The dirtiest word—or words—in real estate is “real estate appraiser.” Here’s why.
What makes “real estate appraiser” the three dirtiest words in real estate? To understand, let’s take a look at what’s happening in our current market.
Inventory is tight right now, especially in the lower price points, and our market wants to start trending upward in terms of home values. Whenever this happens, it makes an appraiser’s job more difficult. I know because I’ve been there before.
Remember, appraisers represent the banks, and it’s their job to look at historical data to evaluate home values. Home values want to start increasing because of our supply and demand imbalance, but appraisers are still looking back six or 12 months to evaluate properties.
As an example, I recently sold a home in Albany for $180,000, but its appraisal first came in at $175,000. This gave my seller a tough decision to make—whether to sell at $175,000 or put the home back on the market and hope they eventually get a higher appraisal from someone else. This home had several offers above the price we sold it for, but the appraiser was saying it was only worth $175,000.
If my client decided they wanted to sell at $175,000 even though the home was worth $180,000, a new appraiser would’ve come along after that and used that as a comparable sale to set values for other homes.
This is just one of many examples I could’ve used that have occurred over the past several months—I list a home at a certain price and then the appraiser comes along and values the home for significantly less than what a buyer is willing to pay for it on the open market.
This effect is keeping the market down when it should be easing up into positive, healthy price gains. Appraisers aren’t doing their homework as far as where supply and demand is and what buyers are willing to pay. As I said, I’ve been there before and I know how hard it can be, but unless they start easing up on their guidelines and using paired sales to measure appreciation and make time adjustments, this kind of thing will keep happening.
As always, if you have any specific questions about your home’s value on the open market or you have any other real estate needs I can help you with, feel free to give me a call or send me an email. I’d be happy to help you.