Wednesday, June 28, 2017

Why Hire a Broker that is also an Appraiser?

realtorappraiserAdvocate vs. Neutral Party

Realtors are sales people and the Appraiser is more like a Financial Analyst. Most importantly, it’s crucial to understand that Realtors are advocates and Appraisers are a neutral party to the transaction. This should be obvious, but is often misunderstood because involved parties continually make remarks as to how appraisers need to “help” the housing market recover as if it’s their moral responsibility. Ultimately, Appraisers are interpreters for the housing market instead of helpers. Granted, people are using this type of language since there are shoddy appraisals that do negatively impact the market.

The newer generation of Appraisers have much higher educational requirements in order to become Certified, which has led to a larger understanding of the real estate industry than thier older peers. Realtors typically have very little actual real estate undustry classroom training that results in improper strategies being employed that causes problems in the real estate cycle.

Many Appraisers are also working Real Estate Brokers and even own thier own firms. The Appraiser is typically the expert in the industry and the other players are sales people. The important point to understand is Appraisers are fundamentally not helpers, advocates or tied to the transaction in the same way real estate agents are. An agent works to get the highest price for the seller, at and not above market value or the best opportunity for a buyer. However, it is NOT the appraiser’s job to get the highest price or best scenario for either party. Their job is to accurately measure the market and record those findings in an appraisal report. What typically gets Real Estate Agents into trouble is they list homes above market value in order to win the listing and the Appraisal doesn't meet the sales price since the home was sold above market value. They don't understand Price is not an approach to Value.

The fundamental issue is homeowners typically believe the property is worth more than it is. In addition, they don't understand the reality of the markets conditions and/or are being passed incorrect information from other real estate professionals. Agents typically always try and convince people the market is doing great and that it is a good time to buy. Statistics by your local Board of Realtors don't tell the whole story. The absorption rates and inventory in the market statistics they provide do not include all of the data existing in the market. Your typical Agent doesn't understand that fact either.