Not an appraiser sent out by the bank, but one I actually find and hire. I can put a lot of faith in that estimate, right?
First, disclaimer: I am a newbie and have only flipped two houses, both were my personal residences that I lived in for over 2 years…
That said…in ANY profession there are competent practiioners and there are “others”. Your appraisal is only as good as the appraiser that does it. How much experience does he/she have? How familiar is he/she with the area? How comparable are the comps?
I have two appraisals in my possession that were done on my current home within a few months of each other. One is for $200k the other is for $232k. Which one is more accurate? IMO, neither LOL. The first one was too low, the 2nd too high. My house SOLD twice for $210k [fell out due to buyers’ not qualifying for their “preapproved” loans…grr] and is currently in escrow at $220k.
When I had it listed for $210k I had at least 5 showings a week (a lot for this area). I got a full price offer within 3 weeks at $210k and another investor that was waiting in the wings…when it fell out of escrow, he picked it up at $220k with us paying all his closing costs and renting it back for a month. So, how much is it worth? ???
Part of the problem with my home is the comps. I live in a rural area that was recently discovered by a bunch of custom home builders. All of a sudden the house I purchased 3 years ago for $67k is surrounded by $400k-800k custom homes! My land alone is probably worth $150k or so…But the nearest comps of similar age, size etc are in a totally difference area over a mile away…even an experienced appraiser has a hard time making adjustments (and none of them adjusted for the fact that my house is 1 1/2 miles from payment on unmaintained roads!)
Anyway, I always take any appraisal with a grain of salt. It is one person’s opinion…hopefully educated 
The appraisal will include the comps the appraiser used as well as adjustments to try to account for any differences between your house and the comps. The more alike the comps, the more accurate the appraisal. Review the comps used to see how recent they are and how similar they are in age, size, location and condition…be wary if the comps are significantly different, old or the prices don’t seem to jive with the valuation you are given.
For that matter…unless you need this appraisal for a refi or something, call out some local realtors and get CMAs instead…they will likely be in the ballpark and they are free
Christine
Oh, I was under the impression that a CMA’s procedures were pretty much the same as what a professional appraiser would do, no? What are the significant differences?
The difference is that with a formal appraisal you get a written report that is 15 +/- pages and includes a lot of verbiage and disclaimers. They often have pictures of your house, inside and out, you yard, land, etc as well as sometimes a picture of each comp.
A CMA is not as formal or lengthy. Many agents will include listing sheets for the comps they use, others just a printout/list. A CMA is also generally going for the suggested LISTING price of a property (as in, if you were going to list it for sale, this is the price the agent suggests). Some agents like to start list price a little high…others like to make it low in an effort to get a lot of interest and try to spark a bidding war.
When I decided to list my house I received CMA reports ranging from $195k-$238k…similar to the formal appraisals…
Christine
So I would likely be better off, albeit poorer by a few hundred, with an appraiser then?
If CMA’s are basing upon asking prices and an appraisal is based on actual comps, then I’ll get a more accurate picture. CMA’s don’t go on actual selling prices, and the realtor can decide to go a little high or low depending on their taste. An appraiser goes based upon a set system, not his taste per se, and uses values that the houses actually did sell for. Am I correct here?
CMAs are based on both recent comps and the current market/current listings (as are appraisals)…then are colored a bit by the agent’s personal preferences…again they are trying to come up with an asking price if they were going to list it for sale (and as with anything else, some agents are better at this than others).
Personally, unless I needed a formal appraisal for something, such as to refinance, I would not spend the money (and keep in mind that if you were to refinance, many lenders want you to use an appraiser they choose…YOU still pay for the appraisal though
Even divorce attorneys in my area generally use CMAs rather than formal appraisals for valuation of property.
If you just want to know about what your property is worth, get CMA reports from at least 3 experienced agents and ask them questions about it…are they pricing it on the high end…on the low end…etc.
ok lets start here with cma’s from a realtor are not always going to have sold comps in with currently listed properties in the area when calling your realtor that you use its your job to let them know what it is you want…in this case sounds like you want to know if your deal is a good one so you want to know what it would sell for if you picked it up and tried to flip it…so you want to only know what the sold comps in the area were for say the last 6 months hopefully if need be no more then a year old and if you look at the cma it should show low mid and high end of sold comps in the area…this will be opinion one of what the house is worth…now an appraiser can give you a better (in my opinion) idea of how much the house is worth because he is out in the area doing full appraisels…you don’t need him or her to do a full appraisel so you wont be spending hundreds of dollars and once your continually using the same appraiser and closing on deals getting full appraisels you shouldn’t be paying him or her for comps…this is your second opinion on fmv…now you should also be familiar with the area some what know about how much its worth…this is your 3rd opinion…personally when i first am looking to see if its a deal and i dont know the area that well i go to my appraiser first if looks like there is a deal there then i will have my realtor do a sold comps cma if it still looks good then we have a deal my realtor also will do free sold comps knowing that threw out the year that she will get enough listings that its worth her time spent looking up this information for me