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I understand "appraisal" very well. You can call it a "gut feeling" based on "knowing" the recent sales, a CMA, an SRPA or MAI evaluation, or a professional appraisal.
All I have to do is to tell the appraiser the purpose of my inquiry. If I'm a seller, I need to know what the properties around me have been selling for and derive an "adjusted" price point for my property. I can also research the county sold reports in my area myself and derive a reasonable figure for the property. Even if I get the figure from your CMA, it's still only a professional "guess".
As soon as you need to tell the appraiser the reason for the inquiry you prove my point. Appraisers can provide different value to the same property depending on what you ask. There is not a single answer.
And the appraisal is, of course, a professional guess. Just that the appraiser is bound to rules that prevent a good professional guess. He has to write it down to set rules. They don't get to truth.
I will almost always beat the most skilled appraiser on what a property will sell for. A good appraiser will counter that they have a better handle on what it was worth. You want "worth" or "sell for".
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Let's look a little more closely at your example, olecapt ...
The buyer got a property bought for back of the appraisal figure, which may have been for a lender's purposes. No doubt your buyer was happy to know that they bought a place for 10% back of the appraisal.
But that also means that the seller sold for 10% LESS than the appraised figure. Now that takes salesmanship on the part of the listing agent to get the seller to accept 10% LESS for their property than it may have been worth. How happy was your SELLER to leave $20,000 minus a 6% commission on the table (that's $18,800 they walked away from by using your agent services, right?)?
My buyer was assured the appraisal was a slam dunk. Expected above $220K. Seller did not lose a dime. To sell by mid July she got every dime she had coming. The fact that she could establish in a court of law that her place was worth $225K did not appeal to her. She wanted to move by July 15 with her cash in hand.
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What you've left out of the equation here is the other factors that entered into the sellers and buyers positions; motivations to sell, personal timelines, adjustments, closing help, need to close by a date certain, etc. ... that induced the seller to accept so much less money than their place was worth.
After all, the data used to determine the appraised valuation was from the actual sold comp's in the area, which include all of those factors in each sale. Not the listing/asking prices. The SOLD prices from the ACTUAL completed/closed deals in the area. And the data you work from for a CMA is no more current than the data that a professional appraiser has working from in a reporting state.
But my work is vastly better for a buyer or seller. I do project what is happening...I also include the area trends and the climate created by the media and the psychology indicating that the seller wants out. That is why I am better than a FSBO and an appraiser.
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In a rising market, the appraiser will see the trend. In a declining market, the appraiser will also see the trend .... just as quickly as you can. The information game simply isn't something held as a deep dark tribal secret in the back room of a real estate agency office under lock and key by the broker who is sworn to secrecy by the devil incarnate. I'd bet there's appraisers in your market who know the trends and price points better than the agents who are out in that marketplace .... because they're only working that side of the street full time.
As I said you don't understand appraisals. What is it that you think they will use for authority that prices are dropping or rising rapidly? Their form does not have an "I think" line. They have to tie it to specifics. Sure they know. But how do they take it into acount?
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I'll give you a hint about why some agents don't have the greatest reputation in a lot of markets ... treating everybody here like they have no intelligence compared to the soaring skills and mystic knowledge of agents like yourself who need to validate the worth of your services.
I'd be pretty po'd if you were my agent and talked me into selling my property for 10% less than it was worth ... come to think of it, that's exactly the situation I had that convinced me to get my own RE ticket many years ago ... and then gave me an opportunity to find out just how scummy a few certain brokers in Denver really were (nice people, just scummy to do business with).
If you'd said that you made a great deal for both the buyer and the seller, then I'd have a different take on this. But your explanation focused on the financial benefit to the buyer only ..
I represented the buyer. That was my job. I think the seller likely left 6 or 8 grand on the table...but she was happy. Such is life. The fact that their are scummy people in the business should come as no surprise. I have even had a couple of scummy clients.
