Are They Comparing Apples to Apples

August 21, 2009 · Lee Ginsburg

When you and I purchase a new computer we compare the memory, the speed, the screen size: does it come with a camera, DVD player/recorder and more. A home the largest purchase most of us will ever make often is not reviewed with such detail by the people doing the lending and sometimes by the people doing the spending. Yes, they look at the square footage, the general condition, and the location. Appraisers often do not have any idea of the cost of section one termite repairs. The differential in repair costs could be 3%, 5% even 10% of the purchase price. Roofs costs could range between $5000 to $25,000. A home with a two year old roof should be valued higher than one with a 25 year old roof. Appraisers know roughly how old the roof is on the subject property but they don’t know the age of the comparables. Same with double paned windows and furnaces. A home with copper piping through out or or with upgraded electric needs to have additional value added to it. All this information does not show up in the MLS. The MLS shows if the kitchen or baths have been cosmetically remodeled but does not go into detail if the cabinets, floors, lighting was all upgraded and how much they were upgraded. Is the home landscaped and does it have automatic sprinklers? This could add $5000, $10,000 up to $50,000 or $60,000. So.. What am I saying. The government has put in all of these new laws to make appraisals non biased but we as an industry have to work together and help them compare apples to apples.

We need to add more info to our MLS data reports. Even comparing selling prices is not a fair comparison if you don’t have all of the information. So many purchases have a credit for closing costs and or repair costs. Whole neighborhoods will be overpriced real quick when just a few homes were compared to homes with 3% credit backs. I realize some MLS’s are more progressive than others and include some of this information now. Some appraisers call and get this information. We as agents, could make this a very simple process. I suggest we add the following categories to the MLS data: age of roof, furnace, type of plumbing and electric, Cost of section one termite repairs if not completed, Amount of credit back, type of financing. If we put this in an area only available to agents we will be more valuable to our clients and help the appraisers compare apples to apples.

www.leesellsmore.com

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Tags: Agents, appraisals, appraisers, bay area realtors, credit back, Lee Ginsburg, Leesellsmore, MLS

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8 Responses to “Are They Comparing Apples to Apples”

Larry Franzella on August 21st, 2009 12:18 pm

Lee,

You are so right, you can’t just look at the sales price and have a true understanding of the value of the property. This is inofrmation that a Realtor with knowledge of the area can really help sift through.

Larry
Kathy Wall on August 23rd, 2009 3:14 pm

Good article, Lee. Even worse than the fact that the appraisers don’t have the data they need to compare, is the fact that so many of them are now appraising homes in areas that they know nothing about. As you know, this has been caused due to the changes in the appraisal laws and the fact that they are all now tossed into a pool and chosen randomly. Some of them are coming from 50 miles or more from the properties they are appraising, which is ridiculous.
Terry Birt on August 23rd, 2009 4:34 pm

Lee it would be nice if the MLS had that information…but it does seem that it will not happen for awhile… as far as our roles in assisting our buyers,sellers,& appraisers – agents need to talk to their piers who have closed and pendings sales in the areas of the subject properties..I know that you are proactive in that way..it is amazing what a large perecentage of agents do not take their time to do better research to advice their clients..
Nicole Machado on August 24th, 2009 12:32 am

Lee,
I couldn’t agree with this blog more. You’re absolutely correct in the price differences for different upgrades and longevity of materials. This should definitely all be taken into consideration when it comes to appraisals and even CMA’s. Great food for thought!
Adam Chinn on August 24th, 2009 8:00 pm

Great post Lee!
It would be very helpful for everyone if they had this additional information. As it is now, it is possible but at times difficult and time consuming to call and find out all the information. If it was in the MLS when the transaction was closed and listed it would be helpful to everyone. Although I do agree with Terry, it is probably not going to happen for a while so until then we need to continue to do our best for our clients and get them as much helpful information as we can.

Thanks again for sharing,
Adam
Brian Boisson on August 25th, 2009 8:53 am

Excellent points, Lee!

The more accurate information, a more informed consumer!

Brian
Jonathan Shaw on September 3rd, 2009 9:16 am

Hi Lee,

I guess easier said then done. But this type of knowledge and perception by an agent really can be a difference maker. I know that this view helps you be the successful, professional realtor that you are!

Jonathan
Shokoofeh Nowbakht on September 6th, 2009 10:33 pm

Lee,
Great points. But, I agree with Terry that it may not happen for while, or a long while. I will ask one of my friends who has an appraisal company here in Bay Area to see what input he can add to this.
Shokoofeh