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2017-04-24 13:27:55
Appraisals Can Be An Issue in a Hot Market

I don't know about you, but I'm seeing another reason appraisals can be an issue in a hot market!

I know, with average and median sales price rising like crazy, how can this be?'

It's actually quite simple, really. There are a myriad of reasons.

I recently saw this article from Bill Gassett @ Maximum Real Estate Exposure that outlined 12 reasons why an appraisal can be low..

Here is an overview of various reasons; login to Bills site to get more info. 

  1. Unequal Area
  2. Different Calculations
  3. Bad Comps
  4. Value of Improvements
  5. Market Velocity
  6. Blind Offer
  7. Best House in Area
  8. Functional Obsolescence
  9. Few Comps
  10. Unique advantages
  11. Inexperience
  12. Emotional Offer

I think Bill really touches on the biggest reasons appraisals can be an issue in a hot market, and I've seen most if not all. But...here is one more that is causing some grief in the Tooele Utah area.

It has to do with Solar Panels.

Last week I attended a conference hosted by the Utah Appraisers Association. One of the modules was on '5 Appraisal Deficiencies' and it was also pretty consistent in it's conclusions, so I know this was good info!

I also learned about 1 issue that has come up for buyers AND sellers of late. That is the problem in attaching a value to permanent solar systems.

With the recent increase in solar installations in Tooele UT we are seeing little or no appraised 'value' attached to an item that may have cost tens of thousands of dollars to install.

The answer was fairly simple, and it's one not everyone will agree with.

The fact is, these systems aren't really part of the market yet.

From an appraisal standpoint, until home sales with solar reach a statistically significant number of properties, they aren't going to assign much value to them, and underwriters are questioning what values they ARE giving them if they do use them.

So, for the foreseeable future, we need to manage our sellers expectations a bit.

There may be, and likely are buyers that think Solar is a 'must have' item when purchasing their next home. But for the most part, buyers are seeing these systems as a nice feature to have, but not vital.

As value is determined by what a willing buyer and seller negotiate, the buyers aren't there yet!

Appraisal issues are still out there, and we just added another one.

But if we do a good job of prepping our sellers for reality, all should be well!

Want to talk more about real estate, making an offer on a Tooele home? I'd like to help guide you through the very rewarding process.

You can reach me or my partner Berna Sloan @ 435-840-5029.

Not only do we know why another reason appraisals can be an issue in a hot market, but what you need to do to protect yourself.

 
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