When preparing for your Greater Baton Rouge Home Appraisal, I invite you to read Real Estate Broker, Jon Kolsky’s advice here:
(image source is Jon Kolsky’s article)
Yes, this is a content curation piece where I take an article written by another expert and add my commentary to bring it home to local Baton Rougeons.
Let me add my advice after 20+ years appraising homes for purchases.
Yes, homes in pristine, especially updated or renovated condition, sell and appraise to Top Dollar given favorable market conditions!
Yes, I have my office ask the Listing Agent what comps were used to support the listing price because I want to know and value their insight into that micro housing market. Many Agents “Farm” their neighborhoods and know them more intimately than Appraisers do, which is wisdom I want to tap.
NOTE: I have two (2) relatives that are REALTORS, have a very high respect for the profession and value their feedback on local market pulse and how buyers react to preferences. My estimate is about 80% of the time, Agents do a good job and follow through with their responsibilities. HOWEVER…..
WHEN A HOME DOES NOT APPRAISE, THESE WERE SOME OF THE FACTORS INVOLVED:
1.) Agent listed the home at the price the seller wanted to list at instead of what the market would support!
Do Agents feel this pressure? Absolutely!
Did the Agent just list at what the seller wanted to list at or was there actual market support? This is key for me to know!!! If the Agent listed at sellers price and has no comps for me, then I’m much less willing to reach for value. To an Appraiser, there’s nothing worse that an Agent listing at sellers price versus what the market will actually support, perhaps with a reasonable bump for moving market.
2.) The Agent Simply DID NOT measure their listing, period, to know the true living area size. The Agent may have relied on home plans with wrong size and/or copied an old MLS sheet, which was faulty. The Agent may not have even owned the tools necessary to measure that listing (tape, laser measurer, app on phone or tablet).
Appraiser Measuring Mistakes Can Kill Your Deal? Kolsky claims Appraisers make mistakes on home measurement, which hurts a deal. I’ll hold my tongue as best as I can here. In my local market and assuming a 6% commission based on an average sales price of $220,000 , sellers pay Agents $13,500 to sell their home, no matter how many different ways that commission is split. AND it’s no secret in the real estate industry that Agents are known for NOT measuring their listings, period. I’ve spoken with Agents in California who say they wouldn’t dare add to their liability by stating a “Living Area Size” in a listing and rather just rely on county tax records size. Some new listings in my local market are just copied from old MLS listings or cloned with no guarantee the first Agent got the living area correct. I’ve seen the first MLS Listing years ago be wrong and then have multiple other Agents copy that lisitng for their new listings.
THE MOST APPROPRIATE TIME TO KNOW THE TRUE LIVING AREA SIZE OF A HOME IS AT THE BEGINNING OF THE LISTING, NOT AFTER THE DEAL IS UNDER CONTRACT AND THE PARTIES HAVE TO LOWER PRICE BECAUSE OF FAULTY OR NO AGENT MEASUREMENT!
DID THE AGENT ACTUALLY PHYSICALLY MEASURE THEIR LISTING? Did the Agent actually physically measure the home and was the listing price actually based on an accurate living area size? It’s not at all uncommon in Greater Baton Rouge Real Estate for new listing to NOT be measured at all and/or the previous MLS sheet was copied. Several deals I’ve appraised this year have not appraised because of Listing Agents not professionally and responsibly representing true and accurate living area.
The most common errors local Agents make deal with classifying additions and enclosures as “Living Area” and pricing them as such when they are not true “Living Area”.
3.) AGENTS DROPPED THE BALL IN THE MLS CMA PROCESS!
The Agents pricing the new listing simply pull a quick MLS CMA (market analysis) and fail to truly read and understand the condition of each comparable used and failed to deduct excessive seller paid concessions.
As an Appraiser, I’ve been involved in deals where I’m appraising a home in only FAIR condition yet the Agent CMA they send has “comps” of renovated homes with grossly excessive concessions. Those Agents don’t see the disconnect there and didn’t take the time to discover the differences between the home they were pricing and the sales they’re trying to use as “comps”.
It’s very obvious Agents aren’t even looking at the amount of seller paid concessions in sales and are not deducting those concessions, as Appraisers are instructed to do so.
Is this a market where sellers are paying such ridiculously high $5,000, $6,000, $7,000, $9,000 or $12,000 in sell paid concessions to make deals work…over and over again to where the market is now artificial? Can Agents see how several months of sales where $6k, $8k, $10k and $12k in concessions becomes the norm inflates a market and how damaging that is? Then the next Agent pulls their new CMA for a listing and says “WOW, The market is way up!” when it’s actually seller paid concessions driving up prices.
When an Appraiser uses such a comp after the sale, they deduct those excessive seller paid concessions to bring that sale closer to cash equivalency. I don’t deduct dollar for dollar and do over $3,000.
In conclusion, when a home doesn’t appraise, it can be the over expectation of the seller based on this ridiculous HYPE in our housing markets and then the failure of Agents to properly perform the basics of their profession: actually measure the home they’re listing and the professionally price it based on solid facts they’ve personally studied (instead of relying on 15 to 30 “comps” in a broad MLS Cloud CMA).
Respectfully, Baton Rouge Bill Cobb Appraiser
PRICE YOUR HOME RIGHT AT THE BEGINNING WITH A PRE-LISTING APPRAISAL TO VERIFY LIVING AREA SIZE!