The Value Game
I got to do a new thing with my current house purchase that I didn’t do with the last two. I “disputed” the appraisal. I did this, obviously, because the appraiser came up with a value that was lower than what I’m paying for it. Mind you, based on what I’ve seen on the market and the prices that houses I’ve seen have been selling for, I think I’m getting a good deal, but apparently the appraiser doesn’t agree.
I could probably make a bigger stink about this but it would be a lot of work and quite possibly wouldn’t gain me anything. The appraisal didn’t come in so low as to crush the deal, but it means I have to put in more money out of pocket and I was already stretching a bit.
The part that’s most interesting to me is that this got me to look more closely at the appraisal than I’ve done in the past. This got me to pay more attention to how the appraisals are actually done. The thing that amazes me is how little information actually goes into valuing the property. The main thing is what they call “comps,” which is short for “comparable sales.” They pull information on recent, though not too recent, sales for houses with similar stats. The thing is the stats are only the most basic information. They look at total square feet, both for the house and the land. They look at the number of bedrooms and bath rooms and the number of stories. And that’s really about it. There’s nothing about the quality of the construction. There’s nothing about the style of the architecture. They take the seller’s word, or more accurately their agent’s word, about things like has the kitchen been updated.
This is like taking a writer’s word about how good his book is without actually reading a paragraph to see if he knows how to string two sentences together. So my agent and I disputed the appraisal and provided our own comps to support the price that I’m paying. All the lender did with this information was send it back to the appraiser and ask him to look it over. Like that had any chance of getting a changed number. The appraiser has no incentive to change his mind, human nature is not to admit we’re wrong, and there was no upside to his adjusting the value. At best he’d seem open minded, but at worst he’d seem like he’d been incompetent. And “open minded” wouldn’t get him any more or less work.
I told God that the more I learn about how the world works the more amazed I am that civilization holds together at all. She just grinned.
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