(Mis)Reading the Signs Pricing real estate is fundamentally precedent-driven. In other words, if you want to establish an estimated fair market value for “Property H,” you first need to determine what Properties E, F, and G sold for. In Realtor (and Appraiser) lingo, E, F, and G are called Comp’s (“Comparable Sold Properties”), and the compare-and-contrast process...Read More
It’s Not A Comp Till it Closes What do you do as a listing agent if the home you just sold (subject to the Buyer obtaining financing) presents an appraisal challenge? That has been a frequent occurrence in the Twin Cities this year as prices rebound, but the most recent sales — and the ones which appraisers...Read More
Appraisal Version of “Garbage In, Garbage Out” Homes under contract that don’t appraise have been a big issue in the Twin Cities housing market all Spring. See also, Jim Buchta’s “Low Home Appraisals Hold Down Area Values” in this past weekend’s Star Tribune. What is the most common reason? A. Multiple offers drove the price...Read More
Supportive — and Unsupportive — Comp’s In appraiser (and Realtor) lingo, a “supportive” Comp (“Comparable Sold Property”) is one that substantiates the value of the subject property, i.e., the one that the Buyer is seeking to obtain a mortgage on. Ergo, an “unsupportive” Comp is one that . . . torpedoes the value of the...Read More
How do appraisers account for a bowling alley in the basement? Or some other unusual feature, like a helicopter landing pad, 10,000 gallon aquarium, basement basketball court, or dozens of other unusual — and therefore hard to estimate — home features? They don’t. Huh?? Self-Cancelling Features If it’s possible, the preferred strategy in such situations...Read More
Weighing Comp’s and “Kind-of-Comp’s” The cornerstone of establishing market value for a given property is the CMA, or “Comparative Market Analysis.” As prepared by both Realtors and Appraisers, it consists of selecting a peer group of three homes (“Comparable Sold Properties”), then going through a compare-and-contrast process sizing up each of the Comp’s relative to the “subject”...Read More