As soon as you need to tell the appraiser the reason for the inquiry you prove my point. Appraisers can provide different value to the same property depending on what you ask. There is not a single answer.
And the appraisal is, of course, a professional guess. Just that the appraiser is bound to rules that prevent a good professional guess. He has to write it down to set rules. They don't get to truth.
I will almost always beat the most skilled appraiser on what a property will sell for. A good appraiser will counter that they have a better handle on what it was worth. You want "worth" or "sell for".
[b] Well, it's wonderful to know that you're not any different from the appraiser ... when you're talking to a prospective listing, you're not immune from trying to maximize the listing price appeal to them, are you? And, when you're talking to a buyer, you're not immune from trying to justify the price that they should pay for a property. It's all "educated" and "professional" opinions, isn't it?
My buyer was assured the appraisal was a slam dunk. Expected above $220K. Seller did not lose a dime. To sell by mid July she got every dime she had coming. The fact that she could establish in a court of law that her place was worth $225K did not appeal to her. She wanted to move by July 15 with her cash in hand.
Ah, the seller had other motivations in this deal which were satisfied. Funny, that wasn't important in your example until I questioned that situation which could affect a deal .... and to which, you, as the agent here, had prior knowledge that she had a timetable and price point to meet. Who were you working for at that point? the buyer or the seller (who paid the commission, right?)
But my work is vastly better for a buyer or seller. I do project what is happening...I also include the area trends and the climate created by the media and the psychology indicating that the seller wants out. That is why I am better than a FSBO and an appraiser.
You're no better than the market the day you get a sale. If I, as an umotivated FSBO, offer my property for sale at an above market price and negotiate an above market price with a buyer, than I've done better than you would have that day. And, I've done that a fair number of times
As I said you don't understand appraisals. What is it that you think they will use for authority that prices are dropping or rising rapidly? Their form does not have an "I think" line. They have to tie it to specifics. Sure they know. But how do they take it into acount?
Quite clearly by following their professional ethics and guidelines for information sources which are the same resources you get to use .... sold data of deals in the area with comparables. Agreed, there's no "I think" line in their work ... but there sure is in yours, and you can do a CMA with the fudge factor. Either way, it's a professional guess, not an exact art. The difference is you get to "sell" your perception of the marketplace to a seller and/or buyer for your financial gain on a commission basis instead of a nominal fixed fee for a professional service.
I represented the buyer. That was my job. I think the seller likely left 6 or 8 grand on the table...but she was happy. Such is life. The fact that their are scummy people in the business should come as no surprise. I have even had a couple of scummy clients.
a big difference here in the numbers you now present ... $6-8K left on the table is a far cry from the difference you cited in your original example, about three times that amount to the seller. I'm inferring that you were a "buyer's agent" in this deal, so you didn't have the seller's interests as your prime responsibility.
I was confused with the whole CMA. I had 3 different agents come up with 3 different suggested selling prices and they are all looking at the same exact CMA. I know it's "educated" guessing but we are talking a huge difference in pricing. I always just go and look at the county sales records for our county and the bordering counties to see what the heck is going on with the market.
I was confused with the whole CMA. I had 3 different agents come up with 3 different suggested selling prices and they are all looking at the same exact CMA. I know it's "educated" guessing but we are talking a huge difference in pricing. I always just go and look at the county sales records for our county and the bordering counties to see what the heck is going on with the market.
They are not looking at the same CMA. They each pulled up the comparables for your area but there could be 6 different homes that are similar and each agent may have used a different 3. They then make adjustments and they may each feel different adjustments needed to be made.
This is very similar to what an appraiser does except an appraiser has to stay with in certain guidelines and those guidelines can sometimes force them to use comparables that are not really similar.
Truly the main difference between a CMA and an appraisal is that a CMA can not be called an appraisal.
Edit- Also a CMA is generally free and an appraisal you have to pay for.
