"That can't be right," I despondently thought, as I studied the appraisal report I had just received in the mail. Having survived months of renovation hell, Cliff and I had decided to refinance our home to better take advantage of the historically low interest rates currently being offered. I had mistakenly assumed that the property's value would rise dramatically, given all the fantastic improvements we had just made to our home. Wrong! In fact, the number was still WELL below the price we had paid when we bought in the rising tide of 2004. Ouch! "This is way, W-A-Y too low," I muttered to myself. (Sound familiar?) Clearly, the appraiser didn't know the finer points of Piedmont Real Estate. She appeared to have given the land NO value whatsoever, challenged me about the accuracy of the square footage on record, and more disconcerting, had missed the fact that our house has four bedrooms - not three. With barely a glance, she might as well have phoned in her conclusion. Didn't she notice the beautiful new hardwood floors? OR the sunny new staircase that now opens to a BIG media room downstairs? OR the new master suite and bathroom that's nicer than most of the hotel rooms at the Ritz? (Evidently, not!) Listen, I'm not unfamiliar with this territory, I counsel my clients all the time that appraisals are only one person's "opinion of value" and that they don't necessarily reflect the true "market value," of a home when it comes time to sell. Appraisals, as a rule, have a propensity for being conservative - especially in today's much more conservative world. Gone are the days when appraisers could easily justify a higher value than surrounding sales - based on demand alone. Understandable from the lender's POV I suppose, but opinions aside, DAMN - that hurts! I was outraged and quickly phoned the bank to tell them so. Luckily, my husband and I have enough equity in our home that our ability to refinance and take advantage of today's low, LOW interest rates, isn't going to be heavily impacted - irrespective of the poor appraisal we received. It's only our pride that has been incredibly bruised. Still, glancing at the report, I felt personally offended, as if my house somehow hadn't measured up. I flashed back to my seventh grade cotillion and the cute boy I had asked to dance. (I wasn't the prettiest girl in the room, but I made up for it with PERSONALITY!) He took one look at my metal braces, my octagon glasses, and my homemade pink taffeta dress and said, "Uh, I think I can do better." (DAMN, that hurts and NO, I'm not still bitter.) The fact is, that rejection, at any point in life, doesn't feel good. We want to know that others approve and admire our homes, our taste, and our choices. And certainly, it feels absolutely awful when Real Estate professionals are "educating" us as to our home's current value, especially when we "feel" they may be mistaken. Don't you see my beautiful collection of stoneware pitchers? Can't you understand how much time and effort I've put into the garden? Don't you know my mother-in-law gave us that antique table? (Evidently, not.)
Compared to the values of yesteryear - when prices soared AND when many of us bought - it's downright disheartening to come face-to-face with the unwelcome truth, which is that our homes may be worth far less than we think, and often, much less than what we paid for them in the hey day. (I feel your pain.) It's hardly better when aggressive Realtors price our homes for competition and encourage us to strip our rooms of everything that make them, quintessentially - ours. Say what? Get rid of what? You don't like that? (How dare you.)
Feelings aside, try and keep these opinions in perspective. If you aren't selling your house at this point in time, the appraiser's opinion (or even the Realtor's) carries very little weight with respect to the market or your home's intrinsic value. Who cares if they don't like your wallpaper? (With respect to the bank, unfortunately, it carries quite a bit.)
AND if you are thinking of selling your property soon, keep in mind that you will be working within a "relative" marketplace. While you will undoubtedly realize less gain on the selling end then you would have had you sold in past years (or in the worst case scenarios, actually lose dollars on the sale) you will also pay less on the buying side, which should dramatically help offset any loss you are bound to experience. In the Pollyanna words of Doris Day, "Que sera, sera."
Certainly, I now have a better sense of how you all feel when I get those panicked phone calls about the appraiser who just "skewered" your home's value (I agree, that's not nice) but few homeowners are immune to a softening marketplace. For better or worse, the market is the market and we can only work in the market in which we find ourselves today. Hold on and wait it out, if you prefer. Otherwise, adjust your expectations appropriately.
Try to take the unwelcome news with a grain of salt, roll with the punches if possible, and if not, let's work on challenging the appraiser's opinion to better reflect the real value as we believe it to be; appraisers are by no means, infallible (and neither are Realtors).
If all else fails, I have got really good documentation with which to challenge my annual property tax assessment (I knew there was a silver lining somewhere). Should you decide to sell, you will need to trust the opinions of the open market and the demand from qualified Buyers in deciding your home's true "MARKET VALUE." Ultimately, it's up to them - not the appraiser.
Care to dance?
Julie Gardner, has been writing The Perspective for 14 years and has published more than 500 essays. She is also a frequent contributor to the Sound Off column in the Real Estate section of The San Francisco Chronicle.