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I am going to get my house appraised soon as part of a HELOC approval (and also to get PMI removed).
In my area, there is very little real estate activity - very few sales in the last year, and very few houses for sale. However, on my street, there were 2 "fixer-uppers" sold in the last few months, that went for around half of normal market value. There is also a 3rd one, across the street from me, which is currently on the market for around half market value. These houses all needed to be gut renovated, etc.
Does the appraiser generally know not to count these as comps? How do they know this? I want to make sure my properly value hasn't plummeted because of these.
Any insight into this topic would be greatly appreciated.
They will do their best to make comparisons to other sales that are as similar as possible to yours in size and condition.
Where they do have to use homes that are different or expand their area of comparison, they will make adjustments for those differences based on the value of the differences in your market.
Thanks Diana. How do they know what the condition was of the home at the time of the sale? Is there some sort of indicator on MLS, etc that show it was sold in a certain condition?
In my area (DC/VA Burbs'), we bought our house as a fixer-upper at the end of 2015. In comparison to the other homes around me, we got a very steep discount on price. To protect them from our transaction, I had the county come and take a look at the house and they agreed our price was not a proper reflection of true market price.
In the county records, they switched our recorded transaction from "Market Sale" to "Changes After Sale". What that changed did, was to communicate to the appraisal community when doing a home in our area and seeing my transaction was recent, to not use it as a market sale comp for their evaluation. They understood that "Changes After Sale" meant "price reflective of condition of home", and could figure from there that it must've been a fixer-upper due to the low price in comparison to the others around it, and therefore not considering it in their math.
You are saying that those houses sold and are listed for "half of market value", but what you're not realizing is that in their condition, they ARE market value. An appraiser will look at those as sales as they are in your immediate neighborhood and then make adjustments based on condition and updates, or lack there of.
Thanks Diana. How do they know what the condition was of the home at the time of the sale? Is there some sort of indicator on MLS, etc that show it was sold in a certain condition?
There may be (hopefully will be) photos in the MLS that indicate general condition of properties at that time, and appraisers will often drive by to look too.
Around here.. they won't usually use bank owned properties as comps at all, unless they are comparing to other bank owned properties.
Interesting information here. I will hopefully be able to ask the appraiser about this at some point before he completes the report. It seems like something that could be worthy of appeal if they count these as "normal" sales. These houses were not really in liveable condition at the time of sale. The one that is currently listed doesn't even have utilities connected to it right now. It has been vacant for years. I guess that's a whole different issue...how that factors in to my appraisal.
Appraisers look at homes for a living. They get the issues you're concerned about. They are pretty good at making comparisons and adjustments between them.
I will hopefully be able to ask the appraiser about this at some point before he completes the report.
I would suggest that you discuss this issue with the appraiser when he/she calls to make the appointment so they can research for the correct comps. I can't count the times I've gone out to appraise what public record says is a 1,500 sf house only to find that it's been scraped and is now a 3,000 sf house. I've got all the wrong comps and I have to come back to shoot the correct ones. I always think, "Ya know, you could have mentioned this when I called you". BTW, we are REQUIRED to photograph every comp in person.
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BTW, we are REQUIRED to photograph every comp in person.
