Cash is King, But Appraisers Aren’t Court Jesters


What is someone’s home worth?  Short answer, of course, is whatever someone is willing to pay for it.  And if they’re buying with cash, that’s all the answer one needs, right?  So, for those of us who don’t have bags of money at our disposal, the real-life answer to that question is the amount at which it appraises.  As real estate brokers and agents, you already know this, so why am I even talking about it?  Well, let’s just think of this as a quick refresher course–one that should help you in our current market.

One of the big factorsused in determining the value by an appraiser – who quite often seems to take his or her job REALLY seriously – is the overall condition.  Please, hold your “well, duh” comments for the moment.  The “condition ratings”, according to the Uniform Appraisal Dataset Definitions, are broken down into six categories: C1-C6. The category of C1 is almost always a new house; C6 is beyond the definition of “fixer upper” – the idea of financing such a purchase evokes either maniacal laughter or the need to evacuate the contents of one’s stomach.  Again, I’m confident you already knew this, but stay with me –you’ll like how all this ends.

GOODagents know how to prep their clients to get their homes ready for the appraiser.  GREATagents know how to read the comps and can tell from the condition rating (C1-C6) why asimilar nearby houseappraisedfor a certain amount.  Then, armed with that information and knowledge, they can give their clients very specific advice and instructions to assure the appraisal comes back as close to what is anticipated.  In many instances, this is what separates the “GOOD”from the “GREAT”agents – it’s all in the details.

If the house across the street (practically the same floor plan, similar square footage) sold for $268,000, a great agent is going to dig into the comps and find, for example, that the “comp” kitchen was given a C3 – regular wear and tear, well maintained.  This great agent is going to look at her client’s kitchen through the eyes of an appraiser and notice that there’s a chip in the sink and the tile has some cracks in very noticeable places, all signs that the appraiser could look less favorably on the kitchen’s condition and issue a rating of C4.  That difference in rating could mean thousands of dollars in decreased appraised value while the repair of these items might only cost $150-200.

If you already knew all of this, I’m flattered you actually made it this far.  However, if there was even a slight “hmmm, that’s interesting” pop into your mind, give us a call.  We would love to sit down with you and review an appraisal to show you what you should be looking for and how to get an appraiser possibly to change his mind – we’re not making any promises, but you’ll be pleasantly surprised to learn that it’s actually more common than a flying pig.

appraisal, mortgage, prioritylending, realestate

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