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Real Estate Appraisals Out Of Whack, Way Way Too Low Happen Reminds Billy Joel.

The song about "we're only human, we're supposed to make mistakes", sang by Billy Joel pertained to real estate agents, brokers, REALTORS and yes, even Maine property appraisers.

How does it happen and why? And we're not talking about a few thousand dollars below the property purchase and sale price. We mean scales of justicewhen the home in Monticello Maine is assessed by the town for $65500 .

And rarely see any Maine house sell below the municipal tax value which is historically low but generates enough revenue to run the town.

Fill the road pot holes, run the schools,  keep the fire engines waxed and ready.

A productive Maine appraiser operating at a blur and cranking out product to the point that when the bomb hits without any warning that hey, I'm struggling with 40% out of whack valuation here real estate brokerman or Mr Maine Banker guy, well, that appraiser may have to stratch his head.

To remember, recall the actual appraisal. And may consider this work ancient history. Did one appraisal, does not want to revamp, replace, rework that appraisal. Beyond any chance of a case of wrong compatibles, analysis quick conclusion. Twice in three decades have I been involved in a Maine real estate sale when the appraisal was way way out of whack. It happens rarely. My dad was a licensed Maine real estate appraiser and I understand the process, the reasons it happened.

Think about it. For $350 for a Maine real estate appraisal but extra travel time, an appraiser works with the three comps (or a few more), three competing property listings that are as current, as close to the subject as he or she can get. To figure out the value of the subject property today, as of the above date on the appraisal for the bank, mortgage company. And in an area like Aroostook County with 11 people per square miles, only so many properties come up on mls property listing radar to factor in, use for the comparison.

So the $65,500 home came in appraised for $40,000. And when I got a copy of the Maine real estate appraisal I study the comparable sales. One I sold in town to the north, Bridgewater Maine that closed for $45000 was used that was no way the same calibre place. And if used for the apples and apples comparasion, the subject sale price of the town assessed value should have been positive. The Maine real estate appraiser when called, asked about each comparable and if there were not better ones, like this sale, I was told not going to get in a contest over this. Done, moved on, appraisal considered flawless, right on, market value established. Sale crashes, bank loves appraisal. Case closed for this real estate buyer who if walked to another Maine bank to start over to get another appraiser with a different perspective. Well the address and new FHA appraiser would see the permanent burdock of appraisal number one done by Mr Never Make A Mistake. Unless taken apart, reviewed, thrown out and all slowly unfolding, reversing weeks, months downs the bunny trail.

Closed on that same Maine property month later for the assessed value, with a different real estate buyer. Yes, will nicely, professionally let the Maine real estate appraiser know here is another comparable to use if looking for  $65,000 sale to use in another appraisal in the Monticello Maine area. Different real estate buyer, different result, but the same sale price we were looking for earlier. It happens. Mistakes, flawed work. Fact, no emotional or irritated finger pointing drama. Just want to sell the listed Maine properties. This is part of the process, the direction the sale can go on the way to derailment or closing.

The other Maine real estate appraisal needing a replacement for accuracy case was off $50,000. And unlike Bangor Savings Bank in the earlier case, Citibank make the review, drew the conclusion another appraisal was needed, allowed.

The Maine bank did allow that the first appraisal was flawed as one by one the comparables I had sold, knew personally were removed from "jury service".

Those appraisal number reductions that came in on low appraisals may not sould like much dollar wise. But consider the median price for a home in Northern Maine is $80,000, not $800,000. Dramatic when a place comes in, appraises for a bank loan off by 40%, $30,000. Or a $175,000 Houlton Maine home intially came in at $125,000 but on second look up and down, all around, with second new appraiser came in at the $175,000 listing price.  Maine, simple, down to earth, calling a spade a spade.

I'm Maine REALTOR Andrew Mooers

info@mooersrealty.com | 207.532.6573

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Comment balloon 3 commentsAndrew Mooers | 207.532.6573 • August 29 2010 08:02AM

Comments

I've seen that here, nowhere as bad but enough to kill the deal. As a 203k consultant I do comparables also but I'm careful not to tell people I am an appraiser, what I do is a simple due diligence. You find homes that are similar and check sales prices and tax records and get in the ballpark. Its not rocket science, but estimating rehab work has the same problem, I will use up to date pricing for my area and get other work scope bids 20% over or under my final price. It always raises questions with the lenders.

Posted by Paul Lesieur (203kloanmn) over 9 years ago

Hear you Paul. I'll still send the appraiser a Christmas card. Just pointing out mistakes are make. Billy Joel was right, we are only human, supposed to make mistakes.

Posted by Andrew Mooers | 207.532.6573, Northern Maine Real Estate-Aroostook County Broker (MOOERS REALTY) over 9 years ago

Yes, mistakes are made. I am currently taking an online appraisal course. I just had a deal killed by a low appraisal. I have learned my lesson. I will do more diligent appraisal like CMA's on all my deals so I can get in front of these. I am glad you were able to sell your property.

Cal

Posted by Cal Yoder, Homes For Sale in Lancaster PA - 717.413.0744 (Keller Williams Elite) over 9 years ago

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