Guilt by Association? Not Necessarily
As a listing agent trying to make sure their client’s home appraises, I know the concern: if the Comp’s you provide to the Appraiser are all less valuable than your client’s home (known as the “subject property”), they’ll drag its price down, too.
Not necessarily.
Step #1 is to realize that a good Appraiser is going to find — and price off of — lower-priced Comp’s whether the listing agent provides them or not.
That’s their job.
Trying to Clap With One Hand
Specifically, the Appraiser is supposed to place the subject home on a continuum of recent sales, identifying homes that are incrementally less and more valuable.**
Called “bracketing,” that’s the essence of establishing a home’s fair market value — or, in the lender’s case, estimating how much they can realize selling their collateral if the borrower (née home buyer) defaults.
Step #2 is understanding that the Appraiser needs to distinguish the lower-priced Comp’s from the subject home.
A good listing agent can facilitate that analysis, first by knowing the Comp’s; second, by identifying, accurately, the adjustments (differences) between the Comp and the subject property.
**Comparing Apples & Oranges? Not Exactly
Which leads directly to Step #3: sharing that information, professionally, with the Appraiser.
Personally, I always try to meet the Appraiser at my client’s house; provide my CMA (Comparative Market Analysis) and offer to field any questions the Appraiser has; then — perhaps most importantly — leave so they can do their job. 🙂
P.S.: Clients know my (slightly cheesy) line about appraisals: “you can compare a Granny Smith apple to a Braeburn . . . but not an apple to an orange.”
See also, “More Than This, Less Than That“; “Real Estate Bracketing ” Advanced Beginner Version;” “The Science ” and Art ” of Doing Comp’s“; ““Bracketing,’ Explained“; “The WAY Out-of-Town Home Appraiser”; and “An Ounce of (Real Estate) Prevention.”
