Can appraisers use listings too or just sales?

One of the biggest complaints I hear and read about is that appraisers are only using the most recent sales instead of current listings. The thought is since the market is increasing, appraisers end up low-balling every appraisal because they don’t really (or cannot) use listings. Is that how it works?

listings vs sales in appraisals - by sacramento appraisal blog

Listings Show the Direction of the Market: First off, listings are important for any real estate market because they can help illustrate the trend of values. When listings are lower than the most recent sales, it probably indicates the market is declining, while higher listings show the market is likely increasing. If listings are priced similarly to recent sales, it shows values are probably stable. This is a basic real estate principle, but let’s be honest that sometimes appraisers clearly misinterpret this phenomenon. At the same time there are also many cases where properties are simply priced too high for the market. Maybe the owner or agent was too aggressive or didn’t pay close enough attention to neighborhood trends. Or maybe an investor picked the wrong “comps” when trying to flip a house. I’m not looking for a pity party for appraisers who got it wrong by any means, but let’s be realistic about other parties missing the market by incorrectly pricing a listing.

A Date of Sale Adjustment: Contrary to some opinions out there about appraisers NOT being able to consider listings, appraisers have what is called a Date of Sale adjustment which allows them to adjust for any value difference that has occurred since the comparable sales went into contract. For instance, if all listings are higher than the most recent sales and other metrics also show the market is increasing, appraisers can give an adjustment to each comparable based on how much the market has increased since the CONTRACT DATE (not the close of escrow) for each respective comparable sale. In short, it is a myth in real estate to believe appraisers cannot use current listings in a valuation. That’s simply not true.

date-of-sale-adjustment-by-Sacramento-Appraisal-Blog-2

Of course the real question is whether appraisers are giving these adjustments or not. This one “Date of Sale” adjustment or lack thereof can be the X-factor in an appraisal being accurate or not. If you feel the appraiser did not give an adjustment, you should dispute the appraisal and ask the appraiser in writing to explain why this adjustment was not given. You may want to ask why a Date of Sale adjustment was not given to comparable sales when listings seem to be priced higher. While you’re at it, make sure to review the appraisal and look for the most important things that really impact value.

Question: Any questions, stories or thoughts to share? Feel free to comment below.

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I’m a 40 under 40 nominee

Sacramento Business Journal 40 under 40 LogoI wanted to share some exciting news. I am a nominee for the Sacramento Business Journal’s “40 under 40” award where they recognize 40 business leaders younger than 40. I know you’re shocked I’m under 40 because of how “distinguished” (gray) my beard is, but I’m not far from the 40 club. In all seriousness, it’s a real honor to be listed among such tremendous business leaders in the Sacramento area, and to have made the cut to the top 100 list. Best wishes to everyone as the final 40 are selected in December. You can read more about 40 under 40 and nominees here.

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook

What’s wrong with this house?

Put your real estate thinking cap on and tell me what’s wrong with this house below. Take a look at two photos from the street and an aerial image from Google Maps. What story might a house like this tell? What marketing challenges would this property face? I’d love to hear your thoughts in the comments below.

Win a $5 Starbucks Card: I see a particular issue with this house, and I’ll email a $5 Starbucks gift card to the first person to mention it in the comments below.

garage door installation gone wrong - Sacramento Appraisal Blog

A closer look at the garage - Sacramento Appraisal Blog

House with issues - Sacramento Appraisal Blog

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

Unemployment declined from March to April in Sacramento County

New unemployment stats are out for Sacramento County. The unemployment rate dropped from 11.4% to 10.5% from March to April 2012. This is a big drop for one month, so we’ll have to see what coming months yield to see if this is just a blip or not. Whatever the case, it’s nice to see the overall downward trend in unemployment over the past year. It’ll only mean good news for the housing market to keep seeing this number decline. Source: EDD.

Unemployment Rate January 2009 to April 2012 - by Sacramento Home Appraiser - 530 pixels

Here is a graph of unemployment in Sacramento County since 1990 to give a panoramic view of the job market. It’s amazing to consider the history of where we’ve been (and maybe a bit depressing too).

Unemployment in April 2012 - graph by Sacramento Appraiser - 530 pixels

Do you want to share these graphs? If you’d like to use these graphs on your blog or website to be a resource to your readers and clients, please do so. If you need a larger size for a presentation or newsletter (or your blog), let me know. Please see my sharing policy for details. As always, thank you for linking back to me and keeping my images intact. It’s a huge honor when others share my content.

What do you see above? Anything stand out to you?

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