Working generally as a San Diego California real estate listing broker, I frequently receive calls from appraisers who desire to validate the reported San Diego MLS sales price, ask about the condition of the property and if the seller gave any buyer concessions. When I say concessions, I am referring to payment of buyer's closing/loan costs or adding some improvement to the property prior to the close of escrow. Obviously, the appraisers were trying to do their best to ensure that their appraisals would match the true resale value.
Almost two years ago, the frequency of these appraisal calls began to diminish and for the last 18 months or so, I personally have received possibly just one such call for my last six sales.
I've confirmed the phenomena of these vanishing appraisal calls with other local brokers. I also called a few San Diego appraisers, but just one would talk about this and only after assurance of anonymity. This appraiser originally said with the new California State licensing law there were many more new appraisers and questioned their competency. When pressed, he very reluctantly conceded that my assumption that the real pressure to bring in the appraisals at the contracted purchase price (all San Diego resale appraisers have a copy of the purchase contract prior to inspecting the property) was causing them not to question the listing broker on condition or especially, seller concessions.
It's my view, in our current San Diego real estate market, that it is exceedingly rare for a buyer not to get concessions from the seller. I'm not talking small change here; these real life recent sales show:
La Mesa $362,000 sale - $4,500 credit to buyers
San Carlos $480,000 sale - $14,400 credit to buyers
Mission Valley $360,000 sale - $10,000 credit to buyers
San Carlos $385,000 sale - $10,000 credit to buyers
So, are the San Diego real estate buyers who are now paying approx. $375 for a residential real estate appraisal, really acquiring a true reflection of their impending new properties value?
If an appraiser looks at the $480,000 sale above, as a comparable without inquiring about the concessions ($14,400 in this real example) the appraisal will be too high. If the appraiser does inquire about the concessions, they have to consider the comparable property was worth not $480,000 but $465,600!
Without payment of the concession, it is not likely that this property would have sold. If the real facts did cause the new appraisal to come in below the contracted purchase price, the buyer (paying for an accurate appraisal) would be not be obligated to go forward with the sale.
In today's strong San Diego's buyer's market, the buyer would be in a very strong position to have the seller reduce the sales price to the accurate appraised value and thereby potentially save thousands!
I'm not a licensed California appraiser, just a California licensed real estate broker with three decades of residential real estate experience, Many may not be in agreement with the fact that these concessions reduce the real resale value of properties. I can understand their opinion. But, I think they are dead wrong!
No seller I know, is willing to give away thousands of dollars of their equity if they could avoid it. This is a classic example on the part of pressured appraisers, of hear no evil, see no evil!
The easy correction to this problem would be a State requirement that appraisers of residential properties use due diligence to confirm the full details of all comparable sales used in an appraisal. Until this happens, I would advise San Diego home buyers to tell their mortgage lenders that they want a copy of the appraisal and will be looking for some notation on the document showing that the appraiser made inquiry into both the condition and possible concessions on each comparable used.
If you are like many people, you will someday need to work with a . If you are interested in buying or selling a home, that's definitely true, because the home appraiser will need to come in to your home to assess its current market value. He does that to help the lender and the seller decide what deals are worth it to their needs. If you are someone who is about to have a home appraiser come in, here are some things you need to know in order to ease any concerns.
It Won't Take Too Much Time
Don't feel the need to clear off your entire calendar in order to make room for your . Many house appraisals just take a few minutes to complete. It will, of course, depend on the size of your property. A larger property will take longer to appraise. The home appraiser will walk around your property in order to measure the square footage and come up with a realistic measure of the size of your home. They will then walk around the interior of the home to see which features may subtract from the size of the home and what renovations have been done inside.
Clean Up Expectations
The home appraiser, frankly, is not looking at how clean your home is. They are only interested in measuring the space on the inside and outside, not its contents. You can try to make a good impression by putting everything in order inside the home, but that is not going to result in a higher appraisal figure.
Home Improvement Knowledge
There is an assumption on the part of some home owners that they needto be able to point out repairs in order to get higher house appraisal. This is not needed, because the home appraiser is a trained professional who will surely notice what has been done to the home in terms of improvements and repairs. If they were to miss a hidden detail, like a new cooling system, you should make it clear to them.
You should also be there to answer any other questions the home appraiser could need information about as they look around the home. If you can't answer all of the questions about repairs, be sure to have someone with you who can.
The house appraisal process is nothing to be intimidated by. They home appraiser simply comes in, looks around, measures and then leaves. They will then survey the home's neighborhood and write up a detailed report. The process is quick, but its needed to come up with a fair value and a good deal for you whether you are looking to buy, sell or refinance.
Both Bob Schwartz & Locateappraiser are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.