or more.