Last week I met with my appraiser Alan Daniel with DS Murphy & Associates (and Alpharetta resident) for 2 hours and here were some notes I took while we chatted. Isn’t it great to have the inside story?
We are in a STABLE environment. Alan believes our market has turned–yet because the data lags behind actual market demand, we won’t know for sure until next quarter. However, agents everywhere are finding that good houses are receiving multiple offers and selling above asking. Appraisals are the biggest hurdle right now because an appraiser must use the past 90 days sales (and the market turned in the last 30 days). In some cases Buyers are willing to bring the additional money needed to close a deal from the lower appraised amount vs. the sales price because Buyers are recognizing the value.
Alan says this is the worst environment he has seen in 20 years for low bank appraisals coupled with a pent up buyer demand. Appraisers are now using 1 pending sale and/or 1 active listing (must use 2 total) in comps in recognition of the shifting market. Previously appraisers would only use closed sales in a declining market.
True comparables are challenging to find that closely match:
- Closed sales in the past 90 days
- Homes within the neighborhood if possible
- If neighborhood comps are not available then within 1 mile and ideally in the same elementary school
If you’re a Buyer in a multiple bid situation, one strategy to get your offer accepted is to drop the appraisal contingency (as long as you are prepared and financially able to make up a difference if appraisal comes in less).
You hear in the media reference a “Shadow inventory” of foreclosures. Alan says those homes are not generally in our area. More so in south Atlanta, Gwinnett and some rural areas. Our inventory level is currently at the same level as 1999--yet we have about 2 million more residents in our area than at that time!
Alan and the top Realtors he works with believe we’ve reached the bottom on price for raw land in North Fulton/Cherokee at $55K – $60k an acre and we are now seeing appreciation (at the peak prices used to be $125 acre WOW).Land in Cherokee is less at $25k-30k acre.
Sellers must take note here…an appraiser will take into account how long a home has been on the market, so the longer a listing sits the lower the appraisal will come in, ouch! This is a screaming reason why sellers should trust their agent’s market stats and price the home right from the beginning. Selling sooner SAVES.
One issue we ran into is the bank sending an appraiser from way outside of our area and therefore he has little or no local market knowledge. This has the potential to really cause an issue with an appraisal full of errors. Alan’s advise is to have the buyer request from their bank and request another appraiser (if appraiser isn’t from around here and BEFORE APPRAISAL IS DONE, comes in low & kills deal).
We have been using Alan on many of our listings to do a pre-appraisals. Our clients feel it’s helpful to have this upfront before the Buyer’s appraisal. It can also be helpful to share with the bank’s appraiser. And if there is a low appraisal, Alan’s data helps us fight to get it corrected. Isn’t this strategy a great insurance against facing surprise low appraisals 2 weeks before closing? It’s priceless.
Lastly we discussed “Relo” appraisals. A Relo appraisal is one where a company hires an appraiser to determine a market value of a home for an employee buy-out/relocation. Relo appraisal are always less than market because they want a guaranteed sale in 90 days should the company have to purchase the home from the employee. In most cases the employee will be better off to hire an experienced agent to get their home sold for the most amount of money to them in the fastest time (many times companies will offer bonuses to the employee if they can get the home sold themselves).
If you have any questions or would like for us to arrange your pre-listing appraisal, just call or email me. A pre-appraisal typically ranges from $350-$600 depending on the size of your home and/or uniqueness of the property.