Why is there such a big difference between a valuator sent by the bank and a real estate agents opinon?

Question

I am in the process of getting my house re-evauluated to extend my loan for renovations. The bank sent out a valuator to see the property and i have had an agent out personally. The difference between the two prices is huge. Why is this?

Answer 1

the agent has a vested agenda in trying to get you to sell the property through them if you ever decide to sell. they also base it on recent purchases in your area. the bank is more concerned with being able to recoup their losses if you default on the loan. if they set a higher price - and therefore give you a higher loan based on that, they are set to lose more money than if they give you a smaller loan based on a more conservative figure.

an assessor that is independent from both the bank and the agent will probably be your best bet in finding what is a more "true" figure for the value of your home (although, no body can ever be 100% sure). however, it is still ultimately the banks assessment that you will need to go on if the bank is the one giving you the loan.

Answer 2

Your key word here is "opinion" Nobody can tell you what a property is worth to the exact dollar. Agents learn to comp out properties as to what the market would suggest a buyer might pay. Banks base their loans on risk of having to recover a loss and will come in a bit conservative. An appraiser will base his opinion on several approaches to determining value and have yet 1 more opinion. Generally real estate agents are highest, appraisers a close second, and banks 3rd in order of absolute value. Keep in mind the bank and the appraiser can only give value as viewed at the time of their inspection. Some loans can give an appraiser the lattitude to adjust up for improvements to be made, but will often do an escrow holdback until confirmation of such improvements has been verified.

Answer 3

The answer is specific to your home.

A bank's representative has to give a number for which the bank could safely sell your home for (read: easily)

A Real estate agent lists a price that other homes in your area have recently sold for, and therefor, everything else being equal, what yours could sell for.

The banks rep is a safe figure, nearly always lower than your sales agent.

My guess is that your home is in worse shape than the comparable homes that have recently sold that your agent used for comps.

BTW, you can have the bank send a new inspector. They will pay for it if the results come back higher than their first inspectors results, usually. The difference needs to be a few thousand dollars though in your favour.

If the new result comes back the same or less, however, you will need to pay for it (which can cost $150-$500, they'll tell you first).

We did that when we felt our banks number was low. It came back the second time $15,000 higher!

The first bank rep only did a drive-by, which is common. If your interior is exceptional (as our was) our there are hidden amenities (as there were with our home), the second inspector should have these pointed out!

SELL your home to the inspector. Not literally, but show him it's best attributes, certainly.

Answer 4

An appraiser will give you an unbiased opinion of value your property. An agent has a vested interest in giving you the highest price for your home even if it is higher than market value. I am an appraiser and I deal with agents all the time. They always have a higher opinion of value than I do because their compensation is related to the value of the property where mine is not.

Answer 5

The banker sees the value as a risk on a loan, while the realtor sees a potential for high-dollar sales.

Want to see the same thing work on a smaller scale? Give a teen and a toddler a sucker. Bet the teen won't be impressed .