Confused over appraisal issues

Guest 0.10 Dollars($)

Hi,

I have a friend who had put up his home for quick sale. The neighborhood property prices showed the home is around $957000. So my friend decided to put the home for the market for $900,000 so that it sells quick.

Around 3 months later, he was still unable to sell the home and the decided to stay at the same home and refinance it. He called in two appraisers from different companies and both stated that they could have the house appraised for more than what he had put it for sale in the market. It didn't appeal to me because recent sales suggested that my friend could sell the home for at least $957,000. Finally he roped in a third appraiser who came and appraised the home for $980,000. I have a question here. Can any of you tell me why two appraisers mention one price while the third one's saying the target price for neighborhood properties is around $957,000. I too will be buying a home by next year and am really concerned over this appraisal issue.

Guest 0.10 Dollars($)

Negar,

There can be a few probable reasons behind the appraisers' difference in determining the values. One such reason is that, if you have a property on the market for a period of 60 to 90 days at a lower price and it does not sell, lenders may think that the home is not worth the listed price or the comparable prices in neighborhood properties. And that's why the appraisers working with the lender you have approached for refinance, may have calculated an appraised value lower than what the third appraiser has suggested. By the way, have your property been on the listing for a year?

helping_user

Hi alex,

It's not negar who's looking for refinance, it's his friend. Well, I think the first two appraisers were most likely afraid that they'll be into trouble if they did appraise the property for more than the asking price. I guess the third appraiser having more experience than the first two, had felt comfortable while appraising the property for the actual value.

Thanks.

mikeshapiro · Posted: Wed Jun 06, 2007 10:24 am Post subject:

Welcome to the forum Negar,

The first thing is the home is nearly a million dollar property. Depending on your location, homes higher in value tend to have a much longer exposure time to sell compared to standard track homes. Some properties in this value range can easily have a marketing time of 6 months to a year. A good rule of thumb for appraisers is to be within 5% of what the property would sell for in an open market. Say he appraised it for $957, the owner then puts it on the market for 980k and gets a buyer. The appraiser was well within 5% of the sales price.

You said the two appraisers could appraise it for more than what he listed it for, but I don't see a firm value or value range so who knows that they would not have appraised it for 980k?

Just remember appraisers value opinions are opinions, not science.

If you could please explain a bit more where your concern is. As I understand it the two first appraisers didn't give a value opinion, except that it would be above the list price, right?

You said the two appraisers could appraise it for more than what he listed it for, but I don't see a firm value or value range so who knows that they would not have appraised it for 980k?

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