Residential property appraisal reports can be quite complex documents full of extensive market data and documented procedures for estimating value. For the novice, as well as the seasoned real estate professional, the reports can be difficult to understand, and most users simply look for the statement of value. This article helps takes you through insights on making sense of the reports by residential real estate appraisal Philadelphia PA.
You can see it in everyday practice. Is it just a coincidence that a size adjustment of say $30 per square foot seems to be just right in equating two or three comparables? Is that only what the market seems willing to pay (or subtract) for the difference in size, or is there something else at play here?
These reports will note any unique characteristics of the property and of the surrounding area, such as a specific architectural style of a property or a major highway located adjacent to the parcel. They also consider additional factors of a property including the condition of the roof and any renovations successfully completed.
The techniques and figures they use find their way into the market. Accordingly, appraisers must be aware of the influence they have and the responsibilities that come with that. Consider a situation where you are asked to appraise a home listed in the local MLS in which you find through market research is priced well above the market.
Suppose you find that there seems to be no real reason for this; that the home does not have any physical or location characteristics that justify such a price. Your duty in this situation is clear, but you know that your lending client will fire you if you appraise this property at market value and spoil their deal. Hopefully your duties under USPAP will be enough to convince you to do the right thing. But if you still are not sure, think about some things that will happen if you do the wrong thing.
Being listed in MLS, if that home does end up closing at the inflated price, it will show up as a closed sale in MLS. When brokers and agents conduct a competitive market analysis of another similar home they want to list, the inflated price of the property you over appraised will enter into their research and influence the list price the agent recommends to their seller.
If the comparables have superior characteristics in relation to the subject property, then a downward adjustment is undertaken to the valuation of the subject property. On the other hand, if the comparables have inferior qualities compared to the subject property, an upward adjustment is done to the valuation of the subject property. Utilizing all of the market data, the appraiser will determine a final valuation for the subject property.
In conclusion, the appraiser often acts as a traffic cop. Although the presence of a cop on the road will cause most sensible drivers to pay greater attention to the rules of the road, the cop must be will to act when necessary. The same basically holds true for valuations. Is the valuation reasonable? Does it reflect normal market variations? Like the traffic cop, the appraiser has a real influence over the lives and fortunes of others.
You can see it in everyday practice. Is it just a coincidence that a size adjustment of say $30 per square foot seems to be just right in equating two or three comparables? Is that only what the market seems willing to pay (or subtract) for the difference in size, or is there something else at play here?
These reports will note any unique characteristics of the property and of the surrounding area, such as a specific architectural style of a property or a major highway located adjacent to the parcel. They also consider additional factors of a property including the condition of the roof and any renovations successfully completed.
The techniques and figures they use find their way into the market. Accordingly, appraisers must be aware of the influence they have and the responsibilities that come with that. Consider a situation where you are asked to appraise a home listed in the local MLS in which you find through market research is priced well above the market.
Suppose you find that there seems to be no real reason for this; that the home does not have any physical or location characteristics that justify such a price. Your duty in this situation is clear, but you know that your lending client will fire you if you appraise this property at market value and spoil their deal. Hopefully your duties under USPAP will be enough to convince you to do the right thing. But if you still are not sure, think about some things that will happen if you do the wrong thing.
Being listed in MLS, if that home does end up closing at the inflated price, it will show up as a closed sale in MLS. When brokers and agents conduct a competitive market analysis of another similar home they want to list, the inflated price of the property you over appraised will enter into their research and influence the list price the agent recommends to their seller.
If the comparables have superior characteristics in relation to the subject property, then a downward adjustment is undertaken to the valuation of the subject property. On the other hand, if the comparables have inferior qualities compared to the subject property, an upward adjustment is done to the valuation of the subject property. Utilizing all of the market data, the appraiser will determine a final valuation for the subject property.
In conclusion, the appraiser often acts as a traffic cop. Although the presence of a cop on the road will cause most sensible drivers to pay greater attention to the rules of the road, the cop must be will to act when necessary. The same basically holds true for valuations. Is the valuation reasonable? Does it reflect normal market variations? Like the traffic cop, the appraiser has a real influence over the lives and fortunes of others.
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