Quote:
Originally Posted by Bonanza
Appraisals on homes are not subjective. They are based on cold, hard facts although there can be some leeway.
99% of the time, it is a lender who is doing it for the purpose of a mortgage. Before the slump, a lender would take the most recent and comparable sales for the last six months. Today, they are pretty much only going by the last three months.
The appraiser will take sales which are closest in proximity to the subject property, as well as the identical floorplan, if possible. He will use square footage, no. of bedrooms, no. of bathrooms, etc. He will add or subtract when a house has/doesn't have upgrades, etc.
A seasoned appraiser usually doesn't need it, but there is a reference manual, available by subscription called Marshall & Swift. It shows the different amounts to add or subtract for everything you could possibly have in a house. In addition, it varies from area to area within the country, which makes this reference book very accurate.
If new construction is used as a comparable sale -- yes -- that still would be market value, even if the price was discounted. But that would only be one of a few properties used for the appraisal purpose. Generally speaking, it usually works out because the percentage of the discounted value of the new property (if that is what has been used in conjunction with other sales) is not really that significant. The only time a comparable sale could be more meaningful is when the property is a foreclosure or short sale.
I hope I didn't leave you with any cliff-hangers; I tried to be a little brief but still cover the salient facts. BTW, I've been an active and licensed (in Florida) Realtor/sales agent since 1984. I've given you some facts, not an opinion.
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AND.. Realtors unless they are also licensed Real Estate Appraisers can only give you a Market Comparison or Analysis.
When picking 3 comps for an appraisal; other appraisers could use 3 totally different comps. Depends on the individual appraiser.
The best appraisal is when the appraiser doesn't know the value the lender is looking for.
BTW; an Appraiser only gets paid if the loan/ house closes.