Relocate to Wisconsin : Praise for Appraisals ? Maybe Not....

Praise for Appraisals ? Maybe Not....

       Please note the title of this post says appraisALS not appraisERS....and regardless of the noun, there is likely to be some disagreement....please do so poltely and professionally...this is a forum where varying professional are welcomed...bashing and trashing is not.

     Recovering markets are experiencing over asking offers.  Thank you Fairy Blog Parent...for featuring our recent blog When Buyers Pay OVER the Asking SOLD over askingPrice... the subject causes a lot of concern in many areas.  Having done short sales....shared fears and tears with homeowners who bought high and had to sell heart has been heavy, sleep lost and sympathy abounding for people who have been forced into doing short sales due to circumstances beyond their control.`

   In Real Estate 101, agents are taught (at least this one was) that the appraisal is the "safety net" for any Buyer...a Buyer "CANNOT" pay more thReal Estate 101an a house is "worth" will not appraise and the lender will not extend a mortgage beyond the market value if the home.

    Hmmm....With bidding wars abounding in some places...we...the collective "we" of the real estate industry....say that the "market decides." The market has decided that for reasons of Thinventory....and I would add, in some cases, Sellers really getting their ready for sale with upgrades, updates and the latest and greatest in all things technical, that there is more value than in the past.

     Newer rules and regulations have gone to great lengths to increase the distance between lenders and appraisers,  realtors and appraisers in an effort third partyto sharpen the focus of objectivity and produce an evaluation that is a reflection of the market...not the desire to lend or sell.  No lender gets to choose their favorite appraiser...the third party system makes that selection and appraisal done "without the influence" of any other relationship.

     We have not had an issue with any property appraising...for asking or over asking prices.   The appraisals sometimes have exceeded the over asking prices with smiles abundant on the Buyers' side of the closing table. "Instant Equity" ....what a wonderful gift !

        Appraisals are opinions...schooled...yes...can there be more than one...can they vary a lot ...we see it all the time in divorce court.  The court appointed appraiser has a "fair market value" for which the marital property should list. We have yet to see that number approach the reality of the market.

         Do I have a better mousetrap ?  A magic solution ? mousetrap A way to bring realistic uniformity to the appraisals of the market ?  I do not.  The purpose of this post is to encourage professional discussion...invite thought...and know, from this Agent's perspective...there is always more than one way to evaluate a property.

    If you or anyone you know is looking for a thoughtful perspective on real estate ...Call the Hansons...we are honored to be of service to Sellers and Buyers throughout southeastern Wisconsin.

Sally K. & David L. Hanson, ABR, CDPE, CSS, e-Pro,ILHM, REDS

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Comment balloon 42 commentsSally K. & David L. Hanson • March 20 2016 05:45AM


The funny thing is, appraisals shouldn't vary so much.  The market data used should be the same accross the board.  Granted appraisers go more in-depth with underlying economy and neighborhood analysis then we tend to but the comps are the comps.

Posted by Christopher Pagli, "I Stay Open Until You Close" (William Raveis Legends Realty Group) over 2 years ago

Rut roh!

Posted by Roger D. Mucci, Lets shake things up at your home today! (Shaken...with a Twist 216.633.2092) over 2 years ago

Sally K. & David L. Hanson I am seeing more balance on appraisals. In the past many were under pricing them by being overly cautious. The problem now with this third party system is giving appraisals to out of town appraisers who have no clues what the market is like in my area. 

Posted by Scott Godzyk, One of Manchester NH's Leading Agents (Godzyk Real Estate Services) over 2 years ago

After having no issues with appraisals for several years, now I am seeing them!

Posted by Kristin Johnston - REALTOR®, Giving Back With Each Home Sold! (RE/MAX Realty Center ) over 2 years ago

Sally K. & David L. Hanson Am I ever glad you made it a point to selectively focus on appraisals versus appraisers. The end result between appraisers of the same property theoretically should result in the same or very close to the same final appraisal number. We have seen this to not be the case and have had to dispute more appraisals.

