There has been a long time ongoing discussion about whether appraisal is an art or a science. I think most people assume that it is a science, but is it? Think about what a residential appraiser does. He (or she) is asked to find the value of a home.

To begin to find the value, an appraiser will gather up samples of sales of homes that are similar to the “subject property”, nearby and selling within a recent time period. In this market appraisers are looking only at sales for the last six months. The sale must be a normal sale, without any undue pressure (like impending foreclosure). The records of recent sales are “science” with hard numbers. But then the appraiser takes the scientific data and applies a subjective view. He must evaluate quality of the design, functional obsolescence, desirability of the area, style, décor, and more intangible qualities that make one home sell for more than another. That is where it becomes an art. Just picking which of the homes are most similar, is an art. There may be 20 homes that sold within the last 6 months within ½ mile of the subject, the appraiser may only use 3-6 of them. How does he pick which is most similar? It is important to remember, that the appraiser does not get inside the homes he is using as comparisons. It is very subjective.

But actually we need to go back further for the real first step in establishing value. It is necessary first to figure out who is asking and why are they asking. Why, you ask? Well, first because the appraiser has a fiduciary duty to their client, i.e. the one who pays for the appraisal. That doesn’t seem to make much sense now in the year of the foreclosure, but that is how it works.

There are several reasons why this is true. Value is an elusive thing. There are a number of ways to look at the value of a home. How much will the home sell for today? How much will the home sell for, given 4-6 months of excellent marketing? How much will it cost to replace it if it burns to the ground? How much is it worth to an investor? How much is it worth to a bank if it forecloses? All of these are part of the definition of value and they all paint a different picture. So the client gets to tell the appraiser how and why they want a definition of value.

Imagine a situation where there is a divorce. It could be a husband who has to pay his ex-wife half of the value of the house. If the court orders the appraisal and wants fair market value, the value may be different than if the husband orders it, simply to strengthen his case. The husband could ask the appraiser to look for low value comps. If the wife ordered it she could ask the appraiser for the highest reasonable price.

I took a state certified course in the early 90’s and this is how the instructor put it. It was legal for the appraiser to look out for the interest of the one who hired him. I think the recent mortgage meltdown may change how the end result is supposed to be determined, but the fact that there are subjective choices the appraiser is required to make, means that the answer is, in my opinion not very scientific.

So its important to understand how the process works, so that when a seller offers a home that is priced drastically below appraised value, you actually are entitled to roll your eyes.

Dan Connolly

October 11th and 12th 2008

Mark your Calendars, it’s that time again! These will be the days that Candler Park welcomes all of Atlanta to come enjoy the neighborhood and the park. There are a lot of fun activities planned. There is a 5K road race which kicks off at 9:00 am on the 11th and at 10:00 am there will be a “Tot Trot” at the Candler Park Soccer Field.

Music at the Candler Park Fall Fest

The music starts on Saturday the 11th at noon with Atlanta’s own Jeannie Johnson Band and goes through the day with a great lineup culminating with an Atlanta favorite, The League of Decency who starts at 5:30. The sounds resume on Sunday at 1:00 and the days music kicks off with Webster and finishes with the headline act Kingsized who starts at 4:30. Local favorite Delta Moon graces the stage at 4:00 pm

Candler Park Tour of Homes

There will be a tour of 9 homes on Sunday from noon to 6pm. Tickets are $12 in advance and $15 on the day of the tour. The tour is a great way to get some exercise and see the classic architecture in the neighborhood. Details, including photos of the homes and info on where to buy tickets can be found here

Artist Market and Food Vendors

There are a wide variety of artists, photographers, craftspeople, political booths, vendors of food and drink, world imports, Green builders, eco-friendly products and more. Come support local artists and craftsmen.

Kids Activities

There are a number of fun activities for kids planned. You can read more about them here

Candler Park has been my home for the last 17 years and we have watched it grow and change. If you are interested in Candler Park Real Estate I have a page dedicated to that with links to search for single family homes by price range and links to search for condos, townhomes and lofts in all of the condominium complexes in this great intown Atlanta neighborhood.

Virginia Highland Celebrates 25 years of Summerfest

It was a sweltering summer day but the crowds came out all the same to enjoy the art, music, food and people watching, in one of Atlanta’s favorite summer festivals. The event started Saturday June 6 with an 8:00 am 5K race, and the temperature was nearly 95 degree by the time they hit the finish line about an hour later.

There was a “tot trot” for the kids to show off their running skills, a parade, a kid’s fest with clowns and fun for the kids, a rock climbing wall and more. The music kicked off at 10:30 in the morning and wrapped up with Atlanta native Shawn Mullins who played till about 9:00 pm. Sunday was another day with another great lineup of local talent and more of the steamy heat!

The festival was located on Virginia Avenue between North Highland and Inman Middle School and there was no charge for admission. Virginia Highland has a wide variety of specialty shops and restaurants who were all doing bang up business.

