Who Knows More About Home Values, Appraisers or Realtors?

October 26th, 2015


Who knows more about a home appraisal? Realtors often think appraisers are not the most accurate assessors of real estate values. And appraisers often think realtors know less than they do. Maybe they are both right? I have had appraisers admit that a good realtor will likely know more than an appraiser about the value of a certain home. This is because most appraisers are appraising a wider geographic area a than a realtor may specialize in. Many appraisers cover a multi-state area. Whereas a lot of realtors specialize not only in one state. Also maybe only in one city or town. So, it is hard to expect an appraiser to know better than a realtor. The appraiser may be covering two or three states and dozens of counties. Whereas the realtor only works one county.

What Affects Real Estate Prices

I think appraisers know more about the rules and guidelines relating to how to analyze and value homes. Realtors may know more about what a marketplace expects in a home. And they may know what amenities are more or less desired. A realtor may not understand why a certain comparable home sale can’t be used because it’s too far away from the subject property. Or because the style of home is too different from the subject property. But an appraiser may not know why a large lot is worth more than they are willing to give it value for in a certain neighborhood.

Proper Comparables For A Home Appraisal

Many realtors are not aware that you cannot count below grade square footage, even if it’s finished, in the gross living area of an appraisal. Or a realtor may know this rule but market the house anyway citing a larger square footage figure including the finished basement.

Finished Basements Do Not Count In Gross Living Area

I had one appraiser tell me, “It’s market perception. So if granite countertops and stainless steel appliances help a place sell for more in a certain marketplace, then a home is worth more with those amenities than other homes without them. But if a marketplace expects those amenities anyway, then maybe adding them does not add value.” He went on to say that a realtor is likely better able to interpret market perception on a local level than an appraiser.

Renovations And Expected Returns

When it comes to views, that gets complicated according to my appraiser friend. Giving a view a certain value needs to be backed up with other comparable sales to show that other comps sell at a premium for the same view.

The bottom line is that determining the value of a home can be difficult. And different parties will have different assessments, based on different criteria they are working within. A home appraisal is a good counter opinion and check and balance to a realtor’s opinion or the market’s perception.

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Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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