Good afternoon —
In a crazy-hot housing market, the appraisal gap is real and only seems to be growing. Consider this real-life incident from an article we published today:
A 2,400-square-foot home on the outskirts of downtown Denver is about 65 years old and was listed for $370,000. In four days on the market it had 202 showings and received 56 offers, 55 of which were at or above list price. The home ultimately sold for $477,000, or $107,000 over the asking price. Although the appraisal came in at just $431,000 – well-supported by the data, the appraiser said – the deal closed.
First of all, let's consider the fact that a 65-year-old house in the $300s sold for $107K over asking! And, hats off to the one person who made an offer under the list price in Denver right now. That's some positive thinking right there.
But also, kudos to the appraiser, who is navigating one of the wildest markets in the country. That appraiser, Warren Boizot, president of BLG Appraisal Group in Denver, said he routinely interviews listing agents to get more information on the sale, such as how many showings there were and how many offers came in. "If there were five other people willing to pay the contract price, then that goes to show it's not just a pie-in-the-sky number," he said. "That's all good information that I'll include in the report."
While an appraisal gap is frustrating to buyers and agents, the appraiser's job is not to hit a certain number, as several make sure to point out in this story. As it is, an appraiser's job is pretty thankless right now: the valuation never comes in fast enough or high enough for the rest of the parties involved.
Still, we should be thankful for the part appraisers play. The real problem would be if Boizot had somehow come up with $477,000. If that happened, we should all be worried that the arms-length protections put in place after the financial crisis were for naught.
Until tomorrow —
Sarah Wheeler
HousingWire Editor in Chief
P.S. We just started a newsletter specifically for those interested in property valuation. Aptly titled AppraisedValue, we curate stories just for that audience and send it out every Tuesday. If that's you, sign up here.
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