I just received a phone call that really disturbed me. I often get calls from appraisers asking questions about the past homes I’ve sold. They make these calls to listing agents when they are doing comps for a lender who is in the process of approving (or not approving), a mortgage for a buyer. The buyer will be paying the lender for this appraisal and hopes that it is accurate.
This particular appraiser was asking about a luxury condo I recently sold in Golf Village (Powell). I began asking her questions, because I know these appraisals can be flawed. She mentioned that she was unfamiliar with the complex and builder of my sold listing. She said she was also unfamiliar with the builder and the community of the condo for which she was doing the appraisal.
So WHY is she doing the appraisal!
Here are the issues that are are going to impact the quality of her appraisal:
- One error dealt with the two builders. Her appraisal was being done for a Bob Webb condo. The Webb family has one of the best local reputations for high quality building construction of their condos, patio homes and single-family homes. Realtors® often use “Webb built” in their MLS remarks section. While my listing was built very well, and was a luxury condo, the Webb name itself can add $$$$ to the price. (“Gee, I didn’t know that!”)
- The condo she was appraising is located several miles away from my listing. It’s too many miles to use as a comp. Same school system, but different schools, different city mailing address and different zip code.
- The condo being appraised is located in a township whereas mine was in a city with an extra PUD tax assessment and an income tax. So there is a difference to the property tax rate as well as whether an income tax is charged. This could make a big difference to a retiree with no earned income. That can affect the price the retiree is willing to pay. The appraiser had no knowledge of this difference. (“Gee, I didn’t know that!”)
- My condo sits on a golf course whereas the condo being appraised is in a more family-oriented neighborhood near a large park. Totally different setting. (“Gee, I didn’t know that!”)
The more I spoke with this appraiser, the more troubled I became. To say she was “clueless” is an understatement. I told her that if she used my sold listing as a comp, that her BPO would be worthless and VERY unfair to the buyer. She said she didn’t know what to do because she couldn’t find other comps.
So why not just explain that to the lender rather doing an error ridden appraisal!
I’ve often wondered how appraisers are able to make an accurate judgement on the price/value of a home a buyer is wanting a mortgage for, because seldom have they been in the homes they are comparing. They have no knowledge how buyers perceive certain features/upgrades in the home because they don’t interact with buyers. This is also a concern for sellers who are refinancing because the same type of appraisal is done as part of that process.
If this appraiser doesn’t change her BPO, there’s a chance that the home being appraised won’t comp out because there could be up to a $100,000 + difference … not exactly chump change. If it doesn’t comp, then the builder or the real estate agent in the transaction will have to spend time disputing the appraiser’s ”findings” and trying to convince the lender to disregard that report or have another appraiser do a 2nd opinion.
Buyers, if your chosen home doesn’t comp out, don’t be afraid to challenge it!
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