For Buyers and Sellers, Appraisers Offer Value

While not as strong as the last five years, the housing market is stable. Nevertheless, sellers may be wondering what to do if price reductions become routine because home inventory begins to outweigh Florida home loan demand.

For most individuals, the ultimate answer about value will come from the appraiser hired by the purchaser’s mortgage lender.

What do appraisers see in the shifting sands of real estate for 2006? And what advice do they offer sellers, buyers and realty agents?

The following is a sampling from a series of late-December interviews conducted with veteran appraisers around the country. They offer practical insights for the early months of the new year.

Learn about your real esate market

Know your market sub-segment - the general price band or location of your property. Frank Gregoire, vice chairman of the Florida Real Estate Appraisal Board and an appraiser in the St. Petersburg-Tampa area, said a cyclical slowdown is well underway in the middle- and upper-price brackets of the Florida west coast, for example, but not in the lower-cost, entry-level segments of $250,000.

To stay in touch with multiple sub-segments, Gregoire not only studies realty industry data on recently closed sales and the time they were on the market, but he also talks to realty agents who are grass-roots experts in specific areas and price segments.

Agents are on the front lines, they are in daily touch with sellers and buyers, and “they really have a very good grasp of where things are heading,” he said.

That specific information gets factored into the total appraisal process, offering a better perspective on sales price variations in “comparables” he selects for a home appraisal.

Hey, prospective buyers/sellers: Hire your own apprasier!

Another piece of advice from Gregoire: If in doubt about pricing, hire a licensed, long-established appraiser as a consultant for an hourly fee. Though most appraisers work on contract for lenders, they are not prohibited from working as consultants directly for consumers, either as the source of a second opinion or to nail down a listing price.

Appraiser Tom Berge, of the Alhambra-based Berge Co., noted that although many Southern California sellers are apparently unaware of it, there is currently “just about zero inflation” in some segments of the residential real estate market, with the exception of the low end.

That reality is a shock to some sellers and lenders, Berge said, “but as an appraiser I have no choice, I have to go with the comps.”

Berge said he ignores pressure by lenders or realty agents to “hit the number” on the sales contract. But he points out a way - ethically and legally - for sellers, buyers, lenders or realty agents who think an appraisal is low to influence the final result:

“If you want me to adjust [the number], go out and get me better comps,” he says, for similar properties that closed recently in the same vicinity, with the same size lot, amenities, etc., but that carry a higher price.

Be realistic about the Florida housing market

Chris Call of AREAS Appraisers Inc. of Springfield, Va., has this three-word piece of wisdom for sellers and buyers in softening markets: Just be realistic. Don’t be greedy as a seller, unless you want to sit dead in the water for months without an offer.

As a buyer, don’t expect sellers to bleed for you. Generally they won’t sell for less unless they absolutely have to. Read through our guide about how to make a Florida home loan offer for more information on how to receive the best deal.