“Back in the day” (5ish years ago) . . . As we were enjoying more than a dozen years of nothing but great Real Estate Sales and Economic growth, we accumulated enough data (precedent) to give “non-specialized” real estate sales professionals the tools they needed to operate effectively in virtually ANY area.
Yep! As long as the sales person had access to the MLS, she could (with decent reliability) determine value for houses based on the statistical comparable sales . . . This was not “rocket science.”
Better yet . . . If she guessed too high, odds were decent that some unsuspecting Buyer would go ahead and buy that over-priced house and the appraiser would dutifully justify the price.
Those were the days of “Happy Happy Joy Joy” when virtually NO ONE could be wrong.
The Buyers were perfectly happy because they could probably re-sell that house for a profit 12-18 months later.
Things have changed.
Nowadays, I believe you’re cruising for a bruising if you rely on advice from anyone but the local Niche Specialist.
Only the LOCAL folks know the local market because every market has it’s own, unique personality.
The statistical data is still there, and it’s fun to massage and manipulate, but it’s not much help with respect to determining value because of the sheer volatility of this “Recovery Phase” . . . Pocket areas are Hyper appreciating – Others are sluggishly improving . . . only those folks on the ground (in the trenches) REALLY know the tune and the rhythm of the local market.
Not a day goes by when I don’t see an “outsider”bumbling around in the local market wildly over-pricing or under-pricing houses.
Not a day goes by when I don’t hear of a “Fish out of water” appraiser botching an appraisal (a deal) because of lack of understanding of the nuances of the local market.
All of this brings some valid questions to mind:
are appraisal guidelines and practices out of whack with reality?
Could our enhanced levels of communication and dissemination of data be working against us?
What are the ethical ramifications (if any) of Appraisers and/or Real Estate sales Professionals “practicing” outside their areas of expertise?
I’m a West Nashville, East Nashville, Brentwood Specialist . . . yet my real estate license allows me to sell real estate ANYWHERE in the state of Tennessee . . . What business would I have working with a client in Memphis or Kingsport or Chattanooga?
If you’re in the market as a Home Buyer or Seller, I think the first and MOST important question to ask your REALTOR AND your Mortgage Loan Originator would be:
Do you SPECIALIZE in my area of interest?
If not . . . Why would you take that gamble?
It would be a veritable roll of the dice.