Question: I am trying to settle the estate of a friend that passed away, and make a sale of her property. I had an appraisal done and thought that would be the end of it. Then, the beneficiaries sent out a broker to check up on my work, and he informed them (and me) that the appraisals were completely out of line with what he noticed. He spotted code violations and even asbestos problems in addition to the ones that were noted on the appraisal.

If I try to bring the appraisal down, it will look as if I am not working for a good sale, and if I keep the one I have, I will 'gouge the buyer' according to this broker. I have investigated his record and he is not only highly respected and the top broker in his area, but he was also correct about the asbestos! What can I do? Can I insist on a re-appraisal without spending several hundred dollars? Can I insist the same appraiser come out and redo her work?

E. Biggs

Answer: The first issue I have with your story is the broker (though considered a top agent) who’s not a certified or licensed appraiser, is casting doubt on the work of someone who has probably conducted many more appraisals than the broker.

Appraisals are not concrete and are at best the opinion of a trained professional who is not buying the house. The true value of the house will be determined once a buyer and seller sign an agreement to sell the house for a certain price.

Nevertheless, let’s review quickly the basics of how an appraisal is conducted. According to the National Association of Independent Fee Appraisers’ Web site.

"An appraisal is an opinion of value or the act or process of estimating value. This opinion or estimate is derived by using the three common approaches, all derived from the market. They are:

1. Cost Approach to value is what it would cost to replace or reproduce the improvements as of the date of the appraisal, less the Physical Deterioration, the Functional Obsolescence and the Economic Obsolescence. The remainder is added to the Land Value.
2. Comparison Approach to value makes use of other "bench mark" properties of similar size, quality and location that have recently sold. A comparison is made to the subject property.
3. Income Approach to value is of primary importance in ascertaining the value of income producing properties, has little weight in residential type properties. This approach provides an objective estimate of what a prudent investor would pay based upon the net income the property produces.

Then, after thorough analysis of all general and specific data gathered from the market, a final estimate or opinion of value is correlated."

Most appraisals in the resale market use the second approach – taking similar properties sold in the last several months, adding and subtracting value according to the amenities and features of the house compared to the other properties, then considering the condition of the property as well.

With that said – a dollar is worth a dollar whether it’s fresh off the Mint press or if it’s been trampled under foot and given to a toddler to play with who just got done making mud pies. The condition of the dollar bill is not at issue, but rather, the value.

The same is true in the case of your house. There may be "code violations, and even asbestos problems," but the appraiser more than likely took all that into account in his appraisal.

Any agent will tell you that his or her fiduciary responsibility is to get as much money for the house and the best terms for the seller. A certified appraisal is part of the process, though it is usually done after a contract has been written not before as you have done in this case.

And the notion that you’re going to "gouge" a buyer in the sale of this property is absolutely ridiculous. You may have an appraisal in hand, however, if the buyer is going to get a loan on the property, the lender will most certainly want its own appraisal on the house.

March forward with your appraisal and forget about trying to reduce it. When it’s an estate sale – get as much for the house as you can and have the money dispersed to the beneficiaries as soon as possible.

If the house is slow to sell for the aforementioned appraisal – perfect – you now can market it "Under Appraised Value."

Published: April 4, 2003

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Mr. Carr is an award-winning real estate broker in Northern Virginia and authored "Real Estate Investing Made Simple: a commonsense approach to building wealth." He also contributed to Donald Trump’s book, "The Best Real Estate Advice I Ever Received," and is an active trainer and coach of top producers in the Washington DC market. As a sought-after expert on real estate, Mr. Carr has been featured on CNN, various broadcast outlets and was the former real estate editor for The Washington Times. He accepts questions at his blog www.RealEstateOlogy.org.