Home Buyers (and Sellers) can be excused for thinking that the purpose of an appraisal — typically, done at the behest of the Buyer’s lender — is to determine the home’s fair market value. Not exactly. Rather, the purpose of the appraisal — at least one done in the context of a home sale —...Read More
The REAL Purpose of Appraisals What is the purpose of an appraisal, in the context of a residential real estate sale? To make sure that, if the Buyer defaults on their loan and the lender ultimately forecloses, the value of the collateral is sufficient to make the lender whole. Or, in plain English: if the...Read More
Financing “Vote of Confidence” One of the best, early signs that the Buyer’s lender is on top of things — and a good omen for final underwriting approval generally — is when the lender orders the appraisal for the day after the Buyer’s inspection removal deadline. That’s in contrast to the usual timetable, in which the...Read More
Comparing Honey Crisps to Braeburns One of the more quizzical looks Realtors get is when they (try to) explain to a prospective home Seller that their neighbor’s house isn’t a “Comp” (Comparable Sold Property). In plain English: it isn’t relevant — at least directly — for pricing their home. For the uninitiated, a Comp is one of the...Read More
Calculating Premiums & Discounts in a Comparative Market Analysis (“CMA”) How much value do Realtors and Appraisers assign to an upstairs Laundry when estimating a home’s fair market value? The honest answer is, I’ve never seen it broken out as a specific adjustment, with a corresponding price tag (or even range) assigned to it. My...Read More
“He Who Adjusts Least Adjusts Best” When it comes to pricing a home off of Comp’s (“Comparable Sold Properties”), the trick is to minimize both the number and absolute magnitude of the adjustments. The ideal would be a condo identical to its peers in every respect — floor plan, size, condition, location, market conditions, etc....Read More
