I think the Real Estate Appraisal Industry in Calgary, Rocky View, and Foothills is a load of crap. I will refrain from mentioning names here but I will cetainly let you know how I feel.
I have been selling properties for 10 years now and I know values. For the second time in just the last 30 days, I have SOLD my listings only to have the appraisals come in so low that the deals fall apart. Now it is my understanding that the appraisers are under serious pressure to be putting low numbers, but they need to understand the impact of their ridiculously low appraisals. I am talking about $100,000 to $150,000 lower than the actual conditional selling prices.
How is it that the market will yield what I sell the property for, and then the appraisal tells me it is worth $150,000 less than what somebody is willing to pay? Do these appraisal companies understand that they are in fact reducing the values of all of the properties in the area? Do they understand that there are people out there selling properties for the third time as they keep crashing all of the deals that us REALTORS are putting together on their homes? Do they understand that I am getting calls from neighbours so excited about the fact that we actually conditionally sold properties for decent numbers in their area within 30 days of list price, and I eventually need to tell them that “the appraisal crashed the deal”?
I have one particular client carrying 2 acreage properties, to the tune of $8000 per month, and I had one of his properties SOLD long ago and this poor family having to pay these ridiculous interest payments now all because of a brutally low appraisal.
As you can see I am gettng to the end of my rope with this problem and something needs to be done. I should not have to do my job 3 times in order to get a deal closed for my seller clients. Not to mention the fact that I am not getting compensated on these deals. My business is not capable of me having to do my job over and over to close one transaction. This is absolutely ridiculous.
Comments of all kinds would be greatly appreciated. Whether or not you agree I will appreciate all perspectives.
Tom.
{ 2 comments… read them below or add one }
hey Tom
I have in the past had the opposite problem – appraised too high for what the market will bear. Acreages are sometimes hard to appraise not only for us but for the appraiser. My suggestion is to take the three comparables they used, do your own and take it to the appraiser to see what adjustments they will make based on your data especially if there are out-buildings which may not have been adequately compensated for if they had additional upgrades-options, or if their comparables were too far outside of your selling area.
cheers, Elke
Thanks Elke. I did speak with the appraiser on this one. It turns out that they do not consider ANY of the outbuildings whatsoever. This particular property has numerous outbuildings that are extremely valuable. I understand that if the lender places a portion of the financing as “residential use” and a portion of the financing as “commercial use” the deal will be okay. The kicker is that the rate of commercial borrowing is higher than residential so nobody really wants to do this. If we include the structures the lender will fund the deal and the appraisal will work out. The big issue upon further investigation today (after my blog post rant…lol) is that people in Ontario are making up these lending rules and what is actually happening is that we need to reduce the asking prices to reflect zero value for the outbuildings in order for the financing approval to work out. This is a serious disaster for most acreage owners and the values are dropping faster than they need to. If the buyer has 50% down which not a lot do, then they can buy the price down to the appraisal amount and then put down their 20% on the appraisal value to avoid insurance premiums. If they are 10% down or 20% down buyers the deal will not go through even though the price is more than reasonable. I hope this makes sense….
Thanks for your comments Elke!
Tom.