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    By Jim Williams

These are fun to play with! We recently “tested” one of the more heavily advertised ones with one of our appraiser’s homes. He lives in a 6-year-old development of similar size and style homes in the Oregon City area.  Quite frankly, the model we tested absolutely “nailed” the value. But then we tested it on Jim’s home. He lives in a totally remodeled home that was originally built in the 1950’s along a small stream, on a ˝ acre lot in SW Portland.The results were pitiful. Most of the data including the building size, lot size, and even age of the house was incorrect. Needless to say the value was off by at least 30%.  This leads us to believe that these models can by useful if you have a “vanilla” property. But, if you have chocolate or strawberry, watch out!

Some of the obvious fallacies of these models are:

Incorrect information from the data base

Most of these models use the County Assessor’s information. In the last few years that information has become more disconnected from reality. Oregonians passed a couple of tax saving measures, so the Counties have necessarily cut back in personnel (appraisers) and relied more on computers. Many homes have been remodeled in the last few years because of the low interest rates. You would be amazed how few people let the assessor know that they now have a new bonus room, remodeled kitchen, added a bathroom or a mud sink in the garage, etc.

Incorrect sales price information

All of these models rely on the gross sales prices as reported by the recorded deeds. Many times there are other considerations that affect the reported sales price.We continually see “built-in repairs” on the sale of a property. We also see discounting of the sales price for repair items.

As an example a sales price could record at $200,000 with the seller to replace the roof, include the portable hot tub, and pay for some closing costs. The total amount could be $10,000.00. This means the recorded price “overstates” the actual sales price.

This probably doesn’t mean as much if you are a mortgage lender and your borrower is making a down payment of 25%. But, if your borrower is only making a 5% down payment, you have just made a 100% loan! Of course if you are a homeowner attempting to establish a selling price, a series of these transactions plus the already poor data from the County, can throw you way off the mark. Keep in mind that most appraisals in this market only cost $400.00. Peace of mind should be worth that much even if you are going to market your home through a Real Estate Agent.


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