Do Appraisals Establish A Market Value Price?
In the real world, very few individuals order appraisal
reports to establish an offering price or to substantiate a
purchase price. At the point that an offer to purchase (in a
typical residential transaction) is made, the price has been
set by other parties, not the purchaser. The price has been
determined by the seller, who wishes to obtain the highest
price possible, or the agent, who receives a percentage of the
price as compensation and often represents the seller in the
transaction.
The real estate agent will typically perform a comparative
market analysis (CMA). The appraisal laws in most states allow
real estate agents to perform CMAs without an appraiser's
license or certification. A CMA is a necessary part of the
agent's preparation for a listing and consists of examining
sales of properties in the area to arrive at a listing price.
The reliability of the CMA depends upon the agent's experience
and the characteristics of the property. The agent will
suggest a selling price to the seller based upon the analysis.
However, neither the seller nor the agent are bound by the
results of the analysis, and the agent is not required to
follow any formal procedure in completing the CMA. If a seller
wishes to list the property at a price higher than the price
suggested by the agent, then the agent may be forced to accept
the listing at that price or risk losing a commission.
Purchasers believe that they are getting a good deal if
they make an offer lower than the listed price. But how far
above the market value was the property listed? 10%, 15%,
maybe even 20% above the fair market value? A negotiated price
of 10% less than the listed price on a property that was
listed at 20% above its value is not a bargain. The agent
cannot tell the purchaser that the offered price is higher
than the value, or even higher than their own CMA. In most
states, they must submit the offer to the seller.
The seller of a property may want to order an appraisal
before listing the property. Of course, the cost of the
appraisal is always a deterrent, especially if the seller
knows that a buyer will pay for it when applying for a loan.
But the appraisal is often justified. The seller could lose a
sale if the property appraised for less than the sale price
when appraised by the appraiser.
If you need help with getting your
appraisal to "come in" at your price, call me at
435-668-7885, I may have some other tips, helps, or other ways
of getting your appraisal to go through - and to help your
appraiser!!....I'm here to help! |