Home Appraisal Problems in Chatham County – What Can You Do?

We do have some appraisal issues right now, every now and then. So, one of the things we need to know about appraisals is that today is the current market, but appraisers are looking at closed comparables that were, at a minimum, yesterday’s market. And we are in an escalating market right now. There is a shortage of inventory and our prices are getting pulled upwards from the … the Raleigh market, or the surrounding areas markets.

So, back 10 years ago we felt as though Appraisers were very hard on Pittsboro and Chatham County. They would … They would drive out here and there would be a house for 250, and they would look at that and go, “The house can’t be 250. It’s out in the middle of the sticks. Who would wanna live out here?” And so, we really had to fight to get the values for our clients, to make sure that it would appraise at 250.

Now, we’re finding that it’s going a little bit the other way where the Appraisers come out here and go, “Seriously? 250? This house would be 500,000 in Raleigh. So, we’re getting a little bit of a pull benefit from the Raleigh market. However, they do still look back in the neighborhood. In general, this is loose … this isn’t the rule for everybody, but you’re looking at a 10% variance in square footage. You’re looking at a 10% variance allowable for acreage, and you’re looking for a six mile radius.

So, when you have a 3,000 square foot home on 10 acres, you have to find another one that is no more than 3100 … or 3300 square feet, and no less than 2700 square feet. No more than 11 acres, no less than nine acres, within a six mile radius. That is difficult … That’s why this Zillow, Zestimate stuff is just crap.

People need to know right now Zestimate is not gonna give you the value of your home unless you live in a traditional subdivision and that same floor plan has sold five or six times in the last six months, but when you try to look at rural property: a farm or a raw piece of land and do a Zestimate, they’re just pulling … they are throwing everything into that … that sausage right there. They are putting … They’re putting the $50,000 trailer in the million dollar home because that’s all within the same little area. It’s just not how we do real estate. You have to compare apples to apples.

What … very important. What buyers and sellers need to know is that you need a skilled agent that knows how to deal with Appraisers to get the results that you want. It’s not manipulation. There are facts that Appraisers cannot see at a quick glance of a home or on the MLS sheet. So, if you have a home that has a rental cottage, and that rental college is getting $800 a month. The Appraiser needs to know that ’cause that would have a profound impact on the value.

If someone bought a home and they added a bathroom and added more square footage on the second floor or a walk-up attic or whatever, and the Appraiser’s looking at what this house sold for a year ago, but they didn’t know about those improvements, that’s significant as well.

Also, because we’re in a rural area, not all sales are on MLS. So, when you have the ability to call the Appraiser and say, “Hey, I just wanted to let you know I researched at the Register of Deeds, there were these three other houses in the neighborhood that weren’t on the MLS.” That is hugely important. The Appraisers aren’t bad people. They want … They want to make a deal happen, but their job is to make sure that the lender’s collateral is good. So, they’re not gonna stick their neck out for you. They’re not gonna do any favors for ya. It doesn’t matter whether or not you’re nice or … Surely, be professional or whatever, but they’re really … they’re really focused on you giving them good data that helps them verify that the bank is actually giving a loan on a property that’s worth what they’re giving the loan on.

It’s not … It’s not a passive thing. I see many Listing Agents go, “Oh, got an Appraiser tomorrow. Hopefully … Hopefully he’ll come through.” And they’re not taking any action. This is your opportunity to give a call to the Appraiser, and say, “Look, I know you know how to do your job, but I want you to be aware of X, Y, and Z. I never have them say, “Eric, you’re being a jerk. I know how to do my job.” They’re like, “Thank you for that information. That’ll help me.” And they want help. They’re … You make their job easier for them. They’re going to be happy and … but they need good, good data.

So, it is an escalating market. Like I said, they’re turning back to yesterday to … to use those numbers. It’s difficult when prices are going up to substantiate some appraisals, but I do think it’s important for the Agents to be involved in that process. There’s nothing … There’s no interference. There’s no Dodd-Frank rules that says you can’t do X, Y, or Z or whatever. You are allowed … You’re not allowed to pick the Appraiser, but you are allowed to give them additional information to help them do their job.