(part 1 0f 2)
When I started in the business (20+ years ago) there was a funny comic depicting how the seller, buyer and appraiser looked at properties.
How the seller valued the property…
What the buyer saw…
…and finally how the appraiser valued the property.
At the time 75%+ of the financing was FHA and appraisers were sticklers about condition of the property. In effect, every sale had 2 inspections- one by the home inspector and then another one by the appraiser. We (seller, buyer and agents) worked through the issues and deals closed.
Today, we are dealing with a “different” real estate market, however establishing a price on a property is still reflective of the 20+ year comic….seller’s value, buyer’s value and the mortgage appraisal. Lots of sellers utilize purchase price + appreciation + investment in property = list price. Buyers are often more sophisticated and arrive at value by comparison shopping….how does this 4 bedroom, 2.5 bath, 2 story differ from the one down the block? Finally the appraiser is the least subjective following fairly stringent guidelines when appraising a property.
(stay tuned for part 2 of 2 )
Related Article: What Do Buyer’s Really Know