There are five values for every property. The Seller’s, Buyers, Tax Accessor’s, The Realtor’s and the Appraiser’s. In theory they should all be close together.

I consider myself to be conservative when it comes to property values. When I do a market analysis for a client i make it clear what the top and bottom ends of the value range are and identify where a particular property would fall within that range. There is no benefit in having a property go under contract only to have a bank appraiser give a value less than the sales price - we all know what the market is like. On top of that, in this market most buyers don’t want to pay top price in a community. So while it’s a great goal to sell a property  for more than we think it’s worth, it’s very difficult to do.

When I let a seller know what I believe their home will sell for I always say “if we get more great - I’m happy to be wrong”. But, it may be a challenge justifying the sales price. Banks don’t like appraisers going outside the community for comparable sales.

So Why are They Still a Joke?

Let’s start with the value of features. What value two appraisers put on a finished basement vs unfinished, or a pool or a 3-car garage vs a 2-car is rarely the same.What is the value for an extra bedroom? What is it for finished basement space vs. unfinished. A fair question and a little variance from appraiser to appraiser is understandable. But what if they don’t give it additional value. It happens.

Then there are bad comparables. Those range from a straight up value comparison between a mold-ridden foreclosure to a renovated home or an appraiser comparing a home without a basement to one with a basement but not making an adjustment. It doesn’t happen too often, but it does happen and has recently to us.

Lastly, and I know I’m going to ruffle some appraiser feathers, but on more than one occasion we’ve had an appraiser come from another part of the state to value a home in Milton. Yes, in theory it shouldn’t matter, but when you’re told that the lake in The Manor Golf & Country Club is a glorified retention pond it’s hard to contain the anger or have a dim view of that appraiser. A Tom Watson designed golf course and a retention pond….right.

So, what do you do to prepare?

First, create a list of all improvements made to your property while you have owned it. Put the costs for each improvement on there and get copies of receipts if possible. In addition, have your agent pull their own comparables and leave them on the table, with the list of improvements, for the appraiser. I do this for all properties when I think we might run into trouble - I’m going to do it for every listing from now on, no matter how far under market value I feel we may be.

The worst part about getting a low value on your home is that the appraiser has the ability to listen to your argument and re-evaluate the appraisal if you provide them data showing that they may not have considered something that is valid - but they won’t do it. Even when the lender and underwriter are asking them to revisit the information.

We all know that values got “out-of-whack” a couple of years ago and needed a reality check but I think the pendulum has swung too far by not having a mechanism for disputing a value or comparable on an appraisal. Caveat venditor “Let The Seller Beware”.