REAL ESTATE BROKER
We are looking to go full time in the next 5-10 years and the first step toward that is moving closer to the grandchildren... We have a real estate agent right now that is doing practically nothing...
Forum Discussion
"regarding the appraisal issue. There is an appraisal and there are comps. Two separate items. Both equally important."
1-Actually the comps are part of the appraisal. There are 3 legs to an appraisal. Comparable sales, replacement cost ( with depreciation considered ), and the income approach. Income approach is generally considered less reliable unless it is rental or commercial property. Replacement cost is subjective and less reliable unless the property is new. There are supposed to be 3 comparables used that are similar to the subject property and in the same market area no older than 12 months. The appraiser must explain fully if this requirement is not met. ( not many recent sales, rural area, or specialty property )
"I would not as a seller pay for an appraisal. Comps are what you base the sale price on. The buyer's bank is going to require an appraisal at "the time you go into contract"."
1=True, a Realtors " Market analysis " is supposed to be like the comparable leg of an appraisal and IF done right it should be accurate, assuming the right comps are used and they are properly analyzed.
"The appraisal is what the amount the bank will loan is based on. That said, the comps are taken into consideration at this time also."
1-As stated before the comparable approach is part of the appraisal, a major part.
"Your house may appraise at X amount but when the comps (i.e. sold like homes in area)are looked at and the sold price is 'considerably' lower than what you are listing it for, the amount the bank will loan to any buyer will be the lower amount of the sale of the like home."
1-Not really true because the appraisal is based on the comps ( remember it is one leg of the appraisal ), so if the comps indicate a lower value, then the appraisal would have been lower to begin with. The correct statement is " your house may go under contract at X amount but when the appraisal, with comps, is done and the comps indicate a lower sales value, then the appraisal AND loan will be less than the contract price.
I spent much of my time the last five years working reviewing single family appraisals for accuracy and compliance with standards. New standards are pretty rigid. But like every field there are good appraisers and bad ones, and some are just dumb. Most know what they are doing and do it right.
1-Actually the comps are part of the appraisal. There are 3 legs to an appraisal. Comparable sales, replacement cost ( with depreciation considered ), and the income approach. Income approach is generally considered less reliable unless it is rental or commercial property. Replacement cost is subjective and less reliable unless the property is new. There are supposed to be 3 comparables used that are similar to the subject property and in the same market area no older than 12 months. The appraiser must explain fully if this requirement is not met. ( not many recent sales, rural area, or specialty property )
"I would not as a seller pay for an appraisal. Comps are what you base the sale price on. The buyer's bank is going to require an appraisal at "the time you go into contract"."
1=True, a Realtors " Market analysis " is supposed to be like the comparable leg of an appraisal and IF done right it should be accurate, assuming the right comps are used and they are properly analyzed.
"The appraisal is what the amount the bank will loan is based on. That said, the comps are taken into consideration at this time also."
1-As stated before the comparable approach is part of the appraisal, a major part.
"Your house may appraise at X amount but when the comps (i.e. sold like homes in area)are looked at and the sold price is 'considerably' lower than what you are listing it for, the amount the bank will loan to any buyer will be the lower amount of the sale of the like home."
1-Not really true because the appraisal is based on the comps ( remember it is one leg of the appraisal ), so if the comps indicate a lower value, then the appraisal would have been lower to begin with. The correct statement is " your house may go under contract at X amount but when the appraisal, with comps, is done and the comps indicate a lower sales value, then the appraisal AND loan will be less than the contract price.
I spent much of my time the last five years working reviewing single family appraisals for accuracy and compliance with standards. New standards are pretty rigid. But like every field there are good appraisers and bad ones, and some are just dumb. Most know what they are doing and do it right.
