Whether an appraiser is working on a residential or a commercial appraisal assignment they always consider the sales comparison approach since analyzing properties using it is an integral part of the appraisal process. With the slow pace of some real property markets there are in some areas few proximate, recent sales that can be used for comparison. The quality and quantity of the sales selected must be sufficient in order to form a reliable opinion of value, but it is important to note that appraisers in the last few years have had to; expand their search areas, go farther back in time to find sales that are similar and consider sales that require greater adjustment. Simply put, appraisals have become more difficult to complete.
Real estate sales prices in some markets have continued to fall. Here in Las Vegas we lived through another year of price depreciation in 2011 and there is no way to conclude stability when factual evidence says otherwise. As a Realtor and homeowner I would love to see sales evidence point upward toward increasing prices but that has simply not been the case.
There has been a great cry from agents and their representatives that appraisers are responsible for holding back the market by artificially decreasing appraised values. That the use of bank foreclosure sales (REOs) and short sales should not be considered. Some attempts to force appraisers to turn a blind eye to these sales have even been made. If considering a fictional reality is ever forced upon appraisers the appraisals and value opinions expressed would also be fictional.
It's not difficult to understand what has been happening in the real estate markets with REOs and short sales. if you are a buyer looking to purchase a used car in your local market and many cars for sale at discount prices because they we repossessed, do you think that the offering of all those cars might affect the value of your car or your neighbors car? Of course it would, it's a simple supply and demand concept that we all deal with daily.
So why is it so hard for sellers and their agents to accept what is happening in the markets? From my perspective its one of those "see no evil, hear no evil, speak no evil" scenarios. Owners and their agents often assign an asking price to a property without finding out about its true market value before hand, then they take sales contracts for it that can be well in excess of its market value and in the final step sellers and agents become irate and disillusioned when the
property can't get mortgage funding because it just won't appraise near the contract price.
It's easy to convince some people that "market price" should be "market value," and that what a willing buyer and willing seller decide upon should be all thats required to transact a deal. The fact is that market value should relate to supply and demand factors and not simply be based upon good salesmanship.
For more residential or commercial appraisal information contact Glenn Rigdon
, MA,MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email or via his business website Horizon Village Appraisal
), or you can also click on “Contact Us” on the home page of this website.
Article source: http://www.appraisalarticles.com/General-Appraisal-Articles/2934-Why-Is-My-Appraisal-Low.html