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Appraisals definitely are subjective whether they are done by appraisers or county officials looking for higher revenue
That is a lie.
Quit disseminating out right lies as though it is the truth. If you have hard evidence proving this, provide it. Otherwise, at least preface it by saying it is your opinion.
First of all, it is perfectly normal to have a variance of about up to 5% between appraisals.
The other answer is: not all appraisers are experienced/educated equally.
I'm not sure I follow how something that is objective can have a variance of +/- 5%. If the appraisal is done accurately and objectively, it should come back the same each time, no matter who is doing it. And if there are enough people doing it incorrectly to warrant a "standard" variance of 5%, wouldn't that imply that there are an awful lot of appraisers who apparently don't know what they're doing?
From what is being said, it seems like we have one of two definitions:
1. Appraising is objective, but a noticeable percentage of appraisers are not following the guidelines or industry standards (thus the +/- 5% rule);
2. Appraising is subjective, and appraisers do influence the value based on their opinions of certain criteria (intentionally or unintentionally).
Which is it? Either way, I think buyers and sellers have every right to question the process.
I'm not sure I follow how something that is objective can have a variance of +/- 5%. If the appraisal is done accurately and objectively, it should come back the same each time, no matter who is doing it. And if there are enough people doing it incorrectly to warrant a "standard" variance of 5%, wouldn't that imply that there are an awful lot of appraisers who apparently don't know what they're doing?
From what is being said, it seems like we have one of two definitions:
1. Appraising is objective, but a noticeable percentage of appraisers are not following the guidelines or industry standards (thus the +/- 5% rule);
2. Appraising is subjective, and appraisers do influence the value based on their opinions of certain criteria (intentionally or unintentionally).
Which is it? Either way, I think buyers and sellers have every right to question the process.
I believe that appraisals done by a qualified, experienced, and honest appraiser will always be objective. That said, there is a degree of subjectivity sometimes when making adjustments to sales used for comparison. This is because the market is imperfect and will not always support the application of qualitative or quantitative paired sales adjustments from the analysis of available data. Thus the assumption of no variance in appraisals is unrealistic. The two words used in the context of an appraisal are by no means mutually exclusive and neither do they have opposite meanings.
I realize that appraisers are bound by the terms of USPAP, however the entire process is truly subjective, and can reflect a matter of personal opinion.
In the aftermath of the mortgage meltdown, I was always amused to watch appraisals for REO's I was purchasing come in pretty close to the purchase price, not a big deal, I always got financing.
In July, 2008, I purchased a cute Cape that was an REO just one town South of my location in SEMass. If anyone remembers, that was the "I'm not sure what's going to happen period", with regard to investment properties, and I got a crazy 30 year fixed at 6.5%, so I attempted to refinance at a much lower rate, the bank using a local appraiser, who actually called me from the property while doing the appraisal with some questions: "How much did you spend on this kitchen, he asked"? $75 bucks I told him, for a Black on stainless Kitchen Aide dishwasher I found on craigslist, the rest was already completed, why? Well, if you spent all this money on Merrilat cabinets, and Corian counters, that would make a difference in the appraisal, he said.
Then he asked me what work I did, which basically amounted to two bathroom remodels, install hardwood floors throughout the second floor, new six panel doors, and paint, trim, etc.
Long story longer, the house appraised out 13,000 less than Zillow, therefore taking me out of the 40% equity window, which, among all of the other unwritten rules, qualifies for the lowest interest rate. I'm approaching one year trying to do this one house, actually saving money doing so, as rates continue to drop, and my FICO score gets dinged from hard inquiries. Incidentally, the new 720 is now 800, another unwritten rule.
Should I not use Zillow while trying to establish a homes' value? I try to take into consideration area comps, REO's, and foreclosures, but for the most part Zillow is fairly close.
I did end up refinancing two investment properties, one through the original lender who had a fantastic deal, and the second through a local bank.
Each bank has its' own set of rules when lending money, and oftentimes meeting the parameters for that low advertised rate can be a challenge. Some banks charge a higher
APR for smaller loan amounts for instance.
We recently picked up an antique home in Metro West, on a cul-de-sac, near 495. While the exterior is okay, the inside needs gutted, and completely remodeled, $70K minimum. The house next door is the same year, style, and lot size, however is completely new inside, I mean Norm, Kevin, Tom, Roger, and Richard were there. The appraisals differ by $1200. "Let's just dump it" could be heard in stereo!
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