In Kenneth Harney’s column Appraising a Shifting Market [Washington Post] he explores how appraisers are dealing with a changing market. The advice is based on good common sense and really applies to all markets at all times, not just in a changing market.
- Stay current, stay local.
- Understand behaviors of each price strata. In the Tampa area, for example, the entry-level segments are more solid than the middle and upper price brackets.
- Get input from local agents, they are on the front lines. Specific transactions may not be representative of current market conditions due to extenuating circumstances.
- Withstand the intense pressure from all parties to the sale but be open to considering data that was missed in the original appraisal.
Get those who are pressuring you to provide data that is comparable and can be verified. The appraisal that was completed was a result of our best effort at the time. If we missed something that clearly shows we are low, we will consider the new information in the context of what was already presented, but that doesn’t happen very often, because the data usually doesn’t exist.
An appraiser whom I deeply respect once told me in a sarcastic tone: Isn’t it amazing how everyone is so much smarter than the appraiser?” Lenders, mortgage brokers, real estate brokers, developers, buyers and sellers all know the right number. We are just here to fill out a form.”
Depending on how the market does over this next year, appraisers may turn out to be smart afterall.
Tags: Soapbox Blog, Appraisal Pressure, Mortgage Fraud
Sound advice. The 3rd point I have always found to be very helpfull. Local brokers ( and in Manhattan that means block by block, building by building local) are a great source of information regarding the nuances of market value. One must be circumspect when the information is from an involved party but being open to all information is being objective and professional – and appraising real estate is a profession. I view the profession not only as a valuation method based on the mathematicaL analysis of all available data, within a specific location, but often as a puzzle which needs to be solved. I question, question, question – a bit annoying to some but very effective.