‘Low Appraisal’ Can Be Based on Many Factors

In the March 7 “Real Estate Q & A,” Robert J. Bruss cited a “low appraisal” as a way of masking discrimination, in response to an angry homeowner who said his or her home was valued at $23,000 below an almost “identical” sale down the block several months earlier.

With so little information, how can Bruss conclude that discrimination was involved and that the appraisal was “obviously” wrong because it didn’t use a recent comparable sales price, or “comp”?

Under the current guidelines for appraisers, most would likely have used not only several recent comps, but included the sale down the street. However, property value is seldom derived by placing all weight on one comp. It is common in this market for appraisers to use four to six comps, with less emphasis typically placed on the high or low sale in the neighborhood.

And while the homeowner felt that the sale down the block was an “almost identical” home, most houses vary in at least one major characteristic, such as usable site area, gross living area, condition, construction, locational nuisances, amenities and so on. One or two differences could easily result in the $23,000 lower value.

Finally, the appraiser may have used listings that were just put on the market. Lenders now want appraisers to include these listings in the report and adjust downward for typical negotiation allowances.

Jumping to conclusions about “low appraisals” without substantial facts, is counterproductive to all parties involved in lending transactions.

STEPHEN N. MILLER

Los Angeles

The writer is an appraiser.