A few weeks ago I wrote about how I was encouraged by an appraisal I was concerned might come in under sale price, but didn't... took it as a good sign that perhaps appraisals are finally catching up with rising sale prices.
Well, this week we discovered they requested an appraisal review on that same property and dropped the value by $35,000!!! I also heard about several other appraisals that came in under value this week for other agents. It appears appraisal issues are far from over.
Perhaps the most frustrating aspect of the appraisal is that it is largely subjective. It is based on data from comparable properties, but the appraiser chooses the comparables... and the appraiser determines adjustments to be made based on condition, location, amenities, etc. Two different appraisers can come up with two very diffferent values.
Appraisals have been an issue since the market downturn... first because values were dropping, then because there weren't enough recently sold comparable properties to establish value.
Now it's an appreciating market, and the closed data that appraisers use is behind what is selling right now. Before the market downturn appraisers were largely too lax... unfortunately, now they have overly adjusted the other way and are causing problems for many home buyers and sellers.
After being at opposite extremes, hopefully appraisals will settle back in the middle... where they should be.Sharlene Hensrud, RE/MAX Results - Minneapolis-St. Paul Realtor