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I might use that as a comp if there was nothing else available BUT I would adjust for condition.
And there lies the set-up for disappointment in many (most) situations. The homeowner has done over 50K in improvements, but the appraiser has never been inside the inferior properties and must rely on interviews with agents. The adjustment for condition is not anywhere close to expectations.
This just seems like a ridiculous statement. I would think it would be better if appraisers never even knew what the contract price was.
Ridiculous statement for sure. But yours is not reasonable either, since appraisers are required by law to report on and analyze any current agreement of sale (contract).
Ridiculous statement for sure. But yours is not reasonable either, since appraisers are required by law to report on and analyze any current agreement of sale (contract).
Does the purchase price make a difference? Let's say there are three contracts to purchase a home exactly the same except for purchase price. Will the appraiser come up with a different number for each contract?
And there lies the set-up for disappointment in many (most) situations. The homeowner has done over 50K in improvements, but the appraiser has never been inside the inferior properties and must rely on interviews with agents. The adjustment for condition is not anywhere close to expectations.
Not necessarily.
In our office we use a formula to determine the depreciation of each Comparable by performing the cost approach on each Comparable in addition to the Subject. Based on the amount of depreciation the condition adjustment is determined. Works a lot better than the old "swag" or relying on realtors.
ETA: Of course, cost does not equate value. Spending $50K in home improvements does not guarantee that the market will react to a value increase of that amount.
Does the purchase price make a difference? Let's say there are three contracts to purchase a home exactly the same except for purchase price. Will the appraiser come up with a different number for each contract?
No, the appraiser will come up with his/her Opinion of Value.
I realize that there are appraisers out there who use the contract price as a guide. We have a policy to not even look at the contract until we have finished the appraisal.
No, the appraiser will come up with his/her Opinion of Value.
I realize that there are appraisers out there who use the contract price as a guide. We have a policy to not even look at the contract until we have finished the appraisal.
I've noticed over the last 2 years that most appraisers I worked with were increasingly arrogant. Not a big deal as most people want to do the right thing and we're all proud of our good work. This aside, I had one appraisal (and I have many examples) last year where the appraiser gave one comparable $20K for being superior. I had been in the house many times before it sold and it had no kitchen; nada nothing...it was gutted to the studs and no picture or narrative in MLS to indicate condition. We asked for an appraisal review and the review came back with no changes.
To the adverse, I had (only one) appraiser who was working on comps to call me and ask questions about my listings that had sold. And I gladly answered to the best of my ability and told her she had my undivided attention for as long as necessary. I don't know the results of the appraisal she was doing, but I respect that she cared enough about her work to produce quality results. It's a rare thing these days. I wish more appraisers would ask about things at the sold houses they cannot see.
I had one other incident that still irks me. After 4 days, I called an appraiser to ask when we could expect his report. His only comment to me was, "You can't talk to me; I'm an appraiser." I wanted to tell him to get over himself but I abstained. The appraiser had a copy of the contract so he knew the agreed upon terms and conditions between buyer and seller and my question was nothing that would have influenced his decision.
I also lookup the appraiser's name(s) to see how many years they have been licensed and I don't think it makes much difference in the care or quality of their work.
I agree with you and I have taken a ton of certified appraiser courses trying to achieve an MI designation all sponsored by the Appraisal Institute. One day I got disenchanted with the entire process because of appraiser greed and said the heck with it, then stopped searching for a sponsor. They are greedy arrogant people. Period.
No one is higher than thou....'cept appraisers. hahahaha
There are a ton of appraisers that are arrogant. So the original problem of searching for an honest and good appraiser still exists.
Question: Where and how can one find people who are able to provide sound advice on where the good honest appraisers work...
I agree with you and I have taken a ton of certified appraiser courses trying to achieve an MI designation all sponsored by the Appraisal Institute. One day I got disenchanted with the entire process because of appraiser greed and said the heck with it, then stopped searching for a sponsor. They are greedy arrogant people. Period.
No one is higher than thou....'cept appraisers. hahahaha
There are a ton of appraisers that are arrogant. So the original problem of searching for an honest and good appraiser still exists.
Question: Where and how can one find people who are able to provide sound advice on where the good honest appraisers work...
Answer: I can't talk with you. I am an appraiser
...
You sound like a bitter person. ANd I still don't know what a MI designation is.
Does the purchase price make a difference? Let's say there are three contracts to purchase a home exactly the same except for purchase price. Will the appraiser come up with a different number for each contract?
Most likely because it would be their opinion of value. Their opinion must include several properties sold that mimic their property in the area and there lies the problem. An opinion comingled with someone elses opinion soon becomes a real mess.
Don't forget there are also several types of appraisals. I live in a city that uses the Mass Appraisal method. The county appraiser just does not look inside a home. A home with zero amendments inside can be appraised the same as one with marble and glass-n-brass throughout the interior. Regardless how well the homeowner fixed up their home a home with the same dimensions and supposedly same bedrooms etc could be appraised the same using the Mass Appraisal Method.
My home is a large 4/3 w/2cg. Lots of extras inside including rolled drywall corners, Italian marble floors and woodwork and a very expensive junction box holding the TV security system, electrical outlet warning system and all the TV cables. A home around the corner from us was appraised higher. The appraiser put a $17k additional price on their old wooden fence. A laughable appraisal from a 20 year veteran appraiser.
You sound like a bitter person. ANd I still don't know what a MI designation is.
If telling the truth without reservation then I guess you are correct.
I type too fast. It is an MAI designation.
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