I’ve been hearing from a few real estate agents that their brokers are telling them to give appraisers the first page of each contract to help show support for the market’s acceptance of a certain price level. Is this a good idea? Here’s my take.
I think it’s great when Realtors share data about a listing. It’s helpful for appraisers to sift through first-hand information to shape an understanding of how the market perceived the subject property. It’s definitely a plus to see contracts instead of just hearing “there were multiple offers”. However, here are a few points to consider:
- What about the other pages? The first page is a very limited portion of a contract. There could always be an addendum or a requested credit or concession on another page of the contact that effectively reduces the contract price.
- A focus on sales and market knowledge: It’s a nice touch to get the first page of a contract, but I’d rather have Realtors offer data in the form of recent sales, listings AND any insight into how buyers perceive the market. What are buyers willing to pay more for in the neighborhood? Is there something premium about the subject street? What facets of the neighborhood market impact price? What sales did you use to support your list price?
- Supplementary data: Keep in mind appraisers use sales and listings in an appraisal report to support value – not the number of offers (even though that can be supplementary data). I’ve had agents bring me nothing but the front page of multiple offers, which is nice, but the number of offers and level of offers is secondary to more primary data like sales and listings.
- Contract price does not equal value: Inventory has been so low in the Sacramento market that some buyers are offering far above a reasonable value. This means offers might not always reflect value. There are several reasons why buyers are willing to overpay for properties right now, which is something appraisers are watching closely.
Summary: In short, I’d love to get the first page of each contract from agents (and have the agent let me know about any concessions, credits or addendums that might impact the price level on the first page). Ultimately though, if a Realtor wishes to communicate more thoroughly about a property, I’d prefer to hear about more “meaty” market items like recent sales, listings and insider-knowledge of the neighborhood.
Some tips for talking with appraisers: If you’re looking to communicate more effectively with appraisers, check out Quick tips for agents for talking to appraisers and Talking to appraisers in today’s changing real estate market [infographic].
Any questions, thoughts or stories to share?
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I’ve found that bringing the entire contract (s) have been helpful. Whatever evidence we can provide to support how we arrived at that number will help ease the appraisers burden. Bringing all offers, all pages, recent sales, AND upgrades/history of the property. I’ve never had an appraiser say I gave him too much info! Thanks Ryan! Nice to hear from an actual appraiser what you are really looking for!
That’s great to get so much information Jennifer. Good for you! Thank you for doing that. I wouldn’t complain either. I appreciate it very much when agents try to lend insight into what they see the market doing or why they listed a property at a certain level. It always puzzles me when I get only the first page of each contract and zero actual sales in the neighborhood. That does happen and it feels a bit lopsided in my mind. Keep up the great work!!