The Serious Danger of an Inaccurate Appraisal

During the buying or selling process, many people take for granted that an appraisal will come in close enough to the buyers or sellers agreed upon contract sales price. They assume that, if their realtor accurately priced the property and they found a willing buyer who felt that the price was justified, that there should be no problem.

Most of the time appraisals are correct but....there are some instances when an inaccurate appraisal can have dire consequences on not only one contract, but the overall value of multiple properties and indeed, entire buildings.

An inaccurate appraisal, (i.e: an appraisal that does not reflect the correct value of a property as compared with other properties) can cause overall property values to decrease.

Here is what happens:

When appraisers look at comparables ("comps"), they look at about 3 properties that are similar in square footage, location, number of bedrooms and baths and of course, overall condition. They then estimate the value of the property on what these similar properties sold for. If a property was appraised too low and then sold for the lower price, another property with the same attributes sold after this property could realistically go for $20,000-$30,000 below what it is actually worth!!! All because the appraisal was not accurate.

Now, this is for one property. Imagine if you lived in a condominium and each unit was then successively based on the appraisal that was inaccurately low. Ultimately, the entire building loses out because, in sum, all owners lose money in property value that they could have made.

The moral of the story is that, you have to be very careful when selecting an appraiser. You must ask the lender whether the appraiser they send to appraise the property has knowledge of the
local market in which the property is located.

One local appraiser that I always rely upon is David Lipsman. He knows the local market inside and out and is extremely attentive to client needs. He has always gone the extra mile and is always available when I need him. He can be reached at 301-461-1153 or via email at: dlipsman@gmail.com


Happy Selling!