Posted by Sandy Padula and Norm Padula, JD, GRI, Presence, Persistence & Perseverance (Realty National) over 2 years ago

Good morning, Sally K. & David L. Hanson and may I add that THIS IS ANOTHER POST THAT IS FEATURE WORTHY....but it's Sunday....and they DO miss many!!!

as far as appraisals are concerned, we all know that appraising is NOT an exact science....there are variable factors that are included in that equation.... opinion is the greatest one....  

we have never had any issues with our appraisals.... we've probably been very fortunate.... but we do help the appraiser along with the proper information....even appraisers need all the help they can get!!!

Posted by Barbara Todaro, "Franklin MA Homes" (RE/MAX Executive Realty ) over 2 years ago

We have to look at the local market.  Here, in the Portland Metro (Oregon) area we've always been the "west coast bargain basement" when it comes to pricing.  I relocated here in 1990, became licensed in 1999.  I've seen the west coast markets appreciate much higher than our market.  From Seattle to San Diego . . . and parts in between.  Now, Portland Metro is playing catch up.  There's a lot of relocating going on, a lot of cash buyers and this all factor in to the appraisals we are seeing now.  It's been interesting to observe over the years.  

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) over 2 years ago

Sally and David an appraisal is an "opinion" and a "reflection of the market conditions of the time.  Many forget that when the market changes for the worst, and speak as if somehow an appraisal is a guarantee of future value. 

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 2 years ago

Sally and David- well done!!! Some people think that because a property appraises at a certain amount, it is set in cement.  They need to remember changing markets and Barbara Todaro is correct. Even though there are factors and formulas that are brought in to make up an appraisal it is still based on an opinion. 

Posted by Kathy Streib, Home Stager - Palm Beach County,FL -561-914-6224 (Room Service Home Staging) over 2 years ago

Thank you Kathy Streib ....a moment in person's opinion...that is all

Posted by Sally K. & David L. Hanson, WI Realtors - Luxury - Divorce (Keller Williams 414-525-0563) over 2 years ago

I rarely have a concern about appraiers or appraisals. If we, the real estate agent, have done our job correctly...the appraisal should just be another step in the closing process...knock on wood!!

Posted by Mike McCann - Nebraska Farm Land Broker, Farm Land For Sale 308-627-3700 or 800-241-3940 (Mike McCann - Broker, Farmland Broker-Auctioneer Serving Rural Nebraska) over 2 years ago

Hey Sis.  Appraisers are aggregators of information.  They have nothing to do with creating values.

Posted by Conrad Allen, Webster, Ma, Realtor (Re/Max Professional Associates) over 2 years ago

Love the term "thinventory"!  Here, appraisers are making upward adjustments to reflect market conditions.  Also, many of the buyers are either paying cash, or they are waiving the appraisal contingency, reading to increase their down payment if need be.  But it can be tricky with first time buyers with small down payments - unless they can fall back on the Bank of Mom & Dad.

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) over 2 years ago

Honestly the only issue I've ever had is that when the barrier was put the lender and appraiser it resulted in (at least for me) a few taking the job when they didn't know anything about the area. And fighting an appraisal is like arguing with a telephone pole. 

Posted by Tammy Lankford,, Broker GA Lake Sinclair/Eatonton/Milledgeville (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) over 2 years ago

To me, all that is not about praise but more being competent worker of our personal magic, so to speak. We should just make quality contributions.

Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) over 2 years ago

I understand the concept of the barriers but also understand the frustration equally. Tammy is pretty much right on the money. Tammy Lankford

Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) over 2 years ago

Sally K. & David L. Hanson congrats on the feature of this, too.

And yes, love that expression 'Thinventory'!

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (LAER Realty Partners) over 2 years ago

Just looking at the word, the largest part of the word "appraisal" is the word "praise."

So, yes, as to your title, the answer to the question is yes.

Posted by Jay Markanich, Home Inspector - servicing all Northern Virginia (Jay Markanich Real Estate Inspections, LLC) over 2 years ago

Sally K. & David L. Hanson Like a doctor who says you need that back sliced open, some welding or brazing done, another notices one leg is a tad longer, tosses you a lift for one show. And ta da, back feels sixteen again. It happens with appraisals that don't use the same comps, or flawed repo ones for sales, etc. The opinion varies but should not if done right. In small rural markets finding the comps is hardest. Not out there to tie the valuation to as easy as when there are a slew of recent sales.

