In February, I wrote about my trip to Southern California to complete the final and most difficult class in the path toward earning the Appraisal Institute’s SRA designation. The designation is a recognized mark of excellence in residential real estate appraisal. After that class, I had a very busy spring and summer, but I finally made time to submit the required experience logs and reports, and then pass an experience interview. Now, after several years of saying that I am an Appraisal Institute candidate for designation, I can proudly add SRA to my title.
My hope is that SRA designation will assist me in service to the Appraisal Institute and that it will also help me gain credibility when completing assignments for attorneys and financial professionals (who are the focus of my business). If you are a real estate appraiser and have not earned a designation from an appraisal organization, I highly recommend it. It is a rewarding educational journey that demonstrates to prospective clients that you hold yourself to higher standards than the minimum appraiser licensing standards.
Did I leave anything out or do you want to join in the conversation? Let me know in the comments below. As of the date this blog was posted, the comments are not working and our website development is working on a fix.
If you find this information interesting or useful, please subscribe to this blog and like A Quality Appraisal, LLC on Facebook. Also, please support us by making Portland real estate appraisal related comments on our blogs and YouTube videos. If you need Portland, Oregon area residential real estate appraisal services for any reason, please request appraisal fee quote or book us to speak at your next event. We will do everything possible to assist you.
Thanks for reading,
Gary F. Kristensen, SRA, AGA
When a home is exposed to the market under normal conditions, it will most often sell within a reasonably tight range. This range is the most probable price and is a fundamental part of the definition of market value. So how is it that market participants (buyers, sellers, and agents) usually agree on a price that is close to market value, even when they are not making adjustments, verifying data, and analyzing statistics like an appraiser does? There are three key factors why the market usually gets the price right.
When someone decides to buy or sell a home, they usually start by contacting an experienced agent who provides expert advice. Agents help to educate buyers and sellers on factors that may not be readily apparent to the layperson. An agent may or may not know the value of a property, although most agents have experience in setting price based on comparable sales or other approaches. (Even so, I still recommend ordering an appraisal before you sell). In addition to helping with setting strategic list prices or offer prices, an agent will be able to point out local trends, help guide decisions, and provide buyers or sellers with a foundation to start searching.
Buyers will usually determine where they want to purchase and start looking at homes in their price range to see what is available. When a buyer is focused on one area, one price range, and one set of key features, it is not long before they can accurately determine what a good deal is. Buyers will not necessarily know what market value is, just that some homes are priced better than others given the buyers’ individual need and budget. This process usually leads a buyer to the right price.
Sellers will set a price, but once the home is exposed to the market, they will usually know quickly if the price is close to market value. A home that is priced very high will typically not receive many showings. A home that receives showings, but no offers, might only be slightly high. A home that is priced too low will often receive multiple offers and still sell for close to or even more than market value (depending on many factors but there are different opinions on this).
This begs the question, if buyers usually get the value right, then why do banks require an appraisal in a purchase? The answer is that buyers usually get it right, but sometimes do not. Some properties are unique, and buyers will just fall in love without sound justification for the price. Other times there are non-market factors that influence the price. Whatever the case, banks use appraisers as one way (of many) to verify and protect their interest in the loan. The typical appraisal cost is very low in relation to the cost of making a bad loan. An independent opinion of value from an experienced local certified appraiser just makes good financial sense.
Did I leave anything out or do you want to join in the conversation? Let me know in the comments below.
I hope that all of my readers are enjoying a relaxing Christmas holiday. For those of you who missed it, last Friday I was honored as a guest on 93.9 KPDQ Real Estate Today with Gloria Hahn. The following is a recording of the live show, without commercials. (It is entertaining, a great way to get to know me, and easy to listen to while you work.)
The topics that we discussed on the show included the following:
How did I get into appraising?
What is the job of a real estate appraiser?
When might a homeowner need an appraisal?
What is market value?
How long is an appraisal good for?
Is Zillow an appraisal?
Why should you get an appraisal before you sell your home?
How can homeowners increase the appraised value of their homes?
What should homeowners do before an appraisal?
What should homeowners avoid when working with an appraiser?
What should you do if your appraisal comes in low?
How do appraisers make adjustments?
Are all appraisers the same?
How do you select an appraiser?
I plan to post a transcript of the show and link it here as soon as it is available.
If you find this information interesting or useful, please subscribe to our blog and like us on Facebook. Also, please support us by making Portland real estate appraisal related comments on our blogs and YouTube videos. If you need Portland, Oregon area residential real estate appraisal services for any reason, please request appraisal fee quote or book Gary F. Kristensen to speak at your next event. We will do everything possible to assist you.