Regardless of all the talk of a recession, soft landing, or something in between. Many…
Unfortunately, as the Colorado real estate market has heated up, so have the number of “questionable” appraisals. I was recently sent an appraisal with a value of 550k on the picture above, just the garage looking structure in the picture. Fortunately, there are three free tools that could quickly tell me the real value of the property. It wasn’t even close to the 550k!
3 free tools you must use to evaluate Colorado Real Estate
Since we are a private lender, we do not require appraisals. For any loan we make, internally we put a value on the property. There are three free tools I use daily to evaluate a property. With the various wildfires, mudslides, floods, etc.. these tools are more critical than ever.
- Google street view: You can tell allot from a picture. With street view you can see the subject property along with the surrounding properties to get a feel for the neighborhood and the subject property
- Google Earth/Satellite view: With all the natural disasters happening it is critical to take a holistic view of the area. In the case of the property above, it was easy to see that there was a major fire all around the property along with high tension power lines. Both factors drastically reduce the value of a property.
- County Assessor: Whenever I am evaluating a property, one of my first visits is to the county assessor website to confirm square footages and other details on the property. In the file above, the first red flag is that the county assessed value was less than 200k. Assessors in metro areas and the foothills throughout Colorado are usually not off by almost 300% on their valuation of a property. Furthermore on the assessors website you can typically search for neighborhood sales to get a good grasp on values in a neighborhood.
How did I know that this appraisal was not as accurate as it should be?
- Street View: When I pulled the street view, I could see that the structure was a class C structure with a high-tension powerline adjacent and burn areas all around the property. These factors greatly reduce the value of the property
- Assessed value substantially less: When I looked at the assessed value, it was almost a third of the appraised value, furthermore zero value was given to the structure, it was just valuing the property as the dirt value.
- One comp was over 6 miles away: In any neighborhood, even in rural areas, it is rare to go more than a mile or two for a comp, in dense areas, I like to keep the sales within a quarter of a mile. When I saw a comparable over 6 miles away, that was a dead give away that the value was a stretch.
We saw during the last real estate cycle that towards the tail of a cycle, as we are today, appraisals/values get a little “looser” than they should. Today is no exception, as Colorado real estate has heated up so has the number of “questionable” appraisals. At the top of the market, like we are currently, now is the time to be even more cautious when evaluating properties. Fortunately, there are three free tools (street view, google earth, and the county assessor) to help you quickly determine the actual value of a property.
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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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