Posted by Andrew Mooers | 207.532.6573, Northern Maine Real Estate-Aroostook County Broker (MOOERS REALTY) over 2 years ago

Good morning Sally. It seems that appraisal issues will always happen from time to time, most of them are worked out, but sometimes it will kill a transaction.

Posted by Joe Petrowsky, Your Mortgage Consultant for Life (Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709) over 2 years ago

Hi Sally and David.  Smart appraisers know when a market is in fact rising and can and do make adjustments in their appraisals.  

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) over 2 years ago

The relief when an appraisal comes back at or above the agreed purchase price is enormous. The appraisal process, while based on data, can be dramatically different from appraiser to appraiser.

Posted by Kat Palmiotti, The House Kat (Grand Lux Realty, 914-419-0270, over 2 years ago

Thanks for the update!!!

Appraisals are opinions, can there be more than one...can they vary a lot ..  The court appointed appraiser has a "fair market value" for which the marital property should list. We have yet to see that number approach the reality of the market.

Posted by Sham Reddy, CRS (H E R Realty, Dayton, OH) over 2 years ago

I am waiting on an appraisal that I suspect will come back below the contract price. I am afraid that my buyer is not prepared to walk away from this deal. She REALLY wants this house, there goes negotiating out the window.

Posted by Raul Rodriguez, Looking out for the client's interest and not my p (Covenant Partners Realty) over 2 years ago

Hi Sally and David, In some cases the appraiser comes from a different area and may need some help from the agent.

Posted by Sybil Campbell, REALTOR® ABR, SFR, SRES Williamsburg, Virginia (Long and Foster REALTORS® 5234 Monticello Ave Williamsburg, Virginia) over 2 years ago

Its like a symphony of a sorts and if conducted properly...we all played a part

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 2 years ago

Each person in a transaction has a part to play, and the appraiser/appraisal is just one, if we as professionals in real estate do our part in the beginning ( like knowing what could be a problem and explaining in advance) then the buyer is less likely to  get cold feet when met with the appraisal.

Posted by Doris Freeman, Broker/Agent, Realtor, Madison-Gibson-Crockett (RE/MAX REALTY SOURCE) over 2 years ago

Sally K. & David L. Hanson Being a professionally designated appraiser, a State Certified General Real Estate Appraiser, as well as having been owner / operator of an accredited real estate professional education service to brokers and appraisers, I can say (with some degree of first hand experience) that the residential real estate appraisal business is a zombie business -

What does that mean?

The ranks of residential real estate appraisers is dwindling and doing so rather quickly.

The average age of real estate appraisers (in total) is over 55 years of age. Why?

For 2 reasons: 1) The bar has been set so ridiculously high that even experienced real estate sales professionals don't qualify without having a college degree (a totally unnecessary overkill factor); and 2) There's no money in doing residential mortgage appraisals (which average about $175 to the appraiser - before operating expenses).

As for your perception that there's now a lesser influence on the appraiser from the lender - that's merely perception - not reality.

If one wanted a true "unbiased" opinion, they wouldn't provide the appraiser with a copy of the sales contract - If that's not intimidation or influence to get a result, nothing is.

In my opinion, the day is very near when residential mortgage lenders will no longer require the services of the appraiser, since they have about as much information available to them as does the appraiser.

I hope I've contributed to a better understanding of this issue.

Posted by Ken Jones Commercial Real Estate, Industrial & Automotive Related Real Estate (VRI Realty, Inc.) over 2 years ago

Hopefully if agents are showing buyer comps to help them decide what to offer on the property the offer made and accepted will meet or exceed an appraisal.  The biggest issue I see is when an appraiser isn't familiar with an area. Thank-you for a thoughtful post.

Posted by Shirley Coomer, Realtor, Keller Williams Realty, Phoenix Az (Keller Williams Realty Sonoran Living) over 2 years ago

As Kenneth noted, a true unbiased appraisal should be done without the contract price.  

I saw three appraisals done on a $135,000 property two years ago that varied by $10-15,000 within 3 weeks (first two offers fell through due to appraisal). The third appraisal was over contract! 

Posted by Athina Boukas, Certified Residential Specialist (CRS) (Virginia Capital Realty) over 2 years ago

As others have noted, my biggest concern is appraisers who are not familiar with the area in which they're asked to assess value. The addage that real estate is local is strongly underscored when it comes to validating the price of a property. Little to no knowledge of the specific area usually leads to an unrealistic value of the property. Great post!

