Some of you may know that I'm also fairly active a blogger on ActiveRain.com, which is a real estate oriented bloging site. An article appeared there recently that I wanted to share with you and comment upon. It had the same title as above and may be read in its entirety at at http://tiny.cc/K1BCh. The post was written by Tony Grego, a mortgage lender with the American Bank Mortgage Group in Indianapolis. Tony was trying to explain why sellers sometimes become so upset at the appraisals that they are given copies of by lenders and why appraisers may not give homes as much credit as the owners think they should for any upgrades that they might have made. It's a good read.
I hit the same thing quite often when I do Market Analyses for client and prospects. Many times the unique features or upgrades that the homeowner has made just aren't going to influence the price as much as the homeowner had hoped or felt that it would. I try to do a pluses and minuses analysis for each house that I evaluate, with pluses being things that might add value above the average and minuses being things that might detract from that value. Sometimes one big minus - perhaps being located on a busy road - will offset many pluses of smaller value - granite in the kitchen or a second floor laundry or other nice to have items. That is especially true if the "comps" that I'm using have similar plus features but not the big negative feature.
I actually avoid the use of the word comps or comparable in my Market Analyses because, for the most part, I have not been in most of those homes. I use the word similar instead and explain that from a data point of view they are of similar size, have a similar number of bedrooms and baths and have other features that are similar to the house that I'm analyzing and reporting upon. That makes more sense to me. So, go read the ActiveRain article and let me know what you think. It might help you understand why your appraisal came in lower than you had hoped.