Home Buying in 92129>Question Details

Sindhura Gut…, Home Buyer in 92122

Comps for home appraisal

Asked by Sindhura Guthikonda, 92122 Thu Jul 2, 2009

In the comparables, the appraiser compared the house we like to houses that were smaller in size. He seemed to add a random figure for the compensation of size. So I was wondering how is this difference calculated?
In his report our home is listed as 2100 sq ft at $245/sq ft where as the comp house is listed as 1750 sq ft at $250 sq ft. But he only added a difference of 20K here. Should this be difference in sq ft multiplied by the price per sq ft or is there some complicated logic that goes behind.

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5
I think it is really hard for us to help given the limited information, because, as Dot said, there are _many_ variables. Here are some quick thoughts that might help...

Especially in a declining market, there is a preference for comps that are less than a month old, then to three, and pushing to 6 months is painful. If a comp is, say, 6-months old and the market has been dropping 2% per month, you could easily see a smaller home be considered worth more than the larger home.

Active listings "define" the upper end of the market. If there are other active listings, say for a 2400 sf house, for the same price or less than your 2100 sf house, the sold comps may have to be given less weight because the _current_ market is saying that the home is worth less.

You might also check sites like FinestExpert.com or cyberhomes or homegain to get a sense of prices. These is no way compare with a good appraisal, but they might give you some insights - by looking at what they consider to be comps.

Robert T. Boyer, Ph.D.
Real Estate Investor Advisor
America's Finest Real Estate
San Diego's Finest Real Estate
http://www.SanDiegosFinestRealEstate.com
SanDiegosFinestRealEstate.blogspot.com
1 vote Thank Flag Link Fri Jul 10, 2009
Sindhura,

There are so many variables when comparing houses. Is there a difference in the lot size? Were the homes built around the same time? Does one have more amenities than the other?

Your best bet to find out how the appraiser derived his appraisal is to call him and ask him to explain his method to you.

Hope you got your house!
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Fri Jul 3, 2009
CMA value seemed just 5K less than the listed price. The house is in very good condition and has similar lot size/view compared to comps.
0 votes Thank Flag Link Thu Jul 2, 2009
SIndhura,

Typically smaller homes will be more expensive per square foot, so as the home size increases, the price per square foot will decrease. There are all kinds of other adjustments that can be made (condition, view, lot size, lot location, etc...) As Tony mentioned, the lack of recent comparables make it more difficult. How did the appraisal compare to what your agent came up with in their comparative market analysis?

Good Luck!
Kind Regards,

Marcie Sands, REALTOR
Simply The Best Real Estate Company, Inc.
Rancho Bernardo
760-644-1562
0 votes Thank Flag Link Thu Jul 2, 2009
Sindhura
It's a highly subjective process and unfortunately for whatever reason appraisers do not use avg price per square foot to derive their pricing adjustments based on a size compensation.

I think this is because in today's real estate market every one is erring on the side of caution and if there are not enough true "comps" in the last 3-6 months then an appraiser is going to always be as conservative as possible, unfortunately even if it compromises a deal.

This is done to protect the lender AND you, the buyer. Obviously real estate agents and loan officers, like myself, aren't happy when something like this arises but it's part of the business nowadays and in my opinion a byproduct of irresponsible practices in the past that partly led to the real estate bubble bursting.
0 votes Thank Flag Link Thu Jul 2, 2009
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