Earlier this year (April I think) I had a home appraised, the appraiser came back with 435 thousand. I am now selling the house and the Real Estate agent I am using says we can ask 499 I said 489. He looked at a couple of recent sales and said it could sell for that amount. I know this is what is called COMPS. Anyway I am really not satisfied that it is the real value of the house. I don’t think he did it correctly so now I am thinking he might just want to pump up the value so I could list with him, which I did.
I am converned that the home might not appraise for the amount and will be wasting my time and I really want to sell ASAP.
What is the proper way to check comps? I have been told it could bethe average of the last three or five homes that were sold. is this correct? OR is it the average of the highest or lowest of the last three or five. If so how do you really find the last three or five and how far back do you go.
I did follow a link on this site and paid to get the last couple of houses sold but even that was not correct, as it left out other huses that sold in the area two months ago…
Any advice is appreciated.
Residential apprasials for the most part are done using comps from 6 months back within a 1 mile radius of the subject property. In a rapidly flucuating market, I’d only be interested in sales from the previous month.
A comparable property (comp.) is one that would “substitute” for the subject property. Contrary to popular belief, that doesn’t mean it has to look anything like the subject. Anything that is similar can give you an accurate value. If one of the comps sold for 500k 2 months ago but was 250 sq ft bigger, or had a pool, or had an extra garage, or no basement, you make adjustments based on the perceived value of the superior/ inferior features to derive at the value for your property. A pool in Maine may have no superiority of the subject property-without a pool and thus wouldn’t add any value. A pool in Phoenix would have tons of value compared to a property without.
“Average” is a bad word in appraising. An appraiser should never just take an average of 3-5 comps to get a value. They must give the most weight to the most similar comp with the fewest adjustments needed (interpolation). An apprasial is just an opinion of value. It’s impossible to predict the future and to “know” the value. If you think your property should be listed for less, that’s your call to make, the agent is working for you.
For the most part they will try to get you to sign and in doing that they’ll “YES” you to death. It’s human nature, after all they are getting a paycheck from you.
That said- be wary of what they tell you and do your own due diligence by reading some posts by some very smart people in this forum. Like DannytheGreat.
I didn’t even pay him to say that.
Thanks Danny…
I dont think the property is not worth the value they set. I am sll for getting as much as I can, after all who wouldnt? I am only questioning how it could fluctuate so much higher in a few short months. Either the current value set is wrong or the Appraiser I hired in April was wrong. It seem like different appraisers will give different value.
If I had the money I would get three different appraisers just to see what each one will come up with. Should be interesting…
You probably should though… 
Yes, if you got 3 different appraisals, they would all be different. Appraisers are happy if they can get within 10% of the final sales price. It is nothing more than an opinion of value. An RE agent who is getting paid on commission will have a conflict of interest in giving your property a real value. It’s in your agents best interest to price the house to sell but perhaps they are being a little overly optimistic. If some time has passed and your not getting any bites from potential buyers, it’s time to lower the price.
If you haven’t already asked to see your Realtor’s comps then ask him/her. You have hired the Realtor as your employee, and as such they are obligated and have a fiduciary responsibility to disclose to you, in detail, all information used to evaluate your property and why. A Realtor’s Comps should be updated on a monthly bases and pricing of properties should reflect these updates at various intervals. Comparable, like-kind properties are adjusted to come up with a fair market price for your property. If your Realtor doesn’t provide this information, report him/her to the Real Estate Commission located in your state. Your Realtor is there to advise you based on their findings, it’s your job to understand where the information is coming from. You both decide what’s a fair market value for your home based on these findings.
An appraiser will offer an opinion based on 3-4 comparable properties located within a 1-5 mile radious of where your property is located. Each appraiser is different and licensed by and uphold laws through their individual states. Keep in mind a Realtor will offer comps based on most recent sales and like-kind properties. An appraiser will give a more detailed value based similar comps, as well as increasing and decreasing the value based on:
Neighborhood - Boundaries, characteristics, and market conditions
Depreciation/Appreciation - Pysical, Functional, and Economic obsolescence
Improvements - Interior/exterior, effective age, etc.
Most appraisals are only good for 60 days due to changes in the real estate market. Your appraisal will show all the above calculations in detail on the report. A good inspector will indicate problems or benefits relating to the actual structure of the property as this will effect the property value as well.
Based on what your Realtor gives you, if the value is too high then lower the price. It’s up to you to instruct your Realtor as to what you want…not the other way around.
The best way to check comps to ask a few agents what they think or have a good relationship with an appraiser in that area.
Comps, appraisals are part comparing similar parties, but also part conjecture. They will usually be in the range of + or - 10% of the actual sales price. The more experienced the agent and appraiser in an area, the closer they will be to the value. In your case, a hot market can fluctuate the numbers in a matter of months.
If you fear the home is overpriced, list it a little lower. If it’s priced right, you’ll have multiple offers. In our market, the sellers often get 5-20k more for a well-priced home because the buyers start competing.
You probably should though....
Can I borrow one of your rubber checks?
Sorry, with Nuevo Riche only accepting unmarked bills in a paper bag I put the checks through my crosscut shredder. You can have the confetti for use in a bird or hampster cage.
Well Just FYI, The first buyer came last Friday and has made an offer. The agent of the buyer said they (wife and husband) are very motivated because she just lost out on one house by making an offer that was too low. Another buyer came yesterday is considering it also
Her offer is 470 on mine and the asking price is 489. I have a few more appointments for the week, so I will see if I get more offers before I accept or not… Love this business, I am so happy I don’t even want to eat now… 
I was a little doubtful with the price because I did not do anything to the kitchen and it really needs fixing up plus it’s an old house. I did knock out and rebuilt the bathroom which has seperate shower and jacuzzi. I put decartive tiles on the wall and ceramic tile on floor, is something to see, plus did a lot of other fixing up like nice lighting and chandliers the house. They also liked that the house has 4 bedrooms instead of the usual 3 you find around here.
I have to say buyers really appreciate when you put nice stuff in your house. Yippee!!! Thanks for all the ideas and suggestion…I love this place… I will tell you how things turn out.
You’ll need that bedding for yourself once you graduate the university…that is until you return the favor and let some others in on the “secrets”.