Park City Home Value Appraisals

By Todd Anderson

May 24, 2012

Two appraisals of the same Park City home result with a large dollar discrepancy.

A buying client of the YouInParkCity.com Group was set to purchase a home and was paying cash. Even though it was technically unnecessary, we felt that an appraisal of the home would be good for everyone’s peace of mind ensuring that the second home they were buying was a good value. With the cash purchase, we were on a short timeline and our first choice of local Park City appraisers was on vacation. We asked around and got a few good recommendations for another qualified local appraiser.

The buyers asked that the appraisal be made without the appraiser knowing the contract price of the home. The appraisal came back at approximately 10% below the agreed upon purchase price. Upon getting the appraisal, the Sellers agreed to pay for another appraisal (feeling that this one was incorrect).

For the second appraisal, the Sellers gave the appraiser (another respected local Park City appraiser) a copy of the Purchase Contract. This time the home appraised at the contracted purchase price (10% above the previous appraisal).

We asked both appraisers about their findings. Both stood behind their appraisal values for the home but there were some interesting differences.

Most of the homes used as the comparable sales were the same. In looking at the two appraisals and the adjustments made for the same subject property values of the same item were very different. While one gave a $2500 adjustment for A/C, the other valued it at $5000. A fireplace was valued by one appraiser at $4000 while the other valued it at $2500. One placed a dollar value on the hot tub while the other considered it personal property not attached to the home and gave it no value. The largest discrepancy between the two appraisals was the adjustment for size; one gave a $30/sq ft adjustment versus a similar home (same number of beds, baths, kitchen, etc.) while the other valued the added space at $70/sq ft. This difference was magnified by the 100 sq ft difference between the two measurements stated in the appraisals.

Which one of the appraisals was correct? As it is with most things, it depends upon which side of the transaction you are on. I believe that the value lies somewhere in-between.

Tags: appraisal, Buyer, homes, local, Park City, Real Estate, seller, Utah, value
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Pricing Schemes in Utah

By Todd Anderson

Nov 04, 2009

I recently read a blog post by another Utah real estate agent discussing Buyers in her area that were putting in offers on property that were sure to be accepted by sellers (as they would be the highest priced offers) with the background idea that the property would later not appraise for the offer price and then the seller would lower the price to the appraisal value and settle on that as the selling price. It is an interesting type of bidding scheme and an idea that probably works well for short sales and bank owned properties in the current national real estate market where appraisers are bearing some of the blame for our financial crisis. Buyers using the ‘offer high and hope to pay less' tactic are counting on the appraisal coming in lower than the offer price. This will mean that the Buyer can't get their expected loan or that they simply state that they are not willing to "overpay" for the home unless the price is lowered. Appraisers in Park City currently have a tough time with property appraisals not only because they are under increased scrutiny, but also because there are relatively few sales and therefore finding a comparable property that has sold recently can be tough. I have seen a few Park City real estate sales recently that were affected by low appraisals. The end result is not always a lower price. In one recent case, the seller did lower the sales price (although not to the appraised price). In another case of an appraisal lower than the agreed upon sales price, the seller just removed the property from the market; effectively stating that they would not sell for what the appraiser had established was market value. The Buyer did subsequently purchase the home at the original offer price. The Buyer's side tactic of offering over what the buyer wants to pay in hopes of an appraisal effectively lowering the price may or may not work in Park City. It is probably best left to investors that have no emotional attachment to the property they are buying. The YouInParkCity.com group suggests finding a property that you want based on location, features and local amenities. Present an offer that makes sense to you as a buyer. The appraisal may give you an idea of fair market value or it may not. Appraisers only have data as to other "similar" sales, but no two properties are alike. In the end, fair market value can be defined by a willing Seller and a willing Buyer.

Tags: appraisal, buyers, homes, market, Park City, price, pricing, property, scheme, sellers, Utah
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