An award winning group of art and craft exhibits, great food vendors, two music stages and shady tree lined streets made for a really enjoyable Summer weekend!

We have all been hearing about the doom and gloom of the real estate market, so I thought I would do some research and see how bad it actually is for Virginia Highland. These numbers are for single family detached homes only, i.e. no condos or lofts or attached town homes.

Just for those of you who like to get straight to the point: Yes, the market is down in terms of overall volume but the average prices are up and the average days on the market is down !

I will start with 2006. In the year 2006 there were 191 properties listed in the First Multiple Listing Service in Virginia Highland. These are properties that actually had a list date between Jan 1 2006 and Jan 1 2007. Obviously there were some homes on the market on Dec 31 2005 that were in the mix, so understand that when looking at these numbers. During 2006 there were 151 closings in Virginia Highlands. During the same time period, 11 properties were withdrawn (some of these were re-listed with different agents and some sold For Sale by Owner.) and 29 properties expired (also some of these re-listed with other agents or sold privately). So the ratio of listed property to sold and closed property for 2006 was 1.26 properties listed for each property sold.

In 2007 there were 240 properties listed in Virginia Highland between Jan 1 2007 and Jan 1 2008. In the same time period there were 85 properties closed, 52 properties were withdrawn and 44 properties expired. The ratio of properties listed to properties sold was 2.85 properties listed for each one sold.

So the market is definitely down. We sold 55% of the number of homes in Virginia Highland in 2007 that we did in 2006.

There were some other interesting observations I made. The average sold price went up. The average days on the market went down. The maximum sold price went down by almost 200K. Expireds were up by 50%. In 2007 35% of the homes that were listed, were sold. While in 2006, 79% of the homes that were listed were able to close.

I saw something interesting while looking at the sales for the last 12 months (12/20/2006-12/20/2007) in the Candler Park neighborhood. We have exactly the same number of sales that we did in the period from 12/20/2005-12/20/2006. There were 51 sales listed in the FMLS during both 12 month periods. That kind of disproves the theory that the market has softened this year!

Right now there are 22 properties on the market and 4 of them are under contract. They range from $299,000 to $949,000 and the average price is $526,888! This is the first time in a few years that we have seen some homes sell around $300K or less, but there are more homes selling at the top of the range than ever (mostly new construction) so the averages have been going up.

If you are interested in living in this neighborhood you can see what’s for sale on my Candler Park page and I would be happy to show you any that look interesting. I have been living in this great area since 1991 and think it’s Atlanta’s best neighborhood!

This Sunday (December 2, 2007) a group of Realtors with listings in Colonial Hills, a subdivision in East Point Georgia, have decided to see if we can shake up the lagging showings by offering a flat screen TV to one lucky winner. To qualify for the drawing you have to preview all of the listings participating. Right now there are 8 Realtors participating and everyone is running their own ads and we are running some group ads. If you want to come to my listing first, I will have maps to the others and the address of mine is 2295 Newnan St. East Point, Georgia 30344.

This is the first time I have participated in this type of incentives, we are seeing more of this as the market cools. Builders are offering incentives on new homes and you see a lot of agents in the Caravan (Tuesday agents preview each other’s listing) giving away bottles of wine or “cash grab bags” to lure their fellow agents into the open house.

Decatur Commercial Opportunity 

This house is zoned C1 and has been totally rebuilt from the foundation up. It is offered with some customization included to the needs of the Purchaser. The Seller is a builder and will provide handicapped access (ramp) and will rebuild one of the bathrooms for handicaped access. There are approximately 1990 square feet and the floorplan would lend itself to many applications.

The house has a large kitchen and the character and floor plan that would make a great restaurant or coffee shop.  It would also be a good office for attorneys,CPA or Real Estate professionals. C1 is a flexible zoning that allows for many uses. The house has frontage currently on South Columbia but it also has rear access on Commerce which is also commercial. There is more traffic on Commerce and better visibility a 6′ privacy fence could be removed and there is a large yard for additional parking. 

This house was rebuilt 6 years ago down to the foundation. There is only one original wall left and that is the front wall. The two sides and back got new siding and windows, as well as insulation and all new sheetrock and trim.

The work was fully permitted and done with structural engineers and Decatur building inspectors.  There are new steel support beams in the foundation and every bit of the house was new 6 years ago.

This year we went out with our daughter, her husband and our granddaughter to trick or treat in Avondale Estates. Avondale Estates is a small city/neighborhood located just east of Decatur, inside the perimeter. It has its own mayor and police force and the police were directing traffic.

I have never seen anything like it. Virtually every house was decorated, and the main roads were closed to traffic. There were literally thousands of kids and parents wandering the neighborhood. It looked like kids were coming by the busload from other areas. Most houses with big decor had 30-50 kids on the porch and some were even decorated on the inside like haunted houses. The haunted houses had lines of people going through and must have given away hundreds of pounds of candy. We were completely amazed, we had heard it was big but really had no idea!