With home valuations coming in all over the board, many have been asking the question if there needs to be some sort of conformity to the way that appraisals are done.
What is an appraisal? It is one mans opinion of the worth of your house compared to other like homes that have sold in the past 3 to 6 months. Ok, then how do the appraisers come up with the values they do? The answer is that there is no set rule to determine value of properties. Most Banks will hire firms to determine the valuation and then they determine how to market their repossessions accordingly.
The questions being, why do well kept homes that are maintained by the owners the same appraised value compared to a trashed home with no yard? The answer is the comparatives are only taken off of the local MLS for homes sold and occasionally from tax records. Does the appraiser go to all of these homes to see first hand the condition? The answer is NO. They currently use homes with the same square footage and number of rooms etc. and run them on paper. The sold amounts are what your home is up against.
The way that the appraisal has ruled the cost evaluation is probably broken, but the banks go along with it on a daily basis. Realtors can come up with the same value if this is the case. These after all are the comparables they use to find their list price. If truly comparing homes have nothing to do with it right now, then why do we need appraisals? Reform is needed.
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