According to a recent blog post about Miami-isms, it appears that Miami real estate is in a constant state of flux.  What with trends that change quicker than the seasons in the Northeast, it’s all but impossible to stay abreast of the housing market unless you are neck deep in the biz.

Realtors and mortgage brokers both have been complaining lately about appraisals and how they are emasculating many of the Miami real estate deals.  Previously, all sellers had to do to get an idea of how to price their homes was to get an appraisal.  Now, however, that is not the case.  Unfortunately, you should expect that an appraisal prepared by a lender for the buyer will be more conservative.

The situation has changed to the extent that two different appraisal companies selected by the same lender, appraising the same property, can arrive at two vastly different amounts.  If appraisers follow similar guidelines, how can that be?

Based on Florida real estate guidelines, appraising is not a science, but an art.  The appraisal process requires mathematical calculations; however, appraisers also rely on their own judgment during the appraisal process in regards to the area.  Knowing the market in which they are working and the nuances related to each market definitely can assist the appraiser in fine tuning the end result.  Unfortunately, this is seldom the case.

One Miami realtor shared a story of representing a buyer whose offer was accepted by the seller.  In executing the contract on the home, both buyer and seller agreed on a price.  When the appraisal came in, however, the deal went dead in the water due to the appraisal being way below the price agreed upon.

On the day of the appraisal, the realtor received three calls from the appraiser.  He kept getting lost.  When the appraiser finally arrived at the property, the realtor noticed that his license plate was from nowhere near Miami.  It was from Minnesota.  Needless to say, Miami homes and trends are vastly different from Minnesota properties.

The Minnesota appraiser used non-comparable properties from neighborhoods that made no sense compared to home styles that were nothing alike.  The realtor for the buyer requested an appraisal review.  The process was out of their control, though, and they couldn’t recover the deal.

A week later, the seller agreed to a price 10 percent less than the prospective buyer’s original offer, proceeded through the same process, and the appraisal came in higher than the original agreed-upon price – 20 percent higher.  This begs the question, “How can two appraisers determine such broadly different property values, the disparity being over 20 percent?”

In this case, it is clear that the one appraiser was not from the area, was not knowledgeable about the area, knew nothing of real estate localisms, so he made a determination based on his knowledge of property in another state, and in another totally different climate zone.

The winner in this case?  The buyer who managed to get a great deal due to a major flaw inherent to the financing process.  The seller lost due to the lack of continuity of the appraisals.

In the past, it appeared that appraisals were often coming in higher than they should have, no matter what market or state they were being worked.  Now, it appears appraisals are considerably more conservative.  Often, sellers take their property off the market due to problems with appraisals, and buyers are becoming even more frustrated with the process.

Some professionals in the industry say that these situations are ways that markets correct themselves.  Regardless of the reason, realtors must be ready to address the issues one-by-one, and prepare their clients for the worst.  Setting expectations is half the battle.

You know, it used to be that property values came down to what amount a buyer was willing to dish out and a seller would settle on.  That pastime appears to have recently become a myth, an urban legend, if you will.

If you would like to see for yourself what homes are going for in Miami, click Miami, FL Homes for Sale to see what the prices really are.