Low Appraisals Suck!
I am selling a house flip that is under contract for $275,000. The appraisal just came in at $250,000! There are ways we can challenge that appraisal but it is so frustrating to have this happen. People want to buy a house for $275,000, the appraiser uses comps that support a value of $275,000, and he values it at $250,000. That basically means if he doesn't change his value I have to sell the house for $250,000 or find new buyers. He had one comparable property that showed a value of $250,000 after he made his adjustments, and the rest were much higher up to $286,000 so he could have easily come in higher.
Here is a video I did on appraisals if you are not familiar with them.
So many irregularities. Sometimes I think some of those people just do those for personal gains or based on whether or not they actually like their client
Many of them also feel prices are too high and are helping people by coming in low, even though that is not their job.
True. I agree with that
Appraisals are definitely a pseudo science... It's amazing how they can vary from person to person.
Since you brought this up let’s point out some things to keep in mind when looking at appraisals:
The owners and agents expect to get the “highest possible price” for the property. Bank appraisal require a “market value” evaluation which implies the “most probable” price not the highest probable or possible price
Appraisals are regulated and scrutinized by humans (underwriters) and machines (Collateral Underwriting, AVM programs, etc.). The appraisals have to be compliant (huge topic) or they don’t pass.
Getting an appraisal that hits your price may still not get your deal done. The appraisal is only the first link in the chain, if the scrutiny mechanisms do not agree with the appraisal, it won’t go anywhere.
There are requirements for bracketing all adjustable criteria and final value, before and after adjustments. These limit the options in the selection of comparables and also the adjustment range.
There are many other items but I don’t want to go on for too long.
(
(Just in case you think I’m talking out of my ass, I’ll just say that most of what I do involves reviewing appraisals. I have a company with nine appraisers, I have been in this business for over 30 years, I have a Master’s degree in real estate and I testify in various courts as an expert on valuation related subjects)
Thank you for the comment. I think that most apprasiers and appraisals are done well. However, this one was done without much thought.
I am following you now and I appreciate a good discussion. So I will like to simply offer some thoughts on what might have happened in your case.
1 – He did adjust $5000 for 1gd (I assume that is the extras garage)
2 –This one does look like adjustments may have been appropriate
3 – Either he was desperate for a comp or he was just lazy
4 – I agree with your point 100%
5 – Since I don’t know your market I can’t comment on this one
6 – The value is reconciled in some fashion in order to arrive at a final number. I don’t know how it was reconciled here but maybe it was a crap shoot. I can’t really see the logic.
Practically every appraisal is vulnerable to criticism, some more than others.
Without knowing your market, I don’t particularly care for comp 2 as it is a manufactured home. Comp 3 seems to be in the same condition (C4) but it is adjusted so I hope there is a good explanation somewhere.
I also am baffled by the use of comps that are half the living area. You have a good case here for a reconsideration request.
I should clarify something! The appraisal that came in low for this post is different than the one I talk about in the video. So the points I made in my response to you are regarding a different house. Sorry for the confusion!
OK, I did not realize that.
FYI, regarding the appraisal in the video. We challenged it and the appraiser changed his value to contract price!
Then you did well. We actually do rebuttal writeups for clients that want to challenge appraisals they had, and charge a decent fee. Is seems to be a growing niche in the business.
I would not sell, unless you feel like your market is declining, or if you are in a financial pinch with your flip. Its early spring the RE rush is just starting for 2018..
I won't sell it for that low. I will put it back on the market. I have 15 flips going so I cannot sit on them too long though.
Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it
This post has received a 3.94 % upvote from @booster thanks to: @investfourmore.
You got a 1.95% upvote from @postpromoter courtesy of @investfourmore!
Want to promote your posts too? Check out the Steem Bot Tracker website for more info. If you would like to support the development of @postpromoter and the bot tracker please vote for @yabapmatt for witness!
I was summoned by @investfourmore. I have done their bidding and now I will vanish...
A portion of the proceeds from your bid was used in support of youarehope and tarc.
Abuse Policy
Rules
How to use Sneaky Ninja
How it works
Victim of grumpycat?