How the appraiser analyzes the market can make all the difference in the appraised value. Are they describing the market in a way that makes sense in the real world of buyers and sellers? Are they including enough sales in that analysis so that they can report accurate price trends in a given area? How are they reporting that information and developing date of sale adjustments? In that vein, here are some graphs from an analysis I just completed of the North Springs High School District. Every figure in this graph represents a quarterly median where the price noted is the median from the last 3 months. That's quite a jump in the last quarter! It definitely points to this market showing significant increases, but would it make sense to make a 15.6% increasing date of sale adjustment to a sale from April? That's $124,800 for an $800,000 home! Above is the monthly median using the same sales. Fannie Mae used a monthly trend in their recent announcement about including date of sale adjustments in appraisal reports. I tend to avoid this approach because, in my experience, these figures can fluctuate wildly. For instance, here you could claim a 15% positive adjustment for a sale a month ago, but at the same time include a 6% negative adjustment for a sale from 2 months ago. What the?!?! Which brings us to the G.O.A.T., the most bestest way of analyzing the market and translating this data to the real world: Rolling Median. Rolling median is an analysis where each figure represents the median price in the area for the previous 12 months. It can provide a better continuous view of how the median is evolving over time, make it easier to spot gradual changes or patterns, and it can give you more stable estimates with less influence from data outliers. In this case that is still a pretty hefty adjustment from 3 months ago: 5.4% which translates to $43,200 for an $800,000 home. But it would seem that amount is more than justified if you look at the quarterly trends. It seems like back in the day (I'm talking early 2000's here - re-fi boom time) almost all appraisers put "stable" for the market and left it at that. That's what my supervisor trained me to do. But several declining markets, and 3% interest rates and god knows what's happening now later it does seem that meaningful market analysis in the appraisal world, for one thing, has generally changed for the better. If you can't properly describe the market and properly analyze it you probably (uh, definitely) are going to fall short in coming up with a meaningful appraisal. If you as an agent get an appraisal where the market analysis falls short and the appraised value falls short, start your rebuttal with the Neighborhood section of the report and any other errors you can find before getting to the comps. You may find that the appraiser made a series of errors which is a big no-no in the appraisal world (USPAP Standard Rule 1-1(c) states that an appraiser must not render appraisal services in a careless or negligent manner. This includes avoiding a series of errors that, while minor individually, can, in the aggregate, undermine the credibility of the appraisal results.)
My wife and I both have family in rural areas of the South. Her parents are both from a small town in North Alabama, and my grandfather hailed from eastern North Carolina. Whenever we visit relatives in these places, and inevitably meet the new person or long lost cousin, we hear a similar story: "Atlanta, yeah I try to stay out of there." "Atlanta, I'll drive two hours out of my way to avoid it." "Atlanta, how do you stand it?" I think this is a pretty widespread experience. I'll admit that even my New Jersey native uncle remarked about how the arrival time on his GPS seemed to keep receding the longer he was on the road while driving in our fair city. Are we really that bad, though? I asked AI why people avoid Atlanta and got traffic, crime, traffic, traffic, weather and climate, traffic, economic and social issues, traffic, traffic, infrastructure and geography and traffic. I guess it's mostly traffic? My proposal: If you have friends or family visiting, keep them out of traffic jams at all costs. Unless it's from 12am to 6am, avoid the interstates. Set your phone to take the "avoid highways" route. Even if it takes a little longer, you'll be doing your part, and maybe when they go back to the sticks or whatever superior place they are from, when someone asks them about the traffic in Atlanta, they will say: "It wasn't so bad." Contact Comp One Appraisal Services today and put our local expertise to work for you. Based in the Globe Building at Peachtree Dekalb Airport, we are the perfect resource for attorneys, agents, homeowners, and lenders. Thanks for reading! Got an appraisal issue or question? Call my Appraiser On-Call For You Hotline at 404-245-7577.
A friend of a friend reached out to me recently questioning some advice on selling his house that he had received from a Realtor®. Sadly, he's going through a difficult divorce. You might say he's the skeptical type, and his concern was that the agent he was in touch with was trying to take advantage of his situation, or favor his estranged wife to line her own pockets. This got me thinking of how rare it is that I see agents engaging in questionable behavior. Maybe I have my head in the sand (reading the list of suspended and revoked licenses from the commission the other day made me wonder), but I honestly couldn't relate to you much of anything specific if I were asked to relate an instance of an agent not working in the best interest of his or her client. I know quite a few agents, and I'm a Realtor® too (though I work in that capacity very little), and even being somewhat "on the inside" with my brokerage I don't see agents behaving badly, or like they are trying to take advantage of folks.
What information Should I Provide To The Appraiser? It seems that some agents are unsure of what information to provide to appraisers, or if any information provided will be welcomed. I generally will send a quick email to listing agents inviting them to provide any information they would like, including comps, and in my opinion it is good practice to welcome this type of input. If you are unsure of how to approach this sometimes tricky interaction, it is helpful to have an understanding of a few points as to what the appraiser is looking for and required to report. One helpful thing to note is that the standardized form appraisers currently use requires the appraiser to report updates or full remodeling of kitchens and baths within the last fifteen years, and it breaks this information down into four periods: 0-1 years, 1-5 years, 6-10 years and 11-15 years. So, if you’re informing the appraiser of kitchen and/or bath updates I recommend being sure to note if what was done was an update or a full remodel and when it was completed within those time frames. A lot of the time I will have an itemized list of any updates completed or a summary comment (a comprehensive renovation) in my condition comment on the report, but I do find it handy if the agent provides a bullet point list of updates which I can just include as an attachment in the report. Contact Comp One Appraisal Services today and put our local expertise to work for you. Based in the Globe Building at Peachtree Dekalb Airport, we are the perfect resource for attorneys, agents, homeowners, and lenders. Thanks for reading! Got an appraisal issue or question? Call my Appraiser On-Call For You Hotline at 404-245-7577.