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Appraisals for Real Estate Agents

by Administrator on Jul 3, 2018 Market Conditions Articles 623 Views

Do some real estate agents / brokers have unreasonable appraisal expectations? If the agent / broker starts your conversation by saying “I already have an appraisal but it’s too high” or they say “it’s too low” you are headed for problems. My last assignment the agent had a high appraisal, he didn’t disclose the value to me and I didn’t ask, but he couldn’t put the deal together so called me and asked for another appraisal. My appraisal was “too low” for him so he asked his money back. I have refunded appraisal fees, not many over 40 years, but if there is a valid reason I will consider it. The value being “too low” is not a valid reason.

When did people, especially real estate agents, decide that if they don’t like your value opinion they shouldn’t have to pay for it? The first appraisal my agent-client got was “too high” but he paid for that one, but then he decided that since my appraisal opinion was “too low” and didn’t work to put his deal together he didn’t want to pay again. I didn’t “bring in” his needed number so my opinion had no value to him.

Some agents and individuals are looking for a specific value and they are not afraid to ask for it, in those situations I just turn down the assignment. When an agent or individual doesn’t ask for a value but still has one in mind it can be a more difficult road. When your opinion doesn’t match up with the agent or individuals expectations you can have an attack dog type of response from them. I’m always open to a discuss comparable sales, income, vacancy rates and / or capitalization rates but, as with most appraisers, those factors are well considered when they are included in my report. These factors are the basis for the appraisal opinion so changing my mind about them generally isn’t easy.

If the basis for the value that is in a clients mind is based on appreciation, my most recent client mentioned that he considered 2.0% per month, then you can consider that a red flag. If you have checked various sources that calculate / display appreciation rates you will find that rates depending on how you calculate them can have a huge variability. One source says the zip code appreciation rate is 18.0% per year and another source says appreciation in the “neighborhood” or “MLS Area” is 5.0% per year. They could both be correct because the greatest appreciation could be coming from condo sales in a specific building that was remodeled and those sales skew the percentage up.

Appraisers have used “paired sales” analyses to estimate appreciation rates in subdivisions, but sales price differences aren’t always about changing market conditions, there are a lot of factors influencing a buyers decision to pay more or less for a property. There are many zip code areas with diverse neighborhoods, some sought after and others not so much. When you blend them you are saying nothing about a specific property.

My most recent agent-client appraisal was paid for with a cashiers check and when the agent didn’t like the appraised value he stopped payment on it. I should have realized that I had a problem with the assignment when no one showed up to pay me at the property and the owner was told not to talk to me. Who tells an owner not to talk to the appraiser? If you are an appraiser and you don’t get paid when you inspect a property you have a potential problem.

It’s news to me that you can even stop payment on a cashiers check but apparently you can. It kind of makes the whole point of accepting a cashiers check as a guarantee way to get paid kind of pointless. You have to wonder about what kind of person you are dealing with when they go out of their way to stop payment on a cashiers check to stiff you out of relatively small appraisal fee.

I have been told that the real estate market in Las Vegas in July of 2018 has become so dire, due to the shortage of homes for sale, that agents like the one I have described are losing control and crossing boundaries that they shouldn’t be. Owners are pushing hard for values that many appraisers just just aren’t willing to rubber stamp. You get these arguments with agents about monster appreciation rates but many of the deals aren’t closing. Red flags should to be popping up at the FHA and the VA with the deals they are receiving, do you think that anyone is paying any attention? I doubt it, they are too busy trying to issue appraisal waivers and use AVM’s and BPO’s to deal with market realities.

Hang on to your hat, things may be getting out of control in the LV market soon. If it does all go sideways it won’t be easy to blame appraisers, like they tried to in 2008 when the government and Wall Street brought it down, because they are doing fewer and fewer appraisals. For appraisers this is a good time not to succumb to the upward pressures being place on them. If sales are $ 150 per square foot there is no way that homes have increased by 25% in the last 6 months and there is no way to justify an increase like that, I don’t care who wants it to happen.

For more appraisal information contact Glenn J. Rigdon MA, MRICS, IFAS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas  (http://www.appraiserlasvegas.com), or http://www.horizonvillageappraisal.com, or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at http://www.linkedin.com/pub/glenn-rigdon-ma-mrics-asa/1a/30b/879/

Article source: http://www.appraisalarticles.com/General-Appraisal-Articles/Market-Conditions-Articles/4705-Appraisals-for-Real-Estate-Agents.html

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