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Be Totally Objective - Part 1

Don't tell the client to buy or not to buy the house for any reason!!!! This is one point that really bothers Realtors and I have to side with them on this one. Your job as an appraiser is to tell the client the estimated market value of the house only!!  I'll repeat my statement again so you get it straight. Don't tell the client to buy or not to buy the house for any reason!

The condition of the house does not make it a good deal or a bad deal. Price is the ONLY factor on whether it's a good deal or not!

If the house is in poor condition just include the repair estimates and the negative affect on the market value in your appraisal report. The condition of a house does not make it a good deal or a bad deal. Price is the ONLY actor on whether it's a good deal or not! Here's why:

  • I've seen people buy houses in great condition but they were paying too high a purchase price for the house. Therefore it's a bad deal because they were paying much more than the market value price of the house.

  • At the same time, I've seen people buy houses that are in terrible condition that need a lot of work. However, they were getting a great deal because they were buying the house well below market value. If you added up all the repairs and upgrading costs, and then added it to the purchase price, they could sell the house for much more than they paid for it after renovations.

The point is that you have no right telling the client whether or not to buy the house. You're hired to only estimate the market value - and that's what your training and expertise are focused on. As a result, it's none of your business if your client decides to buy a house that you don't like or that you wouldn't buy for any reason. After you notify the client of the market value of the property, it's totally up to the client how much, if anything, they want to pay for the property. After you explain the valuation analysis in your appraisal report, it's none of your business even if they want to pay too much for the property. Perhaps there's an amenity value for them and that's why the client doesn't mind paying a high price?

You may not like the house for several different reasons:  perhaps it's too old for your tastes; or it's a Cape Cod style and you only like Colonial style homes; or you feel that there's too much renovation work needed on and in the house; or it's not in a good area of town that you would want to live in, etc. The point I'm making is that all of these are your own subjective judgments and opinions! You have to be totally objective when you're appraising a house. Even though you might not want to buy that house or condo, maybe your client has different tastes and likes than you do. Also, maybe the client can't afford to buy a house in great condition or in a good section of town.

I've inspected houses that when I would write down the style of the house, such as Ranch, Cape Cod, Colonial, Tudor, etc. that I would be tempted to write down "hideous" because the house was so dreadful looking. However, I'm not paid to tell the client whether I would live in the house. So I keep my subjective comments and opinions to myself.

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