Real Estate Analysis and Commentary in [CITY]

How do home appraisals vary so much?
February 28th, 2024 10:40 AM

One of the common complaints about the home appraisal process is that appraisals for the same property seem to vary widely in value. However, there are actually good reasons why different appraisals may come to different conclusions about a home's worth.



Appraiser Subjectivity


While appraisers follow standard practices, there is still an element of subjectivity to the valuation process. Two appraisers may weigh comparable property factors differently or have slightly diverging views of a home's condition. Different math can be applied reasonably.


Timing of Market Data


Recent sales are most relevant, but appraisers may disagree on what defines "recent" in a volatile market. Comparables from the last 6 months vs last 3 could sway the value. Sales may be increasing or decreasing quickly too.


Comparable Selection


Appraisers have leeway in choosing "comparable" properties. Close size and features are ideal, but availability varies. Substituting a slightly lesser comp can affect the final value figure.


Property Condition Issues


Minor issues like minor cracks may be documented inconsistently. Without repairs, one appraiser may adjust condition more than another. Condition also changes over time.


Market Fluctuations


Even in a short window, the housing market is rarely static. Shift in demand, inventory, or interest rates could make the same house legitimately worth more or less just days later.


New Information Emerges


Occasionally a problem is missed on the first visit but spotted later. Or renovations completed after an earlier appraisal impacts value. Recent sales data too.


Appraiser Qualifications Vary


Experience level, market knowledge, and analytical ability differs among individual appraisers, licensed or not. A senior pro may spot nuances a newer one misses.


Inaccurate Comparables


If an appraiser references comparables that turn out to have incorrect details like size, it throws off the whole analysis versus accurate datas.


So while inconsistent appraisals can frustrate parties involved, reasonable variability is normal given the art as well as science behind valuation methodology. The goal is an impartial opinion reasonably supported, not precision. Communication helps address large off-market swings.
Posted in:FAQ's and tagged: FAQ's
Posted by Genie Motto on February 28th, 2024 10:40 AMPost a Comment

Subscribe to this blog

Recent Posts:

Archives:

Categories:

FAQ's (6)

My Favorite Blogs:

Sites That Link to This Blog: