HOW TO STOP INFLATED APPRAISALS, AND /OR ARRIVE AT A REASONABLE MARKET VALUE

Example taken from a recent appraisal.

The property was purchased 03/1999, the sales price $450,000, days on the market, 397. Original list price was

$550,000. The prior sales date for the property was 03/1986, the sales price $340,000, the increase in value

for 13 years was $110,000/ 32.24%.

08/2003, this property was appraised for $1,300,000. No major improvements. In 4 years the subject’s increase in value was $850,000,/ 188.89% . The subject property square footage was in the 2900- 3000 SF range. Subject’s market median value for a property in the 2,900 -3300 SF range, was $649,000

The subject was appraised 06/2008, the value opinion was in the $750,000 - $800, 000 range

How, why was the property appraised a $1,300,000? Was it fraud , or was the appraiser incompetent?

The appraiser should have researched the market values for the subject property, the subject building, and the

subject market.

Subject Market:

The market 12 month increase in value was 07.69%, and a decrease in sales of 16%

The market 6 month increase in value was 07.93%, and a decrease in sales of 11%

The market 3 month DECREASE in value was MINUS 07.45% and a INCREASE in sales of 93%

Based on above data, is this market increasing in value? It appears the market sales numbers are increasing due to lower sales prices. Therefore the values in the subject appear to be decreasing.

If you are buying and/or selling a property, get a good appraisal for negotiation purposes. The appraisal should

have the complete sales history of the subject. Also at least the 2 year history of the market, sub division, the building if a condo/ coop, the map coordinates, and if in a urban area a four block radius of the subject property.

Example:

The subject is a 1 story, brick, 6 bedrooms, 3 bedrooms, 2 bath, full unfinished basement, 2 car garage age 30 years

Market data can be for 1 category and/or a combination of categories. I.E.;

Active Single family listing

Total number of listings, value range low to high, median value, average value, doom

Most (number) are in the dollar value range, percent of the l market sales

Brick 1 story

Total ( number) of listing value range low to high, median value, average value

Most ( number) are in the dollar value range, percentage of market sales

Brick 1 story, 3 bedrooms, 2 bath.

data format is the same as above.

Continue the category process until their is no data for comparison.

Pending single family

same format as the active listings.

page 2

For sales it is the same format, plus the addition of the past year and prior year, plus the median and average

differences by dollars and percent.

Sales Single family

Number, date (07-07 -07/08), values low to high, median dollars, average dollars, dom number ( days on market)

Number, date (07/06 -07/07), values low to high, median dollars, average dollars, dom number

Average one year increase or decrease (dollars) and percentage between the last year, and previous year.

One year median increase or decrease (dollars) and percentage between the last year and previous year

Most, (the past year number) are in the value range, (dollars) and the percentage of sales

Please note in the past year there was a decrease or increase in sales ( number/ percent), and a median increase

or decrease of dollars/ percentage, and / or percentage per month.

Single family, 1 story, brick

Same format as above,

Continue the categories until there is no data.

Sales single family past 6 months. (date)

Use the Active format

Number of sales, values low to high, median dollar, average dollars, dom number.

Most (number) are in the low to high range (dollars) (percentage)

Continue the categories until there is no data

Other sales, Present year

number, attached, value range, dom

number, 2-4 Unit value range, dom

number site value range, dom

List the competing site values

Address, square foot, sales price, sales date, price per square foot.

All sale single family, attached, 2 -4 unit

number date (07/07-07/08), values low to high, median dollars, average dollars, dom

number date (07/06-07/07), values low to high, median dollars, average dollars, dom

Same format as single family above.

Sales single family ( 6 months)

number, date (01/08- 07/08) values low to high, median dollars, average dollars, dom

number date (07/07 - 01/08) values low to high, median dollars, average dollars, dom

Same format as the single family above.

Sales single family (3 months)

number, date (01/08-03/08) values low to high, median dollars, average dollars, dom

number, date (03/08-07/08) values low to high, median dollars, average dollars, dom

Same format as the single family above

Page 3

When accessing the data for the report the date format is, "month, day, year". In the report only month and year

To negotiate a purchase and/ or a sale of a property you would want to be in the best position. However do you

get in that position is by having the numbers that will support your value opinion of the said property.

If you have an appraisals with the data that supports your selling price and/ or your offering price, you should

be able to make a deal.

Short sale, how to convince the lender the offering price is what the market will support,.go back and review the subject’s market data at the time of last mortgage, and at the time(s) of the prior sales, did the market at that time

support the sales price, and/or the mortgage value.Were the values inflated? If the values were inflated, this will

give you some leverage in the negotiating the value of the property..

An appraisal with the market history of the subject property, along with the subject market history , listing

the market data values by categories, time periods for the active, pending and closed sales is the best negotiating

tool for buying and/or selling a property.

The market data in the appraisal report will explain, and show the reader how the value opinion in the report is supported by the market.

Jack Schlenk

Certified Real Estate Appraiser

773 685 8300,

jack127@att.net

web site.WCUAppraisals.com