There is little similarity between how an agent and how an appraiser analyze data. This is due to two main reasons; mindset and resources. Appraisers make conclusions and base opinions on closed sales; pendings are reviewed as indicators for current activity and actives tend to reflect the "optimistic" view. Agents tend to base opinions on listings first as those are the direct competition, closed sales tend to be less considered. Agents solicit sellers for business - and sellers are not always interested in data that might conflict with their personal opinion of value. Many agents don't press this either because their objective is to list homes or they simply don't have the ability to review the data as an appraiser is required to. Appraisers work for lenders and under parameters set by underwriters; every report is scrutinized by disinterested third parties or software programs to ensure consistency within the set guidelines.

When it comes to analyzing market data, appraisers tend to use many more resources and programs than agents. This disparity and exceptionally tight underwriting can lead to contracts with appraisal problems.

Resources utilized are also dramatically different. While the MLS is the base data source for both, it's often the ONLY source used by agents. Although available, agents rarely utilize public records when researching data...because their focus is on active listings. Appraisers use specialized software to analyze data, agents tend to rely on the MLS tools available. An agent comparative market analysis (CMA) usually looks nothing like an appraiser's 1004MC form. The two have different roles so a head to head comparison isn't fair but it is fair to expect agents to utilize the best tools available to them and to understand how an appraiser is required to look at data. Many MLS's (including GAMLS & FMLS) offer tools that mimic the 1004MC and other resources that can narrow the gap of understanding for agents. Unfortunately, the majority of agents remain uneducated about this critical part of almost every transaction.

This disconnect can result in appraisal issues when homes go under contract - something that has happened frequently over the last several years. Underwriters of course continue to be the main issue but the appraiser-agent disconnect doesn't help. The appraisal industry continues to be heavily scrutinized with automated reviews, collateral underwriting and more; the result is reports that don't stray from the defensible closed data.

Here's a look at how an appraiser (Hank) analyzes the market and prepares the 1004MC form. This is the most accurate way to answer the "how's the market" question. This process compliments the other resources available; the best data picture comes from utilizing everything at your disposal. Our clients enjoy this level of research.