[b] Well, it's wonderful to know that you're not any different from the appraiser ... when you're talking to a prospective listing, you're not immune from trying to maximize the listing price appeal to them, are you? And, when you're talking to a buyer, you're not immune from trying to justify the price that they should pay for a property. It's all "educated" and "professional" opinions, isn't it?
You are being dense. I don't maximize anything. I preach a whole lot of truth...at least as I know it. Actually costs me a few listimgs...but I get many back on the second pass.
I tell a buyer what it is worth. If they chose to overpay I will certainly present the offer...but there is not the faintest chance that I gave them any reason to believe it was worth the increased payment. I am not in the least troubled if a knowledgable buyer chooses to pay more for a property than its fair market value...in fact, that may be the right thing to do. But when I am on the scene they know they are paying too much.
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Ah, the seller had other motivations in this deal which were satisfied. Funny, that wasn't important in your example until I questioned that situation which could affect a deal .... and to which, you, as the agent here, had prior knowledge that she had a timetable and price point to meet. Who were you working for at that point? the buyer or the seller (who paid the commission, right?)
More of your silly garbage. Of course I can read tea leafs...in this case so could my client. That is what I get paid for. What prior knowledge? I did not know the lady from Adam. I simply listened to what she said...both in words and other ways. That is what my client pays me for. I work for my buyer and have no relationship with the seller. The arcane way in which we choose to compensate agents in no way effects that.
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You're no better than the market the day you get a sale. If I, as an umotivated FSBO, offer my property for sale at an above market price and negotiate an above market price with a buyer, than I've done better than you would have that day. And, I've done that a fair number of times
Let us presume you did. If I was on the other side you would not have. You may well be able to peel amateurs. Many con men do routinely. But if I am on the other side it won't happen.
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Quite clearly by following their professional ethics and guidelines for information sources which are the same resources you get to use .... sold data of deals in the area with comparables. Agreed, there's no "I think" line in their work ... but there sure is in yours, and you can do a CMA with the fudge factor. Either way, it's a professional guess, not an exact art. The difference is you get to "sell" your perception of the marketplace to a seller and/or buyer for your financial gain on a commission basis instead of a nominal fixed fee for a professional service.
I don't need to sell my "perceptions. I am simply more and repeatedly more accurate than any appraiser. It is the nature of the beast. I want the price for which the property will sell. The appraiser wants the fair market value. They are not the same thing. As I have pointed out before...you do not understand the difference. That is why you and appraiser are not going to be as good as me.
There is no magic. If you are reasonably bright and spend a few years at it you to can call the price as well as I can. But the appraiser can't do it that well. His procedures don't allow it.
a
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big difference here in the numbers you now present ... $6-8K left on the table is a far cry from the difference you cited in your original example, about three times that amount to the seller. I'm inferring that you were a "buyer's agent" in this deal, so you didn't have the seller's interests as your prime responsibility.
More strange noises from you. The appraisal was off the actual price by $22K. If the seller had bargained harder they might have gotten 6 to 8K more. Why is that so hard for you to understand? This is willing seller and willing buyer conditions. The appraisal was off the market price by 22K. Simple as that. RE is loaded with might-have-beens...
Now I'm really impressed. An agent who assures us that he can "call" the market sales price better and more accurately than any appraiser. Can you do that with properties that you aren't involved in the deal, too?
Pray tell, since I'm only an ignorant con man peeling amateurs from their money, please tell us what your definition of "fair market value" is? Isn't that what a willing buyer and willing seller could agree on in an arm's length transaction? And that's the fallacy of a FMV appraisal when an agent ... or other third parties enter into the picture ... their perceptions of value and their salesmanship to assist the principals to strike a bargain.
Now I'm really impressed. An agent who assures us that he can "call" the market sales price better and more accurately than any appraiser. Can you do that with properties that you aren't involved in the deal, too?
