Buckhead Condo News: Why Bad Appraisals Are Hurting the Real Estate Market

The news seems to be full of stories about low real estate appraisals and faulty appraisals as well.

Atlanta, GA (prHWY.com) February 20, 2012 - What's All This about Appraisals?

What is an appraisal?

The news seems to be full of stories about low real estate appraisals and faulty appraisals as well. It turns out that lots of people have no clue as to what a faulty appraisal really is. So let's go back to basics.

An appraisal is what an appraiser considers to be the value of a property. There are lots of factors that affect the value of an appraisal including the age of a home, its size, condition, and more.

There are three ways that a home can be appraised.

* Any kind of income producing property (multi-family homes or commercial properties) can be appraised according to the income the property will bring in.
* Manufactured homes, and sometimes new construction homes, are appraised according to the cost of building.
* Most homes are appraised according to the comparison approach - comparing the home being appraised to homes that are currently for sale or recently sold in the same neighborhood.

Recent Problems with Appraisals

Ten to eighteen percent of NAR members who were recently surveyed reported that they have had at least one deal in the last year either held up or destroyed by problems with appraisals. For the most part, these issues are caused by the appraisal not coming up to the contract price. The NAHB released a report recently complaining that they, too, have been having appraisal problems. In a survey conducted recently, about sixty percent of members surveyed said that they had had a problem with appraisals meeting contract prices. Approximately fifty percent complained that they have had appraisals that were less than the price of home building.

A Bad Appraisal is REALLY Bad

Most appraisals are well-done. However, a bad appraisal can cause enormous problems. And an appraisal that's poorly done, inaccurate, and one that doesn't take all of the information into account or even uses false data, is a problem to everyone concerned.

It's understandable when a good appraisal doesn't meet contract price for a good reason such as the home being too highly priced, the decline in market prices, over-improvement of the home, or the condition of the home.

The contract price, no matter what the upgrades are, doesn't account to much if the area in which the home is located is simply not capable of supporting the price.

Top 5 List of How I Ensure My Sellers an Acurate Appraisal Everytime

1) Even though the buyer or the buyer's lender orders the appraisal, I always make sure that I personally meet the appraiser at the property and tour the appraiser the same way I would if he/she were the buyer.

2) Be Prepared. I always have a print out of the condo's floorplan, finishes, any upgrades that makes it unique, view shots, ammenity info, ect. I provide this to the appraiser to show the value of the subject property.

3) Provide comps. While the appraiser will do their own FMLS comp search, if you know which buildings are your direct comp, show them! I can't tell you how many times I provide very different properties then what the appraiser was going to initially use. I know my market better than anyone and I am going to make sure that this appraiser is not comparing my listing to one that is not comparable in the slightest.

4) If the appraiser has time, show him/her the amenity spaces. Anything that sets your building apart from others is a good thing.

5) Smile and be courteous and helpful. Let the appraiser know that you are there to help and he/she can email you directly with any questions.


For More Information - http://www.buckheadhighrisecondos.com

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Tag Words: atlanta condos, buckhead condos

Categories: Real Estate

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