That information is to old when you use the old sales prices of a few months past. Our market is moving up 1% or more a month so BPO's many times are wrong. Just a starting price point to start at. Tom Inglesby, Broker
I do BPOs. Over 3500 of them in the tri county area. I was mortgage underwriter trained and bank underwriter trained with appraisal review as a specialty to look for fraud. It used to be 80% science and 20% art. That ratio has changed a lot! We dont have dozens of comperables surrounding subjects any more. We dont have many 'like kind' dwellings so many adjustments must be made.
I started selling homes in 1980 and would almost always ask the seller to pay for a fee appraisal to set the price. More often than not---the lender would take the same appraisal. If time had gone by since the list datye, the lender would ask the appraiser to review his'her own work and make any adjustments. Wow were those the good old days. My opinion is most real estate people do not know how to properly value a property. I have them try to help me by giving me comps but almost exclusively the comps cant be used. I now consider a pre mortgage appraisal to be worth the paper upon which its printed. It cant be used by anyone else. It would have value for unique, specialty or extra large or small houses though...you would be able to see the process the appraisal went through and what contributes to negative and positive adjusting. ADJUSTMENTS are the largest weak spot of a novice when evaluating property.
Great question as appraisal values are definitely something to be aware of in this sellers market when buyers are bidding above list price.
An agent should be able to have a very good idea on what a home will not appraise for based upon their study of the related comparables with focus on the SOLD listings from the past 3 months.
In a recent deal, my seller's house did get bid up over $15,000. Since we had done on research we knew that the likely hood of it appraising for that amount was very low. So my seller decided on taking a lower offer but it was all cash and still above list price. That took out the question of needing an appraisal and she was able to close sooner and got a fair price.
If you have an interesting house with unique features that could make the value be higher if an appraiser understood all the upgrades. It would be best to have the listing agent meet the appraiser out at the house so they can explain in detail these amenities.
To be honest, it seems market values in some areas have been higher than appraised values. An appraisal is a good starting point, but not completely necessary. Any agent should be able to help you with setting a price.
This question, raised 5 years ago, would have gotten a different answer:
Now, appraisals are use to protect the person who hired the appraiser; they don't have the subjectivity that they used to. The appraiser is not in the busines of business, they are not looking at it from the point of view of Marketing.
We have been finding appraised values coming in much higher or much lower than selling price. These are from the sellers getting an appraisal prior to listing their home. As for selling for a price prior to appraisal, we are finding most appraisals are coming in at selling price or somewhat higher.
I see HUD use a current FHA appraisal to set the list price of their REO homes in Oregon. Half the time it seems that the value is drastically under market value while other times it takes 2-3 10% of list price reductions to attract the buyer.
I know that lack of comparables isn't making the appraisal world any easier. I get at least 2-3 calls from every sale from an appraiser to verify and to get further details.