In our experience, real estate agents and real estate appraisers have different motives when searching for comparables. Appraisers always search for comps that are most similar to the subject property in a variety of ways- size, location, construction, etc. We do this in order to paint the most accurate picture of what a property is truly worth. Real estate agents tend to put these rules on the backburner, and search for comps that will best drive up the value of a home.
If you want your real estate appraiser to take your comp suggestions seriously, keep these things in mind:
Do you have a valid reason to suggest comps?
Why Are You Suggesting Comps?
Whatever the reason, be sure to state it when handing them over to the appraiser. If your suggesting comps because you happened across a similar house to the one being appraised and think it might help the appraiser, right on. If your sole purpose is to offer comps that will help improve the value (which is obvious to a good appraiser), stop right there.
It’s not okay to try and persuade or coerce a real estate appraiser to “hit your mark”, or appraise the property at or above a certain value. Picking sub-par comps in order to encourage positive price adjustments is an obvious ploy. If you’re not suggesting comps to try and make the appraiser’s job easier or to be generally helpful, it’s doubtful the appraiser will give your comps a second look.
Are the Comps You’re Suggesting Close in Size?
This should be a no-brainer, but you’d be surprised how often we get suggestions that make us think otherwise. In a perfect world, each comp would be almost identical to the subject property. If most of the other features are similar, a bigger house will sell for more than a smaller one, as that extra space isn’t free.
It doesn’t make sense to compare a 2500 square foot property to a 1500 or 500 square foot property in most cases, unless the market dictates otherwise. If you suggest comps like this to an appraiser expect two things: that the appraiser will thank you, and that their trash can will be full.
Always check to see if your comps are too old.
Was the Comp Sold or Listed Recently?
The market changes daily. Unless your doing a retrospective appraisal for an estate or something, most lenders prefer comparables to be as recent as possible, and definitely not older than 90 days.
There are exceptions, though. In rural areas or places where the market has been slow and there aren’t as many recent sales in close proximity, sometimes you have to look back a bit to find a valid comparable- but If the market is healthy with enough recent sales, there really shouldn’t be a reason to pick any comps older than that.
#treagroup #realestate
Recent Comments