Comments on: Appraisal: Art or Science?

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Wed, 10 Mar 2010 05:18:28 +0000

[...] Residential Appraisal – Art or Science? – Atlanta Appraisals [...]

By: Dan Connolly

Dan Connolly — Sun, 09 Nov 2008 15:41:34 +0000

Ben,
I appreciate your perspective. So you are saying that the appraiser doesn’t have a fiduciary obligation any more? In the example you gave I would think that the bank or mortgage company collects an application fee from the borrower and then uses some of it to order an appraisal, so technically the bank is paying for the appraisal and that would be why the fiduciary obligation goes that way.

How about when a private individual orders it, like in the divorce example, does the fact that the one who orders it dictate how the appraiser looks at value today?

By: Ben Goheen

Ben Goheen — Sun, 09 Nov 2008 05:53:11 +0000

I always like reading articles about how agents view an appraisal. Since the course you took in the early 90’s many things have change in the appraisal world.

I would agree that it is both a science and art, but from my experience I see it primarily as a science. If the subject is in an area with 20 comps in today’s market that would be great. How do I pick the best ones? Similar age, size, style, condition, and amenities are top priority. Yes I typically haven’t set foot inside all the comparables. I have to rely on measurements from County records and other agents, then view all interior photos and read the comments to determine the condition. It is subjective, but by definition an appraisal is an “opinion of the value of real property.”

An appraiser’s fiduciary duty is NOT always to the person who pays for the appraisal. Often times it’s just the opposite. A homeowner or buyer will usually pay for an appraisal, either at the door or having it rolled into the closing costs. BUT our duty is to the lender who ordered the appraisal and is borrowing money to the homeowner.

People tell me all kinds of things during the appraisal inspection but 99.99% of the time their points aren’t relevant. “The neighbor’s house just sold for $750,000.” That may be, but the neighbor has a 4,000 sq.ft. 2 story on a lake and you have a 900 sq.ft. rambler next to a highway. It mostly goes in 1 ear and out the other.

You’re right – listing a home below appraised value means nothing in today’s market. Who was the appraiser and how valid was that prior appraisal?

Good read – I’d suggest taking an appraisal continuing ed class now to see all the differences. It keeps us on our toes!