Cash is Still King, But Appraisers Aren’t Court Jesters
What is someone’s home worth? Short answer, of course: whatever someone is willing to pay for it. And if they’re buying with cash, that’s all the answer one needs, right? So, we all know the real answer is, “for the amount at which it appraises.” As real estate brokers and agents, you already know this, so why am I even talking about it? Think of this as a quick refresher course.
One of the big “factors” used in determining the value by an appraiser – who quite often seems to take his or her job REALLY seriously – is the overall condition. Hold your “well, duh” comments for now. 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. But you already knew this, right?
Good agents know how to prep their clients to get their homes ready for the appraiser. Great agents know how to read the comps and know from the condition rating why a nearby house that’s similar appraised for a certain amount; armed with that information and knowledge, they can give their clients very specific advice and instructions to assure the appraisal comes back 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 slight chip in the sink and the tile grout has some holes, signs that this kitchen could get a rating of C4. That difference in rating could mean thousands of dollars in decreased appraised value – the repair of these items might only cost $150.
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 – that’s actually more common than a flying pig.