Today I had the misfortune of receiving two appraisals done by "peers" in my area. The first was sent to me by a builder who is angry that I am not able to justify his most recent "price increase". Let me set the stage:
This subdivision started in 2008, but new construction (and sales) have kicked up substantially in the past 6 months. My property was a 3,800sf 5BR/4BA home on a typical lot, with a sales price of around $365,000. This is one of the largest homes in the subdivison, admittedly, but just barely; a lot of sales are in the 3,500 to 3,700sf range.In the past 12 months there were 34 sales in the subdivision, 17 of which were over 3,000sf. 17 were similar 2 stories, 4 or 5 bedrooms, all but two were new construction. Getting rid of the 4 smallest sales leaves me with 8 really good comps, all within 350sf of mine, all in the same neighborhood, new construction, similar bed/bath count, most of which were built by the same builder. The ranged from $325,000 to $360,000, with only one over $352,000. My numbers work out to about $355,000 on my property, around $10k under contract.
So the builder sends me a few pages from a recent sale (done in the past two weeks) by another appraiser. His value, for a slightly smaller house by the same builder, is $390,000. Which amazingly supports the $389,500 contract price. His two main comps? From a subdivision 1.6 miles away on larger lots and by a superior quality builder. His two sales from the immediate subdivision adjusted out in the $360's.
Appraisal #2:My friends are buying a new house. Due to a bidding war, they ended up offering $20k over asking price, knowing that they would likely have to come to the table with cash. Amazingly, for this $520,000 house that they offered $540k on, the appraisal came in at $560k. The reason? Well, their neighborhood is a collection of homes built in the '90's, very similar to each other, on about 1/4 acre lots. The comps? All from an adjacent subdivision with superior quality estate homes and lots selling in the $600 - $1M range. So the appraiser completely ignored the 5 sales from the immediate area, and also ignored the 59 sales from the general market area that were more similar in size/age/quality, not to mention every shred of historical statistical data, and just found a few in the area that would "work". The previous high sale in the subdivision was $434,000. The most recent sale (similar size, age, one block away) sold for $423,500. He valued their 9,500sf lot at $125,000, yet decided that lots ranging 19,000 to over an acre deserved hardly any adjustments (several on greenbelt or view lots). But he MADE IT WORK! Happy lender, happy life I guess.
What is the point? Why not just send the lender an email back 5 minutes after you receive the order and say "It's worth it, that will be $400 please"?
I'm just incredibly frustrated right now. Are their any appraisers out there that want to do a good job, and take some pride in correctly valuing a property regardless of whether the lender will be happy or not?
Thank you, we'll be in touch!