Home Buying in 28078>Question Details

Kelly Hayes, Home Buyer in Jefferson, NC

Can an appraiser exclude new home sales in our neighborhood?

Asked by Kelly Hayes, Jefferson, NC Thu Nov 22, 2012

We are starting to look for refinancing of our home loan. I spoke with a couple of appraisers about the process and they said they have to exclude the new home sales from the comps. Does that sound correct?

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No, this is not the right way. When you are carrying out a residential appraisal for a home, it is necessary to consider the value of the other houses in the same locality. Values of the other homes in the same locality have a great influence and significance when deciding the value of a house that comes under that specific locality. So it is not right, on the part of an appraiser, to exclude considering the value of new homes in your neighborhood.

It will be better if you inquire for services of the reputed residential real estate appraisers in your city, as they can guide and assist you in the most appropriate manner to find out a fair and accurate market value of your desired home. These appraisers have good talent and rich experience in carrying out the valuation of various kinds of residential properties by using effective valuation techniques. Though these reputed appraisers may charge you a bit more, you are sure to get quality service for refinancing your home loan in an appropriate way. So, make a wise decision and hire expert and well-known residential appraisers. Be assured with their services, as they will prevent you from being a victim of several deceptions prevailing in the real estate market.
0 votes Thank Flag Link Fri Oct 25, 2013
Kelly,
It would be important to understand what you are calling a new home sale:
1. The sale of a home that has NEVER been lived in?
2. The sale of a home from a builder to a buyer?
3. Is this 'brand new' home in a community where new contruction is in progress meaning the builder controls the values in the community?
4. What is the age of your home?
5. Does 'new home sale' mean a sale that has not been published at the time of the appraisal.

Be aware, the 'bank' imposes upon the appraiser the criteria for 'comparable comps' and can be different for other lenders. The appraiser is hired by the bank and is compelled to abide by the instructions accompanying the appraisal order. Appraisers ARE graded based on this compliance.
0 votes Thank Flag Link Wed Oct 16, 2013
Appraisers will weigh homes that are new just as they would weigh a home that has been foreclosed in the neighborhood...biggest thing is having the Builder that either comes in your neighborhood or is continuing the building in the community to maintain selling prices!
0 votes Thank Flag Link Wed Oct 16, 2013
Good afternoon, Kelly:
Appraisers have state guidelines that they are required to follow. It is not uncommon to see only existing homes used as comparable properties in appraisals. If you appreciate an answer, please give thumbs up. For the most helpful answer, please say thanks with a best answer click.
0 votes Thank Flag Link Wed Nov 28, 2012
Kelly, it all depends on how old your home is. If your home is, say, less than (2) years old they might be able to use a new build home. It just depends on the appraiser. However, as an example, I have refinanced my home that I built in 2007 twice. Both times the appraiser did NOT use new home sales, even though there are still homes being built and sold in my neighborhood. They are not the best determinate of value.
0 votes Thank Flag Link Fri Nov 23, 2012
Hi Kelly,

Excluding property may not be the best way to view an appraiser's selection of comparison property. The responsibility of an appraiser is to arrive at a fair and objective value for a property. This can be accomplished via several means but most commonly is achieved through the use of "comparison" property that is as similar to the subject property as possible.

Location, square footage, condition, age of home, upgrades, etc. are important considerations that should be taken into consideration when arriving at a value. If there are sufficient similar comparison properties to arrive at a value without using homes that do not compare well with the subject property, it may be fair for the appraiser to not factor them into the equasion.

A reasonable question relative to your post would be, How much older is the subject home compared to the new ones?

Hope this is helpful to you.

Best regards,

Bill
0 votes Thank Flag Link Fri Nov 23, 2012
If your home is more than 5-7 years old and hasn't been significantly updated, then it would be unrealistic for an appraiser to compare it to a new house, however the fact that your neighborhood is having new homes built in it is indicative of the overall desirability of your neighborhood and will be considered.

Honestly unless there's been a lot of distressed sales (short sales and foreclosures) in your neighborhood within the past 6-12 months I don't believe it's likely you have any reason to be concerned. All that has to happen for you to get your refi is for the home to appraise for 20% or more above what you currently owe your lender.
0 votes Thank Flag Link Fri Nov 23, 2012
Hello Kelly, I have also had that experience as a Realtor. The appraisor seems to use simular homes in style, size and age. When I am doing a market analysis for a listing I also use the same criteria.
0 votes Thank Flag Link Thu Nov 22, 2012
Hi Kelly, I am not an appraiser, but that sound correct. As a Realtor, when I try to establish a value for a seller, I work with like properties and try to use other existing homes similar in size and age to the subject. I wish you the best with your refiance!
0 votes Thank Flag Link Thu Nov 22, 2012
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