Correctly pricing homes in an escalating market can be tricky. Usually both appraisars and real estate brokers use “com parables” which are properties that have sold within the past 6 months and are similar to the subject property in terms of location, square footage, # of bedrooms, # of bath, garages. A house with a garage may had added value to a comparable property without a garage in which case an adjustment will be made. In a market where prices are increasing rapidly using a home that sold six months ago and that was priced 9 months ago based on com parables going back 9-12 months will not be accurate.
You would need a crystal ball to be able to determine the amount of the escalation going forward three months to when a home might actually sell.
All of this is why i believe the only way to insure that you obtain your highest and best price is to put a property onto the multiple listing service and allow buyers a week or more to view the home and make their offers. It is the pent up demand that will determine the best price.
Appraisers can only use the previous sales as a way to determine value and those previous sales belong to a lower market…prices are rising and capturing that increase is not always easy. Which is why many homes are not appraising,,,,which is the correct price, whether we are experiencing a bubble and whether these lower appraisals are actually correct is another discussion and subject to discussion.
A few forces are at work. First, many homes are being appraised at a lower price than what buyers have offered on a house. That is because home values are improving so fast in competitive, high-priced markets that “comps,” recent sales of nearby homes with comparable characteristics, haven’t kept up. When the appraisal comes in low, the buyers either lose the loan or must quickly make up the difference with a higher down payment.
From the Wall Street Journal – Appraisals