By AnnaMaria Andriotis - Markt Watch - WSJ
What’s that $1 million house really worth? Depends who you ask.
To determine the value of a property, appraisers are supposed to review purchase prices of similar, nearby homes that sold in the past six months. But when a property is much pricier than others in the neighborhood, it can be hard to find similar examples close by. As a result, their asking prices are often out of whack with values that are later determined by appraisals.
“The higher you go up the ladder in value generally the less data you have,” says Danny Wiley, chief appraiser for LSI, an appraisal-management company based in Irvine, Calif.
To find relevant numbers, appraisers in many cases have been digging up older sales as far back as five years ago, consulting current listing prices that might not reflect what buyers are actually paying for a property and even looking at sales prices in other markets.
Further complicating matters, some luxury real-estate values are partly determined by the services and amenities in that neighborhood. City cutbacks in police patrols, fire services, park maintenance and school-district funding can also contribute to lower property values.
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