Appraisals Get Tricky in a Cooling Market

The housing slowdown is making it increasingly difficult for appraisers to use comparable sales data in calculating a home's worth.
Gary Crabtree of Bakersfield, Calif.-based Affiliated Appraisers says he now takes into account pending sales, current list prices, supply and demand, time on the market, price fluctuations, defaults and trustee's sales, incentives, and the market perceptions of real estate agents.

Crabtree says valuations become complicated when real estate practitioners engage in "the re-list game," in which a home that has sat unsold for a long period of time is removed from the multiple listing service and re-listed with a new price and MLS code to make it look like a new listing.

"Just looking at historical data can be perilous," says Appraisal Institute spokesman John Bredemeyer, who explains, "You've got to answer the question: 'Where are we in this cycle?' And you've got to factor that into your valuation."
Source: Baltimore Sun, Ken Harney (09/15/06)