Because the market is as hot as it is now in many areas, we are having appraisal issues.
Many appraisers are too unmotivated or too ignorant to correlate to the “current” market by pointing out the number of multiple offers or by making a case for the use of pending sales for “comps”.
We understand the need for appraisers to adhere to standard guidelines, but coming in below the contract price when there are 5 other offers at that same price seems irrational. 5 buyers willing to pay a certain price seems like the best indication of market value.
In any case, when values do come in low and we need “comps” to support a rebuttal, the “comps” need to have closed in the last 90 days, they need to be within 1 mile of the subject and within the same barrier area (freeways, rivers, etc), and they need to be within 20 percent of the size of the subject.
If our subject property is 1,000 square feet, a 1,400 square foot comp is of little assistance no matter its sales price.
We are likewise unable to use a 700 square foot comp and then extrapolate up.
We often get comps we cannot use.
Founder/Broker | JVM Lending
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