Sunday, October 09, 2005

IS APPRAISAL AN ART OR A SCIENCE?

Bob Bruss shares this story of his recent appraisal in Inman News

In the past, I've written many times that real estate appraisal is an art rather than an exact science. But, thanks to computerized appraisals, I'm beginning to wonder.

After my refinanced mortgage was approved, subject to the appraisal, my lender's loan agent (who was located in Las Vegas) asked if I knew of any good local appraisers. Even after phoning some of my Realtor friends who sell homes in my town, there was no consensus of who is the best appraiser.

So the loan agent phoned a few nearby bankers and hired a highly recommended appraiser from a nearby community.

When she arrived at my house in her sports car, with her dog in the back seat, I wasn't sure what to think. Although my house is "average" for the area, the appraiser was neither critical nor praising. But she was very professional and extremely competent.

I was armed with some recent "comps" (sales prices of similar nearby homes) to hand to the appraiser, along with a list of my home's features. But when I mentioned what I thought my house is worth, she replied, "You might be a bit on the low side."

That's when I decided to keep that information to myself and see how the appraisal turned out. Two days later, the loan agent phoned from Las Vegas to tell me the appraised value. It was about $100,000 higher than I estimated.

When I received a copy of the appraisal from the lender, it turned out the appraiser knew of several very recent comparable home sales prices within a block or two of which I was not aware. I'm sure glad I kept my mouth shut.

Read the entire article at Citywide Services

3 comments:

Jason said...

I'm a real estate appraiser in Denver. It is interesting how the question of art vs. science always comes up. I'd say it is definitely both.

An art in finding and selecting the right comparables, rents, etc. A science in adjusting the comparables and estimating cash flow.

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