Why does my house appraise for less!! I don't Understand?

Well, there are many differing opinions to this in the Real Estate business however there is really only one. The competitve market analysis, while being a usefull sales tool for an approximation of house value is not accurate to say the very least in determining your appraised current market value to the lender. Go to www.tombrewerjr.com for more information.

An appraisal takes into account many more variables than a CMA and does so because it is a necessary measurement to determine actual market value. While there will always be Real Estate professionals that will tell you that your market value is X, the appraised value will be different 99% of the time.

Why are competent Real Estate agents not accurate on value? The reason is very simple. The Real Estate agent of today is not a mortgage professional and by no fault of there own does not completely grasp today's mortgage market environment. The mortgage market has gone through a massive transformation in the last year and more specifically within the last 3 months.

The appraisal takes into account some of the following factors and is an answer to quite a few seller's questions when a neighbor's house might have sold for more. I will list a few below however these are not all of the factors but certainly some that have a major impact potentially when selling or buying your property.

1. Seller Concessions - When an appraisal is done with thew sales approach all comparable sold properties will have a deduction for seller paid closing costs. This is not calculated by the CMA.

2.Improvements - Kitchen and bathroom updates are the best investment in a property. The appraisal will adjust value based on this.

3.Over Improvements - A common mistatke that is over valued is new carpet,paint and flooring. While this will help an appraiser in overall property condition adjustments they are not a huge bang for your buck as these are considered habitability issues to an appraiser. A house needs a floor, paintand carpet. Pools in most markets are one of the worst ivvestments as the appraiser considers the cost of upkeep and condition of the pool when making a dertermination of value. Nevertheless, pools will return very little on investment.

4.Major Mechanicals - These are very important to overall value as new HVAC,Furnace and roof are important in the long term condition and habitability of the property. Pleasae note that a hot water heater places no increased value in this discussion.

5.Declining Markets - Very new to the industry and not fully understood by many Mortgage Brokers or Real Estate Agents. These are recent sales - and by that I mean within the last 120 days. If there are foreclosures or fire sales in your development this will effect your value in todsay's mortgage world. The appraiser may very possibly notate declining market on an appraisal . This not only effects value but LTV on a perspective buyer's loan as well. The number 1 transaction breaker in the Real Estate industry today revolves around this topic.

There will be more changes to the lending world in the next 6 months so stay tuned for more as we continue to adapt.