In answer to this question, one appraiser I recently spoke with jokingly said, “How about a dart board?†Seriously, though, a lot of people are ready for a dart board. Since the mortgage crisis began last August, every lender in the good ole US of A is sweating bullets over home values. Most analysts think the mortgage crisis occurred in large part because of over-valued homes, so naturally everyone in lending is a little sensitive about appraisals. The Federal Housing Administration (FHA) now requires all appraisals to be based on sold data from the last 90 days. Furthermore, the feds want at least one pending sale and/or one active comparable included with the appraisal. Some lenders will still accept sold comparables from six months back, but that’s not true across the board. And sold comps from 12 months ago are extinct.
Then there are some appraisers putting more emphasis on actives rather than solds. Their philosophy is that in a rapidly changing market the actives are a better gauge of value, assuming realtors don’t pull list prices out of thin air. Jay Vici, an appraiser with Rocky Mountain Valuation who’s been in the business since 1989, came on the scene right after the savings and loan crisis so he knows a thing or two about a volatile Denver market. Vici believes the most up-to-the-minute indicator of your home’s appraised value is “pending sales†in your area, provided the appraiser can get that information from listing agents.
Now, back to the notion of pricing your home. Vici’s advice? Know your competition. Do your homework and know what else your potential buyer can purchase for the same amount of money. Compare your home with others competing for your buyer and ask yourself: Is my home a better value than all the others for sale in my neighborhood?
