Supporting Market Conditions, it is harder than you think!

Supporting market conditions is a very important part of the appraiser’s job- it is mostly misunderstood by sellers, and often miscalculated by realtors. It takes many  years to understand the foundational  value of a home.

It is time to understand the appraisal and the job of the appraiser.  The appraiser must support the current market conditions. This has always been a Fannie Mae requirement.  It is also a Collateral Underwriters(CU), and  Uniform Standards of Professional Appraisal Practice (USPAP) requirements. These requirements satisfy the most demanding reviewer.(AMCs, lenders, and underwriters)

Data is from local MLS markets, however back up data is  graphed and calculated  for specific requirements. This takes very specific information compiled from  the appraiser.  The extra work (and your costs) money, is  well spent- it saves the  reviewers time- enough exhibits to establish the current market value.  The analysis uses median prices rather than average or modal prices.  The Appraiser uses the one that makes the most sense in that particular market area. This requires analyzing information and comparing several things. All three factors- mean, mode, median,  are reviewed then the most accurate information, or the most reflective, is used.  This is not the price  the seller may want- he only understand his value, not the markets fluctuating value. Remember a seller can put any PRICE on his home, it isn’t a VALUE.


SR 1-2(3) (requirements)  – requirse the appraiser to identify the “physical, legal, and economic attributes…” which influence a properties value and current marketability. Part of the analyses behind this is the study of marketability, submarkets, and how the market changes, is  its current  influences.  The market is always under influences related to supply and demand, the buyers ability to pay and a sellers ability to sell.  Even in a stable market( Tucson is not) there are forces at work that could unsettle the market any a moment.  Increase in interest is one of these forces- sometimes it becomes cheaper to remodel, stay, or do nothing.  Moving costs money, moving up costs money, and selling a property costs money. Often consumers are unaware of all the costs to sell a property and are shocked at how little they really get to keep!  When markets have a lot of buyers – buyers are at a disadvantage, finding themselves in bidding wars. The only way to get a property is to overpay- in markets like these the price is clearly the issue, the value is another! It doesn’t mean the price is equal to the value- it means YOU paid too much!  The buyer is bidding to overcome the real estate shortage in THAT particular submarket, at that particular time. Be aware!  Your bid(price) represents a non-real estate component.