Posted by Monica Hill, the REALTOR to help you discover Delaware (RE/Max Associates) over 2 years ago

Thinventory is the genesis of the problem, for sure.  I have not had an appraisal issue in a couple of years but I keep my fingers crossed every time!

Posted by Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC, ... a small office, delivering big service! (Waters Realty of Brevard, LLC) over 2 years ago

Great read. Thank you for your post! 

Posted by Sheldon Haywood, Haywood Home Team (HHT) (McGraw Realtors ) over 2 years ago

Hi Sally.  Congratulations on the feature.  So many issues with appraisals.

Posted by Conrad Allen, Webster, Ma, Realtor (Re/Max Professional Associates) over 2 years ago

I do not profess to know the answer or solution.  I only know I have had three straisght deals now, one killed, two critically injured and bloody over the appraisal.  The days of absorption rate, current inventory (2.8 in our county), multiple offer all in 1 to 12 days mean nothing to the appraiser.  I don't understand how prices that have been held down for 90 days and used for comps will ever adjust to the acutal market place.  Will reality ever check in?

Posted by Rick Frissell, aka "The Red Baron of Real Estate" (HomeXpress Realty) over 2 years ago

Hi Sally K. & David L. Hanson 

Great article and a well-deserved Feature. The only bad appraisal I have had in the past 12 years was on my personal home and it was a re-fi. OMG this 21 year old girl came from 100 miles away and kept saying she was from Orange Country and the traffic was so bad here. She compared my home to 5 REO's over 2 miles away and none in my newer neighborhood so I had to appeal it in Northern CA and it was the first appeal since the new lending rules plus it cost $350 more. After the appeal, they said she had to agree to change the price. I should have canceled this loan and gone to another lending company. She came up $15,000 but I had to put $15,000 in cash up. Still angry about this but all my clients have had better luck. OH, did I mention she was the daughter of the owner of the appraisal company!

Posted by Kristin Hamilton CA Realtor, (909) 557-6966, GREEN, SFR, CHS-Redlands/Loma Lind (Keller Williams Realty) over 2 years ago

Sally and David,

I think I know what you feel like when you said:

 "Having done short sales....shared fears and tears with homeowners who bought high and had to sell heart has been heavy, sleep lost and sympathy abounding for people who have been forced into doing short sales due to circumstances beyond their control."

My first days in real estate began shortly before the market value began to slide in 2005 or 2006. I often wondered how agents felt that had sold homes recently before the collapse got into full swing and obviously had clients who lost significant value in their homes. I understand that was not strictly the fault of RE agents nor was it the fault of appraisers, but I feel that some educated restraint is an important quality that buyer clients should appreciate.

Posted by Craig Cooper, Creating-Preserving-Growing Wealth in Real Estate (Chase International Real Estate) over 2 years ago

Sally & David this is a worthy post and worth our time to consider the points made.

As agents, we should present the Buyer the best comp information we can get to help them decide on the best price to offer. We can never be sure in advance what the appraisal will be but we should strive to help the Buyer be in the best position possible.

Most of my sales the Buyer closes with equity. Not always.

Posted by John Wiley, Lee County, FL Real Estate GRI, SRES,GREEN,PSA (Right Move Real Estate Group- EXP Realty) about 2 years ago

First off the Appraisal Companies are owned by the big banks.  I thought that was what we were trying to avoid!  Poor appraisers are getting squeezed.  There are ways to game the system when it comes to choosing appraisers.  I have not had a lot of problems with appraisals if our offer was in the ball park of reason.  But even though it is still a sellers market it is not as tight as a few years ago. 

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) about 2 years ago

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Posted by Davies Anthony (Ceo) about 2 years ago

Agree 10000% with the fact that this is really an opinion with a little bit of professional experience. Nothing more nothing less. Many other variables 

Posted by Michelle Grunberg, When Honesty, Integrity and Loyalty Matters! (eXp Realty) about 2 years ago

Just like in real estate agents, there are a few bad apples that make life difficult for no reason. 

Posted by Eren Millam, Certified Negotiation Expert (Realty World Cosser & Associates, Inc.) almost 2 years ago