by Michele Newbern Gillis
Staff Writer
With the sale of homes on pause or even stop mode, many appraisers are having a tough time finding homes to use as comparables.
But you may be able to help them out.
Though foreclosures, auctions and short sales have been affecting comparables, Realtors coming forth with information can be more valuable than you may know.
Information such as surveys, inspections, Multiple Listing Service information and notes from past listings and sales on properties they are appraising can come in very handy to appraisers.
“The more information you can give to the appraiser, the better,” said Austin Hollis of Hollis Appraisals. “We are market reporters. Two years ago, we’d go into a subdivision and there’d be 10 sales. Now we go into that subdivision and there are two sales. That really hurts us. A lot of times, we have to throw out one of those sales anyway because it was a short sales or a distress sale.”
The Northeast Florida Association of Realtors’ Beaches Council brought three appraisers - Hollis, Steve Wright of Florida Certified Appraisers, Inc., and Lynn Hileman of Hileman Appraisal Group - for a panel discussion at Queen’s Harbour to discuss how foreclosures, auctions and short sales affect the comparables they use to create their appraisals.
Hollis said they are seeing a real affect in some subdivisions from short sales because they aren’t always good to use as comparables if there aren’t other short sales to compare it to.
The No. 1 thing directing their appraisals is the drop in sales prices, which results in lack of comparables.
“When we look at listings and they say ‘short sale potential’,” said Hollis, “to me that is a red flag that there is going to be a low offer on the property. Is that a good property to use as a comparable sale if there are no other short sales in the subdivision? Let’s say there are two sales in a subdivision and one is a short sale. My thought is throw it out because it is not a true reflection of the market. But, let’s say I go into a subdivision and there are four listings that all say short sale. Now, short sale has become the market in that one particular isolated subdivision.”
The appraiser said what they try to do is to get it as close as possible to fair market value, but it’s getting hard to do. They have to do a lot more research since there aren’t comparables always readily available.
“As the market has tightened up, the lender’s restrictions have tightened up as well,” said Hollis. “You end up in a conflict trying to please the lender on their end, trying to be honest on our end and trying to read the market and where it’s at and where it is going. As appraisers, that is a problem we are all seeing right now.”
A way to handle the new restrictions and ensure an accurate appraisal is to go back to those involved in the original transaction, including the listing agent and the selling agent, and reopen the lines of communication.
“I would encourage you, especially in the market that we are in now, to work with your appraiser,” said Hollis. “Give your appraiser any information you have on the property. After all, I’m not an advocate for your property. I’m trying to be as honest and objective as possible.”
Many Realtors don’t even know who the appraiser is, but if they ask the lender and tell them that they would like to meet the appraiser at the property, there shouldn’t be a problem.
“I think most appraisers would be happy to meet you and would be happy to hear whatever you have to say,” said Hileman.
Other items discussed during the panel were contracts that show how appraisers deal with all the incentives being offered on properties right now and how are they factored in on an appraisal.
“The incentives are noted and adjusted for,” said Hileman.
What about older neighborhoods where there hasn’t been sale in over nine months, how do the Realtors price the home?
Wright said to see if there are any other listings and check out the competition first.
“What is the motivation of the other people in the neighborhood?” said Wright. “As Realtors, you need to weigh the competition first and see how motivated they are to sell.”
Wright said he would even go to neighboring communities a few miles away to see what similar homes are selling for if there were not enough comparables available in that particular neighborhood.