Lenders have become increasingly strict on real estate appraisals. During the housing boom, most of my clients didn’t blink an eye if I used a comparable that sold 6 to 12 months ago. During the current housing market, lenders want the most recent sales to be used in real estate appraisals and most of my clients want two active or pending listings be added to the appraisal as well. In my market in Georgia, I am lucky to have three sales in the past 6 months located within 1 radial mile of the subject, much less sales within the past 3 months.
It use to be common to receive complaints from lenders that I was appraising properties too LOW, now I receive complaints I am appraising properties too HIGH. That’s right, too HIGH! The expectation seems to be that every market has plenty of sales, all just like the subject, with a similar age, construction, lot size, and especially GLA (gross living area).
Not only are perfect comparables expected as well as active listings added to the appraisals, it is becoming common practice to require appraisers to detail their search efforts. Below is part of the instructions I received with an appraisal order.
In each appraisal addendum please include a brief description of the parameters used. For instance, the criteria used in performing the search-proximity or distance from the subject, lot size, quality, age, room count, gross living area, basement, additional structures, etc. Also included in the description should be the process or steps taken by the appraiser to narrow the search down to the comparable sales analyzed in the report, or to expand the search in the event the first pass revealed insufficient data. We would also like to see the supporting documentation of the search conducted attached as an addendum to the appraisal report. This documentation would be, for instance, a one-line MLS printout of the final search conducted in tabular format.
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