With home prices dropping, stabilizing, shifting and doing crazy things, I thought it was timely to comment on appraisals and value. Once in a while, a home seller will consider getting a licensed appraiser to give them an appraisal of their home so they can get an expert opinion on price. Consider these thoughts:
1. If you had 10 different appraisals, you would (most likely) have 10 different appraised values. From high to low, there might be great differences, especially if the home is custom built ot unique.
2. An appraisal is an opinion, as is anyone’s determination of value. For every person, there is a different value.
3. Some appraisers don’t pay much attention to what is currently on the market, they focus more on what has sold or is under contract. This omission of supply evaluation can be a huge mistake.
4. When a seller tells me their home was just appraised for $50,000 more than what I feel the value is, I know right away they had a refinance and pulled money out for personal reasons. Your home is almost never worth what a refi appraiser said it’s worth. If you have great credit, some appraisers completely over-appraise.
5. When an appraisal is done on a purchase, many times the appraiser knows exactly what the purchase price is, and then miraculously appraises the home for that exact same sales price. This is a practice which, when stopped, will have a huge impact on the industry.
What is a home worth? It is worth what a buyer is willing to pay after the property has been exposed to the market for a reasonable time period.