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D. Scott Murphy, CEO and founder of D.S. Murphy and Associates, joins host Carol Morgan for this week’s Atlanta Real Estate Forum Radio episode. Murphy discusses the residential appraisal process in this podcast segment and how it factors into today’s housing climate.
How is the current state of the housing market affecting appraisals?
When the volume of homes for sale dropped in recent years, appraisers took a hit. Appraisers build their opinions off recent sales, meaning they look at data from comparable properties sold in the last few months. The drop in sales has left them struggling to get that data for homebuyers.
“There is no rule as to how far back I go, but the rule of thumb is three to six months,” said Murphy. “So, if I don’t have good recent comparable properties, it makes my job a lot more challenging.”
Increasing interest rates also factor in the sales cost of properties, sometimes creating a price tag higher than the appraised value. Since the early 2000s, the volume of homes sold has steadily decreased over time as interest rates rose.
“The better analogy is that we had our foot on the accelerator, and it was pressed to the floor, then we took our foot off the accelerator,” said Murphy. “And we’ve just kind of coasted and slowed down a little bit. So that’s how the market’s gone.”
However, federal rates lowered significantly this year, sparking homebuying activity across the country.
Murphy emphasized that the National Association of Realtors (NAR) settlement also factors into home prices especially when homes are listed above appraisal value. It has caused discussion about commission structures and transparency among all parties involved in a real estate transaction. Many sellers are following a traditional standard and include the buyer’s agent commission in the sales price. However, when buyers refuse to pay the commission or the buyer pays their agent directly, it can cause problems.
How can appraisers use the latest technology to improve the appraisal process?
The most common technology in the housing market today is automated valuation models (AVM). Heard of Zillow and Redfin Estimate? Those are both widely used AVM algorithms. Murphy said that even though these algorithms are not always high or low, they are always wrong because they don’t consider the unique qualities of your home. That’s the human touch that D.S. Murphy and Associates is proud to provide.
Murphy said, “Particularly in the Atlanta area, Zillow is working off public record data, which is notoriously incorrect.”
What resources are available for current and up-and-coming appraisers?
Appraisal Institute offers worldwide services for appraisers and boasts high-quality courses taught by exceptional instructors. Anyone can sign up for classes, but appraisers should take note since many classes are required for continuing education.
A two-year college degree, preferably in finance or real estate, is required for residential appraiser roles. Then, you must complete 90 hours of qualifying education through the Appraisal Institute to obtain a registered trainee’s license. After that, 110 hours of classwork and two years of mentorship qualify you for a residential appraiser license.
Tune in to the full interview above to learn more about residential appraisal. For more about D.S. Murphy and Associates, visit www.DSMurphy.com. More information about Appraisal Institute can be found at www.AppraisalInstitute.org.
About D.S. Murphy and Associates
D.S. Murphy and Associates is the largest appraisal and inspection firm in the Southeast, serving homeowners, agents and lenders with 30 years of experience. In addition to its regular services, the firm also offers courses for appraisers, Realtors and the public that provide key information about the appraisal process, both residential and commercial.
Podcast Thanks
Thank you to Denim Marketing for sponsoring Atlanta Real Estate Forum Radio. Known as a trendsetter, Denim Marketing has been blogging since 2006 and podcasting since 2011. It is currently working on strategies for the Google Helpful Content update and ways to incorporate AI into sales and marketing. Contact them when you need quality, original content for social media, public relations, blogging, email marketing and promotions. A comfortable fit for companies of all shapes and sizes, Denim Marketing understands marketing strategies are not one-size-fits-all. The agency works with your company to create a perfectly tailored marketing strategy that will suit your needs and niche. Try Denim Marketing on for size by calling 770-383-3360 or by visiting www.DenimMarketing.com.
About Atlanta Real Estate Forum Radio
Atlanta Real Estate Forum Radio, presented by Denim Marketing, highlights the movers and shakers in the Atlanta real estate industry – the home builders, developers, Realtors and suppliers working to provide the American dream for Atlantans. For more information on how you can be featured as a guest, contact Denim Marketing at 770-383-3360 or fill out the Atlanta Real Estate Forum contact form. Subscribe to the Atlanta Real Estate Forum Radio podcast on iTunes, and if you like this week’s show, be sure to rate it.
