Sometimes I get a stack of “comps” from real estate agents during my appraisal inspections when meeting the agent at the property. Are they good ones? Sometimes they are, but since many times they aren’t, I wanted to highlight some important questions that might be useful to Sacramento area agents (and anyone) when selecting sales to share with the appraiser. I hope this is helpful.

Here are five questions to ask yourself before giving comps to an appraiser:

1. Is the “comp” a replacement? Would buyers in the neighborhood market consider purchasing the “comps” instead of the subject property if the comps were still on the market? That’s really what “comparable” means. The sale should be similar enough that the buyer would have theoretically considered it as a replacement instead of the subject property. If the subject is a fixer, are the comps fixers? Do the comps have standard updates also or are they all remodeled?
2. Are your comps located in the same neighborhood? Keep the neighborhood boundaries in mind when selecting comps by asking yourself where else a buyer would shop for a similar property. It’s fine if there is a reason to use comps outside of the immediate neighborhood, but just make sure the neighborhood is really competitive to the subject neighborhood (not superior). Otherwise the sales really aren’t all that similar.
3. Are the sales of a somewhat similar size? It seems like I get “comps” from agents quite a bit that are incredibly different from the subject property in size. For example, if the subject is 1700 square feet, I wouldn’t be surprised to see sales around 2300 square feet show up in the stack of comps. This is fine of course if the market views these properties in a similar way or there is an extreme shortage of sales, but usually there’s a price premium for the extra living area. Does a buyer looking for a 1700 square foot house typically shop for a 2300 square foot house at the same time? Probably not in most cases.
4. Are the sales recent? If the appraisal is for a loan, most lenders want to see recent sales over the past 90 days. However, if there is a good reason to use older sales, the appraiser certainly isn’t bound to use sales only from the past quarter if they are indeed the best sales. Sometimes real estate agents will give “comps” that are 6-12 months old while ignoring more recent sales though, and that’s suspicious if there are solid recent sales.
5. What are your motives? I think it’s fine for real estate agents to share data for the sake of giving the appraiser insight into how they marketed the property. It’s great if the comps and commentary help answer the question as to which properties the agent used to market the listing. Ultimately agents want to advocate for the sales price, which is fine in the eyes of their clients, but at the same time agents can often say and do things that pressure the appraiser to “hit the number” – which is not fine. When advocacy for a client becomes coercion for the appraiser to meet a certain value, that’s not a good thing. That’s why it’s important to check motives and use language in a way that does not pressure for a higher value. Check out a previous post on talking to appraisers (things to say and not say) for helpful tips.

Sacramento area Realtor Steve Ostrom and I discussed this issue of giving comps to appraisers in a video below (or click here).

How do you communicate with appraisers? What things do you say and not say? Do you have any frustrations, tips or questions?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

To give comps or not give comps? That is the question. I met up with Realtor Steve Ostrom last week and we talked about whether a real estate agent should give an appraiser “comps” or not when meeting the appraiser at the inspection. Steve talked about why he always meets the appraiser at the property and I gave some tips for interacting with appraisers around this issue. Due to HVCC, there is still some confusion over whether agents can even talk to appraisers, but they definitely can (just don’t try to pressure for a certain value). Check out the video below (or here). Let me know what you think. I’d love to hear from other agents and appraisers especially. Any questions?

NOTE: In quite a few cases the “comps” provided by real estate agents are really not all that “comparable” to the subject property. It can be valuable when agents share their market insight with appraisers, but my advice to agents is to make sure the sales really are comparable and located in the same market area. This comes back to the difference between a property that is truly competitive / comparable (“comp”) to the subject and a sale that meets a certain price level.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

I met up with Realtor Steve Ostrom the other day while at Real Estate Bar Camp Sacramento (a great event). Steve interviewed me and we talked about home owners getting an appraisal before listing a home, finding comps and other issues. Check it out and let me know what you think.

Catch up with Steve and his wife Heather at www.rosevilleandrocklin.com or on Facebook or Twitter. Thanks so much Steve & Heather.

If you have any real estate appraisal, consulting, or property tax appeal needs in the Greater Sacramento Region, contact me at 916.595.3735, by email, on our appraiser website or via Facebook. 

I’m heading to an appraisal inspection shortly in Roseville and I wanted to share some preliminary research. I find it interesting to take a panoramic glimpse of citywide data like this. What do you see in these trend graphs below? What stands out to you? The graphs are based on all single family residential sales and listings in Roseville from Sacramento Metrolist. I’d love to hear your comments below.  

While on the subject of Roseville, I wanted to mention that one of my Twitter friends, Realtor Steve Ostrom of Coldwell Banker, posted an interesting video a couple of weeks ago about shadow inventory in Roseville and Rocklin. It’s interesting to look at what the numbers are saying. How many houses are in the process of foreclosure? How many loans have defaulted but not listed on the market yet? Statistics like this are very important to watch and they can be indicators of what is to come too. If you can’t see the video below, then click HERE.