I recently listed a home for $699,000 when the appraiser had said the house was worth $775,000.  The owner of the home assumed it would sell within a week because we had it priced $75,000 below appraised value.  I told my client that I thought the appraiser was incorrect and I was pretty sure that we would not be able to get over $700,000 for the house.

After we had the house on MLS Realtor Tour and I received feedback from the Realtors, I realized that we needed to adjust the price again.  We presently have the house listed at $649,000 – we have not had a single offer and have had very few showings.  The showings we have had, people have not been excited about the house. 

If it is on the market for $650,000, how in the world did an appraiser think the house was worth $775,000.  There is an answer to that question.

When appraisers appraise property, they look at comparable sales of comparable size homes.  They have not been in most of these homes that they are using as comparables and we all know that people do not buy homes based on square footage – they buy houses based on style, how they look, how they show and how it fits their needs.  In fact, in today’s market, it is unusual for a prospect to ask me how many square feet are in a house.  They either like it or they don’t like it.  It is the feel of the house that is important.  Since an appraiser has not see then comps that they are using, they do not know the feel of the house.

In a market that is trending down, the older the comp, the higher the price as prices are dropping.  We see that all the time. 

I had a client yesterday drop off a copy of an appraisal on his house with a note to me saying that this should make my house easier to sell because it appraised for more than it is currently on the market.  I told him that it did not work that way because people really do not care what the appraised value of the property is, they look at the competition on the market today and they determine value based on what else they can buy in the market at the same time.