The last thing either buyer or seller wants to hear is that an appraisal fell below a property’s contract price.
If it has happened to you or someone you know, you probably would join my occasional chorus of contempt for the appraiser. And these days, with automated appraisals and out-of-town appraisers, the song we sing may well be justified.
However, an appraiser Ryan Lundquist has written a blog post that explains why a short appraisal in the face of what appears to be market value may be correct, even in the case of multiple bids.
In his post, he notes that “offers above asking price are not always indicative of the worth of a property or appreciating values for that matter.” Lundquist points to elements that can distort value, among them the following:
- An offer above the asking price that is merely a strategic move to overcome any competition or hammer home to the seller the buyer’s high level of motivation;
- Low interest rates, which makes borrowing not only cheap but leads to offering what amounts to other people’s money;
- Paying more than a property truly happens to be worth.
As Lundquist puts it, “All things considered, it’s important for appraisers to evaluate each transaction and understand the nature of the sale for the property being appraised as well as the comps.”
I can’t argue with that sentiment. Not at all, though I’ve run into appraisers who seem unaware or blithely uninterested in exactly what is important to them, their profession, buyers and sellers.
Tomorrow: Weekly Roundup
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Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022