I had and still have many questions
about appraisals & appraisers work and I thought share them
with you and get your opinions. They are:
Are you happy with the appraisal you get? Do appraisals
really reflect the fair market value of the property? Do
you think appraisers do a great job and spend enough
time to derive the fair market value? Do you
think appraisers do their jobs independently and they
are not being
influenced by lenders? Do you think appraisers should
have a copy of sales contract?
I address each question and give my
personal thoughts based on my experiences on each
I know when I do a comp it takes
me at least 6-8 hours to do my job. I make necessary
adjustments using several comparable properties that
meet certain requirements. I don’t agree with and don’t
use the CMA generated from MLS nor avg.
price/SQ. Ft. from MLS to make offer or decide to
purchase a house or not. Though, these could be used as
a guideline, but not decision maker. Anyhow, it takes me at least a
day to come up with a good comp.
Also, I have been very good
negotiator and were able to get the sale price in some
cases about 20%-30% less than the listing price in a Buyer
2012 Year (Buyer Market):
3 out of 4 contracts that I had, appraised exactly the same amount of the sales contracts
and one came up only $1000 more than the sale price. I
had seen the same trends, appraisals equal to sales
price, with other REALTORS. That cannot be a
coincidence, it only suggests that appraisers just
looked at the sale price and use them without any
further serious investigations. Otherwise, it implies
that, all real estate agents are the same and all real
estate agents are better than
professional appraisers, which is not true at all.
2014 (Seller Market):
I just had a contract which was appraised exactly the same as the
purchase price! Looking at the detail appraisal, I
noticed the appraiser had reduced the Sq. FT. of the
house about 140 Sq. Ft. out of 1800 Sq. Ft. which was in
Tax roll from the beginning to come up and match with
the sale price. That has created some bad test in my
Buyer's mouth and all parties not happy at all. Who knows, he might have used some
of the free mobile apps from cell phones to measure instead of
measuring accurately with tapes, etc.
He has also adjusted $10,000 for
between two properties fences which is ridiculous and
I have also noticed, some
appraisers, measure the living area from inside wall to
inside wall but some measure from outside wall to
outside wall. This could create hundreds of Sq. Ft.
differences. See the picture below.
In the following illustration, for
simplicity purposes, let's say we have a large living
room with building size of 50' by 50' (picture on the
left). Now let's assume that large living room is
divided into 4 smaller rooms by two walls, one vertical
and one horizontal, with 1' foot. Outside walls
are assumed 1/2 feet thickness. With these assumptions,
the measurement for outside-wall-to-outside-wall is 50'
* 50'= 2500' Sq. Ft., where as
the measurement for inside-wall-to-inside-wall is 48' *
48'= 2304' Sq. Ft. As you see just with two small walls,
we have about 200 Sq. Ft. differences which is a lot.
If and when appraisers just take
the negotiated sale price and derive their
values from there, they diminish the value of real
estate agents negotiation works and expertise’s (it is not good).
That is the reason, I strongly believe that appraisal
should NOT have access to the contract purchase price.>
My Answers to Questions Set#1:
questions set#1 are No.
Based on the above situations and experiences from the
last couple of years, Buyers Market and Sellers Market, my answers to
What are Your Answers to
I know each of you have different experiences and views
on these questions, and most probably, they are
different than mine, but I like to see your points
of view and reasoning’s for each of the following question.
When and if I get enough inputs, I will publish the survey
Are you happy with the appraisal
Do appraisals really reflect the fair market value of
Do you think appraisers do a great job and spend
enough time to derive the fair market value?
Do you think appraisers do their jobs independently and they are not
being influenced by lenders?
Do you think appraisers should have a copy of sales
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