Are Appraisers the Devil? PART 2 Real Estate Appraisal Between The Lines

Episode 027 - Are Appraisers the Devil? PART 2
Are you a Netflix binge-watcher? Then, we have a 3-part binge-worthy listening opportunity for you! Welcome to our 3-part series all about how to more effectively price properties. In this series, we "deep dive" into understanding the appraisal process.
In today's episode--PART 2--we show you how to write a better CMA and what an appraiser is thinking about when they're evaluating the data. We discuss items like comp selection, gridding comparables, and adjustments to give you a better handle on the valuation process.
Be sure to watch our accompanying breakout video as B explains the difference between "Qualitative" and "Quantitative" adjusting. Sometimes, it's the little things that can make the difference between a good and a great CMA.
No, appraisers aren’t the devil! They provide a service. If you can understand how the appraisal process works and what is expected, then you'll get better results in your next appraisal.
 
SHOW NOTES
01:10 – B represents the appraisers and Cate the “angel” is here to represent the agents. 01:40 – Song of the week: Devil Went Down to Georgia, Charlie Daniels Band 02:40 – Christian: name one other Charlie Daniels Band song? “In America.” 04:15 – How to create a CMA: comp selection, gridding comparables, adjustments and reconciling. 04:38 – Cate: CMA is a comparative market analysis; not an appraisal. 05:22 – Christian: how close is the appraised value to a CMA value. 06:18 – CMA is “rudimentary” or as detailed as an appraisal. CMA doesn’t have much regulation. Appraisal will have more detail. 07:40 – CMA should look “more” like an appraisal report in the steps. 08:00 – Appraiser may not choose the same comparables as the agent due to appraisal requirements and guidelines that the agent is bound by. 08:30 – B’s example of ranch home being appraised and what comp might be needed for value AND for underwriting. 09:45 – Cate: doesn’t make sense to use the 2-story comp, but appraiser has to make the underwriter happy. 10:08 – Comparable searches should start with the major variable such as size, bedroom count, design, lot size. Realize you are not going to always find the most ideal comparable properties. 10:55 – Complicated property or an area without a lot of comparable sales: use the “floor” and “ceiling” method. Find a comp that is better overall than your property that sets the ceiling (high number), my home is NOT worth more than that property. Find comp that is inferior overall that sets the floor (low number), my home is worth MORE than that property. Sets a range to work within. 12:22 – Cate: as a newer agent, floors and ceilings is a great way to practice. Helps when presenting to seller and buyer. 13:03 – Helping people understand and see the numbers. Searching for comparables is tough. 13:27 – Consider using pending, listings and expired listings to help. They are not ideal but can be helpful. 13:47 – Cate’s Side Note Tangent: fiddles (aka violins) appeared about 1,100 years ago. Fiddle is more for dancing and violin is more for the classical music playing. 14:55 – Cate: did you play an instrument? B – bass guitar; Christian – played drums his whole life; family played in a house band and got to meet many famous country music singers. Super B did not sign his autograph book. 17:40 – Properly grid comparables is HUGE! B is right every single time! You’re right B. 18:40 – Having the comps on a grid allows you to see all the element of comparison so you make a more critical look at the properties. 19:05 – Excel spreadsheet that agents can use. Email B if you would like a copy of that grid. 19:30 – Apply the adjustments. What is a fireplace worth? The adjustment is the LAST thing you need to worry about. The adjustments will make little difference comparables to the property you select as comps and how you grid them. 20:05 – Adjustments are extrem