[Roaddog53]

I just had to vent or ask for opinions, or both. I know home appraisals are subjective and definitely swayed if the house has sold when it is performed. I have been a part of these in various scenarios from selling , buying, boards of reviews, banking, and more. Banks use them mostly to insure the house is valued properly. Now the rub:
Most appraisals are performed from sales of homes in the area to determine market value. If a home sold pretty much that's the market value though. An appraisal will come in at that price give or take a few dollars.
The Villages sells homes at their prices. Right or wrong. Now IF TV discounts homes in an area to close out a neighborhood, the market price is what? Recently they discounted homes and within less than a few days an appraisal was done on one of those homes. Homes in that area that sold prior had the higher price. If the appraisal shows the discounted price as the "market value", TV than had those homes overpriced. So the homes that sold prior to the discount overpaid. So what is right? I have never agreed with appraisals.

[gomoho]

My understanding has always been an appraisal does not really establish the market value of a home, but supports the bank loaning that amount of money for the home.

[Bonanza]

Originally Posted by Roaddog53

I just had to vent or ask for opinions, or both. I know home appraisals are subjective and definitely swayed if the house has sold when it is performed. I have been a part of these in various scenarios from selling , buying, boards of reviews, banking, and more. Banks use them mostly to insure the house is valued properly. Now the rub:
Most appraisals are performed from sales of homes in the area to determine market value. If a home sold pretty much that's the market value though. An appraisal will come in at that price give or take a few dollars.
The Villages sells homes at their prices. Right or wrong. Now IF TV discounts homes in an area to close out a neighborhood, the market price is what? Recently they discounted homes and within less than a few days an appraisal was done on one of those homes. Homes in that area that sold prior had the higher price. If the appraisal shows the discounted price as the "market value", TV than had those homes overpriced. So the homes that sold prior to the discount overpaid. So what is right? I have never agreed with appraisals.

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.

[rubicon]

The issue of value is confusing because it is viewed by many differently.
The seller want to maximize profits. The realtor for the seller has the incentive to also maximize commissions but also factors in pricing at what he/she believes will increase turnover. the realtor for the buyer has the opposite goals.
The bank's value is in concert with the riskiness of its loans as the loan especially after the housing bubble burned so many banks.

Insurance companies value a home based on the cost to replace it less the land

This is an abridged explanation given limited space

[mulligan]

Tell me if I am incorrect, but isn't the value of something closely related to the price people are willing to pay for it ? Would recent sale prices on similar homes not be a reasonable measure of a home's true value ?

[TraceyMooreRN]

Be aware of "Discounted Prices". I ran into a problem with my NEW CONSTRUCTION home--had a Discounted price--guess what appraisal came in at discounted price...not listed market value before the discount. I knew what I was paying after the appraisal--but thought cheap marketing technique by TV....

Anticipated 9,000+ off new home value--got no discount from appraiser. Value was what I paid. Seemed TV would know the value of the home before setting a price. Same technique as retail sales--up the price to show a discount to get a buyer.

Price didn't make the sale--location, type of house and lot made the decision for us to buy! Either way--happy I am in my new home

[TraceyMooreRN]

Originally Posted by mulligan

Tell me if I am incorrect, but isn't the value of something closely related to the price people are willing to pay for it ? Would recent sale prices on similar homes not be a reasonable measure of a home's true value ?

Yes, In Virginia we would take 3 homes recently sold in the area and also 2 current marketed homes. They would be similar (2 story) (1 Story) ..they add and subtract things like curb appeal, lot size, number of bedrooms etc. There are problems that arise when you have a unique property (ie We had a house on the water in a city where no other properties in that area on the water sold in the last 20 years)....it was a challenge getting an appraisal. Lots of adding and subtracting. Water view is SUBJECTIVE, water front lot size is NOT SUBJECTIVE.

I was a licensed Realtor in Virginia--I feel comfortable that I know the business...

[graciegirl]

Originally Posted by TraceyMooreRN

Be aware of "Discounted Prices". I ran into a problem with my NEW CONSTRUCTION home--had a Discounted price--guess what appraisal came in at discounted price...not listed market value before the discount. I knew what I was paying after the appraisal--but thought cheap marketing technique by TV....

Anticipated 9,000+ off new home value--got no discount from appraiser. Value was what I paid. Seemed TV would know the value of the home before setting a price. Same technique as retail sales--up the price to show a discount to get a buyer.

Price didn't make the sale--location, type of house and lot made the decision for us to buy! Either way--happy I am in my new home

It worked. Marketing techniques are used in the sale of everything....and if we buy it...well enough said.

[MikeV]

Originally Posted by gomoho

My understanding has always been an appraisal does not really establish the market value of a home, but supports the bank loaning that amount of money for the home.

[OBXNana]

Originally Posted by TraceyMooreRN

Be aware of "Discounted Prices". I ran into a problem with my NEW CONSTRUCTION home--had a Discounted price--guess what appraisal came in at discounted price...not listed market value before the discount. I knew what I was paying after the appraisal--but thought cheap marketing technique by TV....

Anticipated 9,000+ off new home value--got no discount from appraiser. Value was what I paid. Seemed TV would know the value of the home before setting a price. Same technique as retail sales--up the price to show a discount to get a buyer.

Price didn't make the sale--location, type of house and lot made the decision for us to buy! Either way--happy I am in my new home

We purchased new construction in February. We used a lender from NC we have used often and he can write a policy in 48 states. The Underwriters were in Texas. They went to a pool of appraisers and they went with the first on the list. Our villa wasn't discounted, but came in over the price we paid. We were putting down more than 20% and the bank only cared that the appraisal came in at a 20% to 80% ratio. If the appraisal was below what we were willing to pay, we would have walked since there are no negotiations with new construction.

[TraceyMooreRN]

Originally Posted by graciegirl

It worked. Marketing techniques are used in the sale of everything....and if we buy it...well enough said.

Actually--what worked was the location of the house (Corner Lot in Gilchrist), designer home, price....but was hoping that after the 20% down payment I would have the additional 9000 in equity--which I didn't....

[Big O]

Originally Posted by TraceyMooreRN

Actually--what worked was the location of the house (Corner Lot in Gilchrist), designer home, price....but was hoping that after the 20% down payment I would have the additional 9000 in equity--which I didn't....

I'll bet you have it now.

[keithwand]

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.

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.

[perrjojo]

Originally Posted by keithwand

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.

I can't speak for Practices everywhere but I have been in the mortgage business and my daughter is currently in the business and the appraiser ALWAYS Gets paid. That is why lenders ask for credit report fees and appraisal fees upfront.

[keithwand]

Not in FL.
I got paid for an appraisal if the loan closed.
If the borrower changed their mind or switched lenders then there was no compensation.
It didn't happen often.
A homeowner or realtor can pay for an appraisal. It doesn't have to be a lender. Then it's yours.
The appraisal belongs to the lender originating the appraisal and not the homeowner.