Appraiser CooperativeAlternative To Appraisal Management Companies

Few can disagree that the primary role of a real estate agent is marketing and negotiation; while the role of an appraiser is the reporting of value; plain, pure and simple. Yet somehow in the act of buying and selling, this simple definition gets turned all around leaving many to believe that “an appraisal is only a justification of the sale price.” - Isn’t that thinking a HUGE part of the reason we are in the financial mess we are in today? Because shady or ill-informed appraisers simply “justified sales prices” with appraisal reports that weren’t based on hard market data, overlooked reality and weren’t worth the paper they were written on?

Unfortunately, the adversarial divide allows many to argue that “appraisers don't have any business pricing homes for market, “ that ”the appraised price is irrelevant to the market value of a home,” and that it’s the appraiser’s job to merely follow along on a leash and politely write up a fancy report with pretty pictures, drawings and maps that “supports the sales price.”

Professional real estate agents and appraisers both know that market value is truly defined as what a ready, willing and able buyer is willing to pay for a property and what a seller is willing to accept. But what many seem to disagree with is that it is an appraiser’s job is to further analyze what buyers and sellers have recently decided to offer and accept for similar, proximate properties. Then, make justifiable adjustments for differences derived from market data (ie: How much more did a very similar home with a 2-car garage just sell for vs. no garage? - The paired sale price difference representing the market value a willing buyer will pay for a 2-car garage.) and eventually come up with an opinion of value.

Appraisers base their “opinions of value” on sale prices of recent, proximate, similar homes because sales prices (not listing prices!) represent the current market; and appraisers are required to base their “opinions of value” on hard current market data and validated statistics.

Realtor Mike Lefebvre (and Appraiser) wisely explains his use of an appraisal as a negotiation tool, “When I’m on a listing appointment, I tell my sellers we will start with a typical CMA which will explore closed, pending and active properties to come up with a price range we feel is in line with the current market. - I then take it one step further, remind them that chances are your buyer will be applying for financing, and perform a full-blown Fannie Mae Form 1004 because that is ultimately how a bank will formulate their opinion on whether they will lend this buyer money to purchase this home. This often includes things like regression analysis and declining market status. - This appraisal often provides insight that helps us more accurately price the home. I look at is as skipping a step and starting with the finish line in mind, rather than having to sell the property twice: once to the buyer and then once again to the appraiser and the bank.”

Mr. Lefebvre also shares two recent, real-world examples of how appraisals not only reflect market value, but become valuable tools of negotiation:

1. "I sold a local condo in 21 days last month because the appraisal I did pre-listing helped price the home correctly. Average days on market in that complex is well over 100 days and, yes, my sale lowered the bar pissing off the 8-10 other active listings. Sorry neighbors, the MARKET told me as an appraiser that a lower price was more accurate. And I was right."

2. "I saved my buyers almost $30,000 last month because I did an appraisal and presented it with our offer so I could show this FSBO that, yes, you have a lovely home but based on the current market data, your list price is about $30,000 too high. And I was right."

Enough said? (Click here to read more of Mr. Lefebvre’s comments)

A real estate professional is defined by two things: Compliance to regulatory laws and practices and Competence. ReValYoo’s Appraiser Cooperative is comprised of independent professionals, who are not only USPAP compliant, but who are competent experts in real estate appraisal.

As an Appraiser Cooperative, we pride ourselves as being the premiere resource partner to administer an association of independent certified and licensed appraisers, who develop real estate appraisal assignments. Valuable services that allow real estate agents to do what they do best, market and negotiate real estate transaction, while we manage the profession we were trained to do.