Demystifying Real Estate Appraisals

Understanding real estate appraisals is key whether you're buying or selling. Here at The Ridgeline Group Brokered by LPT Realty, we aim to provide clarity and insight into this vital aspect of real estate. In this blog post, we aim to demystify real estate appraisals by answering some of the most common questions. We'll provide insights into the process, the factors that influence property valuation, and how you can navigate appraisal challenges. Let’s explore the intricacies of real estate appraisals.

 

Section 1: Value and Location

1. Is there added value if a home backs up to green space?

   • Yes, homes backing up to green space often have higher value due to increased privacy, scenic views, and access to natural amenities.

2. How do appraisals differ for residential and commercial properties?

   • Residential appraisals focus on the property's features, while commercial appraisals consider income potential, market demand, and the property's purpose.

3. Do you consider comps submitted by the listing agent or selling agent?

   • Appraisers consider comps from both listing and selling agents, but independence and accuracy are crucial.

Section 2: Pricing and Value Determination 4. How to handle mortgage appraisals when the sales price exceeds the listing price by 5-10%?

• Appraisers assess market value; if the sales price greatly exceeds market value, negotiations or a new appraisal may be needed.

5. What can we do to get the best appraisal amount? If it's not as expected, what's the recourse?

   • Ensure accurate property details, provide comps, and discuss discrepancies with the lender if the appraisal falls short.

6. Where do appraisers pull their specs, like square footage, valuation metrics, etc.?

   • Appraisers use public records, MLS data, property visits, and professional judgment to determine specs.

Section 3: Unique Property Challenges 7. How to get value when there are few to no comps available?

• Appraisers may consider similar neighborhoods, features, and adjust for differences to estimate value.

8. How do you value a finished basement vs. a non-finished basement or "lower-level square footage"?

   • Finished basements add value, but the extent depends on local market preferences and quality of finishing.

9. What is the best valuation method for recommending a price to a seller on a listing?

   • Comparative Market Analysis (CMA) using recent sales and adjustments is commonly used.

Section 4: Appraisal Insights 10. If an appraisal was done for tax reduction, will the selling price be affected? - Tax appraisal values may differ from market values, so it's essential to rely on a current market appraisal for selling.

11. Why do they tell the appraiser the contract price?

    • Sharing the contract price helps the appraiser understand the agreed-upon value but doesn't dictate the final appraisal.

12. What would you say is the typical $$ margin between more than 1 appraiser on the same subject property?

    • Appraisal variances can occur, but significant discrepancies may signal issues with data or methodology.

Section 5: Market Dynamics and Safety 13. How are valuations completed for older updated homes near new construction (few comps)? - Appraisers use adjusted comps, considering the age and features of the older home relative to new construction.

14. Have you started to see properties not appraising yet?

    • In fluctuating markets, some properties may not appraise at the desired value, requiring price adjustments.

15. Do you still use only comparables within one-mile radius?

    • The radius can vary depending on the local market. Appraisers consider proximity, but quality comps take precedence.

16. Do you have templates we can use and the formulas you use to calculate $ x square footage?

    • There are standard appraisal forms, but specific formulas depend on factors like location and property type.

17. What are your thoughts on valuation programs like RPR?

    • Programs like RPR can be helpful for preliminary research, but a professional appraisal is essential for accuracy.

18. What mistakes do you see Realtors make that you would like to correct?

    • Providing accurate property information and not pressuring appraisers for specific values are key to avoiding errors.

19. Regarding concessions, my property was discounted on value due to comps concessions. Is that how it works?

    • Concessions in comps may impact appraisals, but your own concessions should also be considered when discussing value.

20. How much emphasis is placed on unsafe conditions of a short sale property?

    • Safety concerns can affect a property's value. Appraisers assess these issues in their evaluation.

The So What: In the complex world of real estate, appraisals serve as a critical guidepost, ensuring that properties are valued accurately and fairly. Understanding the appraisal process empowers both buyers and sellers to make informed decisions. At The Ridgeline Group Brokered by LPT Realty, we're committed to providing you with the knowledge and expertise needed to navigate the real estate market successfully. Whether you're a fitness enthusiast, a military veteran, or anyone looking for reliable real estate guidance, we're here to help. Don't hesitate to reach out for more information and personalized advice on your real estate journey.

Call to Action: Ready to discuss your real estate needs? Contact us today for expert assistance and a personalized approach to your real estate goals. Your trust and satisfaction are our top priorities.

Brandon Lecocq Real Estate Agent | MRP | SFR, The Ridgeline Group Brokered by LPT Realty M   7194136610   W   www.cosliving.co   E   brandonlecocq.co@gmail.com   "Only I can change my life. No one can do it for me." - Carol Burnett.