Why Sales History of a property is important
I have mentioned in previous posts that appraisers are required to include the sales history of the subject property for three years past. This is a Uniform Standards of Professional Appraisal Practice or USPAP requirement. It is required for appraisers but can also be useful to agents, buyers and sellers, the history provides a story of the property which can be important when buying or selling a home.
If there is a significant difference in value between the current sales price and the previous sales price, it would be helpful if the agent could provide an explanation of how the new value was determined.
Previous sales: If a previous sale was a motivated sale, meaning the seller needed to sell the property quickly, it would be helpful if the appraiser was informed. Some reasons for a motivated sale could be divorce, foreclosure, short sale, relocation, estate sale, or a sale between relatives.
When you are buying a property and notice that it recently sold for $50K less than what you are offering, it is worth it to check the sales history. It will make you feel better about the value and it will give you the ability to provide an explanation to the next buyer if they ask.
Remodeling and additions: Has the property recently undergone major renovations? This is important information to provide the appraiser, so it is considered when comparing it to other properties in the neighborhood but also when comparing it to previous sales.
If the property is selling for more than it did in a recent sale, it will raise questions which is why providing the upgrades to the appraiser could help him understand the difference in price. Providing a general list of the major upgrades with an estimated cost of the upgrades can help speed up the appraisal process.
Market Changes: The market fluctuates and can affect the supply and demand which can significantly change the value of a property.
If a big company such as google moves into the neighborhood, with it comes more jobs but also more people which increases the number of people buying while the number of homes stays the same. This can increase the value of property because the supply is much smaller than the demand.
Things much simpler such as renovation to the city or new stores and restaurants can end up completely changing a neighborhood and therefore affecting the value of property their too.
Your appraiser should be familiar with these changes without you having to tell them, if not you should request an appraiser that is familiar with your neighborhood. But as a buyer, seller, or agent this is important to pay attention to because it can explain why you may feel like you are overpaying.
This information may seem obvious, but you should pay attention to these types of changes. If it is provided to your appraiser sooner rather than later, it can speed up the appraisal process and potentially avoid some delays from the lender.
San Diego Real Estate Appraisal Services For:
* Divorce Appraisals / Marriage Dissolution
* Bankruptcy Appraisals
* Bail Bonds Appraisals
* Estate / Date of Death / Retrospective Appraisals
* Financial Planning & Trusts
* PMI Removal Appraisals
* Pre-Foreclosure & Short Sales
* Tax Assessment Appeals
* Pre-Listing, Pre-Purchase, FSBO’s
* Probate Appraisals