The most common reasons there are disagreements with an appraised value are the properties used for comparison, and the condition and quality of the home being appraised versus those it is being compared against.
If there is a dispute, sometimes lenders or real estate agents will request a second appraisal, but more often the parties involved in the home purchase negotiate a solution.
I have not answered the specific question: how often does this happen? I am not familiar with statistics reflecting how often this happens. It does happen, especially when we are in a market of increasing values (such as we see today).
Alain Pinel Realtors
I am a former Real Estate Appraiser and a former Review Appraiser, and expert witness in court and arbitration cases with respect to fair market value of real estate.. This is an issue that I consider to be very important.
Yes there are often disagreements on appraised values.
Common sources of disagreements are areas that are very subjective and prone to error such as adjustments that are made for differences in location. The classical example is a house on a busy street, where some of your comparable sales are on quiet streets. The value of the adjustment is time consuming to perform properly and involves some very subjective decision making on the part of the appraiser.
Another common source of error is the use of comparable sales where the houses are in different school districts. For example in Saratoga there are 3 different school districts. The houses with Saratoga schools sell for very different prices when compared with similar homes with the Fremont Union High School District (Cupertino Schools) and similar homes with the Moreland (Campbell ) School District.
A good real estate appraiser will make absolutely certain that the subject property and the comparable sale properties all are in the same school district.
Another source of error is negligence on the part of the Appraiser. I have seen appraisals with incorrect square footage listed for the comparable sale properties. This is often caused by errors in the square footage reported by the listing agent and the County Assessor's Office. Usually the square footage for the subject is correct because the appraiser has access to measure that property. If the appraiser cannot measure the square footage for the subject property correctly, that appraiser is not competent to even be an appraiser.
I have also seen appraisals where the appraiser has described the property incorrectly. For example in one appraisal that I reviewed, the appraiser described a comparable sale property as having a 2 car garage where the appraiser's own picture in the appraisal report showed the comparable sale property had a 1 car garage, not a 2 car garage.
These are merely a few examples of sources of error and sources of disagreement in an appraisal report. There are many more that would be to much to list and describe here. For more information you may call me at my cell phone: (408)509-6218, or you may send me an email at my email address: email@example.com
Charles Butterfield MBA
Real Estate Broker/REALTOR
Cell Phone: (408)509-6218
Email Address: firstname.lastname@example.org
Here are a few posts that make help you understand the issues:
Appraisers Struggle To Keep Pace with Market
Appraisers Struggle To Keep Pace: Part 2
All my best,
Dot Chance, RealtorÂ®
Certified Distressed Property Expert â€“ CDPEÂ®
DRE License #01494182
Keller Williams Realty World Media Center
WHEN YOU THINK OF REAL ESTATE...Think DotChance.com! My business thrives from your referrals!
The appraiser is providing his most accurate opinion of what the house can be sold for. The lender is counting on him so that they can evaluate the risk. The lender may ask for a larger down payment or increase the interest rate they will make the loan at if the appraised value is low.
An experienced seller's agent will make certain that the appraiser is aware of favorable features of the home and of favorable comparable sales. The agent also knows which lenders are more likely to approve a loan.
Different areas have different sales prices for very similar homes. An appraiser may not be as familiar with a neighborhood as a real estate agent who does a lot of business there.
Juliana Lee MBA LLB
Top 3 agent nationwide at Keller Williams
Over 20 years experience