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  • Comment Detail

  • Date: 01/12/21
    First Name: Dawn
    Last Name: Parker
    Email: birminghomerealty@gmail.com
    Organization Type: other
    Organization: Birminghome Realty PLLC

  • Comment

    1. In the greater Birmingham area where our company operates, there are many rural communities that suffer from a lack of "comps," making the need for cost based appraisal almost mandatory if the true value of these properties are to be remotely close to equivalent properties in comparably sought after urban communities. Currently, most appraisers are forced to find comps from 10s of miles away often resulting in badly undervalued appraisals, primarily because the further away from the urban center the less value properties traditionally appraise for. Allowing appraisers the freedom to choose cost based over comps when appraising rural community properties could alleviate this problem.
    2. We have observed that appraisers in our area, especially those utilized by VA, FHA, FM&FM do not seem to consider the rate of rising home prices when making their appraisal. With the average sale price in our current market rising at a rate of 2 to 4% a month and as much as 29% over last year month over month, a comp even 1 month old can be significantly lower than the market value at present, and a comp 90 days old prohibitively lower. We suggest introducing a formula that adequately adjusts for rising market values be implemented that accurately calculates what a property is worth based on the percentage of increase year over year and month over month, not just for a geographical market, but down to each particular neighborhood, in that not all neighborhoods within a greater real estate market rise at the same rate.
    Furthermore, supply and demand which can be calculated easily by "days on market" should also be a consideration for a particular property being worth more than present comps. For example, we see many properties that garner multiple offers i.e. bidding war, yet the appraisal comes in far below what the home's value is as attested to by both seller and a multitude of qualified buying candidates. We suggest an algorithm that takes into consideration the level of demand for a particular property when determining it's market value.