Pray tell, since I'm only an ignorant con man peeling amateurs from their money, please tell us what your definition of "fair market value" is? Isn't that what a willing buyer and willing seller could agree on in an arm's length transaction? And that's the fallacy of a FMV appraisal when an agent ... or other third parties enter into the picture ... their perceptions of value and their salesmanship to assist the principals to strike a bargain.
You should not be impressed. Any Realtor ought to be able to call a property pretty close. The Agent can't make it sell unfortunately. But they can tell you at what price it will sell.
There is another indication you have little idea of how it all works. Ask an appraiser sometime for an appraisal with a guarantee you will sell within =-2% of that number. See what they tell you. Hey...if "fair market value" is what it sells for it should be a piece of cake right?
"Far Market Value" is a legal concept. It has little to do with what a property will sell for. It is the value arrived at by an arcane appraisal procedure. It neglects many factors. While its theoretical definition is fine they would require that you have a calibrated "willing buyer" to purchase from a calibrated "willing seller". Ever seen one of thsoe in the Real Estate Store?
Note by the way Appraisers have multiple ways to determine value. Comps are only one. But note that they virtually always throw out all but the comp procedure. Why is that? Because they give hopelessly wrong or indecipherable answers.
Well, the appraisal topic is a little bit off topic from this thread. All I would comment is that a CMA (comparative market analysis) is done for free by the realtor to determine the best price to sell your house at. It changes all the time based on whatever comparables someone chooses. An appraisal is ordered by the mortgage company....the only thing they are concerned with is making sure the property is worth enough to cover the amount of the loan. Often, I have seen, that the value of the house can exceed the appraised amount, but the appraised value listed will usually only state the max amt needed to justify the loan. Kinda silly if you ask me, but, if someone had cash to pay for the property, you wouldn't need an appraisal done at all.
With that said....
Keith baby face - I'm totally gonna look you up when I move to Charlotte.......which is planned as soon as I self my house in Oregon.....should be soon! I don't mind riding around in cars that aren't current year bmw's or mercedes. Afterall, cars only depreciate in value and it just shows me that someone doesn't know how to spend their money...or doesn't know the value of money. Frankly, I'd rather put it in my house. I've heard we can buy a decent house in Charlotte for the $700-900K range....so I'm excited to move before the housing prices sky-rocket, like they have here.
I have not heard about anyone who has their property on Ebay , selling their home.
All I hear is MLS listings.
In my mind , selling a home is little different than selling a car. , and , in some cases , the prices may not be that different as well. ( I have sold several cars over 100,000 over the years ) I like to be involved, in whatever I sell. The Realtor community seems to want to keep a distance between the buyer and the seller. Also , when I tried to list with a Realtor , they would not exempt the contacts I made on Ebay.
Bottom line , I want all the exposure I can get , and I do not mind paying anyone a commission if they find me a buyer. In a buyers market , like it is here in Michigan, the Realtors have a lot of listings, and spend a lot of money advertising. At some point , they will have more funds invested in listings than the return in commissions This poses a lot of problems , and sets up the seller for a less than fair representation, at least it looks like that to me.
I want to keep my Ebay listing, ( have had 4 showings , and about a dozen contacts that look like possibles, in last 3 months ) , yet , I do think that being in the MLS , and , the services of an aggressive Realtor , could be helpful. . I have one in mind , and , I like him , but, I do not want to give up my freedom to sell , wheel and deal , or whatever. I will have my legal council handle the final closing anyway. My property is lake house, under 500m , and of historic modern design. A special property , for a special person. Any thoughts out there for those of us that are Ebay nuts, like to sell ,but want all the exposure we can get in a depressed market ?
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Well, it's wonderful to know that you're not any different from the appraiser ... when you're talking to a prospective listing, you're not immune from trying to maximize the listing price appeal to them, are you? And, when you're talking to a buyer, you're not immune from trying to justify the price that they should pay for a property. It's all "educated" and "professional" opinions, isn't it?
Selling on Ebay
