Appraisers make adjustments to comparables to account for differences between properties. Adjustments reflect the incremental value buyers are willing to pay for specific features.
📣📣📣Adjustments are MARKET SPECIFIC!!! There is NOT a one-size fits all dollar value for certain features. Also, keep in mind a “market” is not only defined by location. 📣📣📣
The dollar amount is based on the value of that feature to the buyers in that specific market. Some markets value certain features more than other markets.
Also, the cost of the feature often does not equal the value of the adjustment. For example, a pool may cost $75k but the value added may be much less.
⚠Be cautious of cheat sheets that specific values for certain features. Appraisers very carefully analyze each market to determine the impact of specific features. ⚠
💥36% of active listings in Acadiana have had a price drop💥
We’re monitoring stats like these weekly. These stats give us insight into how sellers (and buyers) are adjusting their expectations to the changing market.
📊This graphic shows parish by parish detail. In the bottom right chart, it’s interesting to see the magnitude of the price reductions by parish. For the active listings with price reductions, there’s average reduction of about 8% as compared to the original list price. This a price drop of about $22,000 on a $275,000 house.
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One of the common ways we monitor market stats is parish by parish. This graphic shows how each market behaves a little different. While the end of the 3rd quarter is about 15 days away, we can still gather some good info on the general direction of the data.
Interesting takeaways:
Lafayette parish’s sales volume tends to be more than double the volume of the other 5 parishes combined. The stats tend to be a little “smoother” for the parishes like Lafayette with more sales.
Sales prices in Lafayette parish appear to still be slightly increasing. Vermilion parish shows somewhat stable prices. The data for the other parishes are indicating some decline.
Keep in mind, there’s still so many ways to slice the data even within a parish. Sales price ranges, MLS areas, home sizes and ages, to just name a few. The stats represent the average or median and don’t apply to EVERY SINGLE house in a parish.
In most situations, not really! Dirty dishes in the sink, toys in the living room, clothes on the floor are part of daily life for most of us. Appraisers are trained to look past these types of personal property. Their focus is on the permanent fixtures such as walls, floors, cabinets, etc.
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If the appraisal is being completed for a lending transaction, keep in mind that photos of the interior will typically be included within the appraisal report provided to the bank or mortgage company. So, it may be a good idea to tuck away anything you wouldn’t want showing up in a picture.
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In short, prepare your property the way that makes you feel comfortable but don’t add more stress to your life trying to make sure your house is “magazine” ready just for the appraiser’s sake!
Appraisers use bracketing to select comps with features and characteristics that are both inferior and superior to those of the subject property.
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The goal is to attempt to bracket all features that require adjustments. Features may include items such as condition, lot size, living area, location, view, or amenities such a pool or garage.
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In a perfect world, each property would indicate the same value after all adjustments are made. But…real estate is not perfect, and a range of adjusted values is typically formed.
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Most lenders require the opinion of value to be bracketed by the sales prices/adjusted sales prices of the comparables.
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Bracketing (per FHA)
Definition:Bracketing refers to selecting comparable properties with features that are superior to and inferior to the subject features.
Standard:Comparable properties must be selected based on the principle of substitution, and the analysis will reveal the relevance of that data.Comparable properties should not be chosen only because their prices bracket a desired or estimated value.
Required Analysis and Reporting:In analyzing the comparable pool to determine the best comparable sales to display and compare in the adjustment grid, the Appraiser must use Bracketing techniques when possible and appropriate.
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Bracketing (per the Dictionary of Real Estate Appraisal, 7th Edition)
In a quantitative analysis, a process in which an appraiser chooses comparable sales or listings that display both superior and inferior elements of comparison to the subject property.
A process in which an appraiser determines a probable range of values for a property by applying qualitative techniques of comparative analysis to a group of comparable sales. The array of comparable sales may be divided into 3 groups – those superior to the subject property, those similar to the subject property, and those inferior to the subject property. The adjusted sale prices reflected by the sales requiring downward adjustment and those requiring upward adjustment refine the probable range of values for the subject property and identify a value bracket in which the final value opinion will fall.
Home valuation tools like these simply use algorithms and generic data to “guess” your home’s value.
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Automated systems do a poor job of valuing qualities and characteristics that are intangible. Fresh paint, remodeling efforts, quality building materials, etc. are most likely not considered. On the flip side, structural issues, deferred maintenance, and other worrisome issues won’t be reflected.
The real estate market is constantly changing. If you are thinking about listing your property for sale, purchasing a property, or going through a divorce/estate settlement, it is important to have the most up-to-date information. Here are a few graphs and charts showing how the Saint Martin Parish real estate market has been performing (Look at the difference between 2020 and 2021!!!!).
Real estate appraisals typically involve an on-site property inspection. The appraiser will schedule an appointment in advance with the homeowner or real estate agent. During the site visit, the appraiser will generally make observations, take pictures, and measure the house.
It can be helpful to know what to expect while the appraiser is at your home.
Measure, observe, and photograph the exterior – Appraisers use a variety of tools to measure the exterior of the house. Any other permanent structures such as guest houses or workshops on the property will also be measured. These measurements will be used to create a sketch, also known as a basic floorplan, of the house. The appraiser will also take pictures of the exterior and may make notes of his/her
Observe and photograph the interior – The appraiser will need access to enter the house and any other permanent structures on the property. He or she will perform a walk-through of the home where access to all rooms and closets will be necessary. The appraiser will take pictures of each room. He or she will observe and potentially make notes regarding the quality and condition of the interior building materials and fixtures.
Potentially check electrical outlets, appliances, window access, and other utilities – Appraisals completed for certain types of lending transactions, such as for FHA loans, have additional requirements. The appraiser may be required to confirm all utilities and appliances are turned on and function properly. This could include (but is not limited to) testing electrical outlets, turning on water faucets, checking the water pressure, opening windows, testing the HVAC unit, and making sure the appliances are in working condition.
Potentially check the attic – The appraiser may be required to inspect the attic for specific lending transactions. It is important that the homeowner ensures access is available.
Ask for additional details – The appraiser may also have specific questions for the homeowner or agent that could aid in the appraisal process. It can be beneficial to have details prepared regarding items such as recent renovations and/or any recent or needed repairs.
A few other helpful tips that ensure the process goes smoothly:
Properly restrain pets – Appraisers get to meet all types of furry family members every day! Some typically friendly pets may not always welcome the appraiser in their territory. It’s recommended that all pets are appropriately handled during the appointment.
Unlock sheds, outdoor buildings, etc. – The appraiser must look inside all permanent structures on the property. Everyone remembers to give the appraiser access to the house, but please don’t forget about the other buildings.
Don’t worry about the house being spotless – The appraiser has observed homes of many varying conditions, and appraisers can professionally look past everyday clutter. Most importantly, the appraiser needs easy access to each room and with unobstructed views. Please keep in mind the photographs of the house will appear in the appraisal report.
If you have specific requests for the appraiser while visiting your home, please let us know! The appraiser appreciates the invitation into your home, and they wants to make the homeowners comfortable.
Please give our office a call if you have any specific questions about the site visit.
