Geographic competence in appraising has become a hot topic over the last couple of years. It refers to an appraisers knowledge of a market and his/her ability to produce an accurate and reliable report. One way to measure this is by looking at someones experience of working in an area. Take a look below at the map I put together. It shows the work I have performed in the Birmingham, Alabama area over the past several years. I have been appraising for over 20 years, with 17 of those years being in the Birmingham area. I only included the last several years because before that my records were in a format that was more difficult to export into this program.
View Tom Horn’s Geographic Competency Map in a full screen map
Let me fill you in on why this is such an important topic in today’s crazy real estate market. In the last several years, due to the slowdown in home sales and refinances, most appraisers business has decreased significantly from what it once was. This has resulted in appraisers expanding their coverage areas to some locations where they have not previously done appraisal work in, and that they are not knowledgeable about. It is very important for an appraiser to have knowledge and experience in the areas that they work because real estate markets are location specific. For example, there are areas in the Birmingham metro area that have unique characteristics that make it necessary to choose sales comparables from directly within the immediate area. In some areas school systems are big determining factors that drive prices, however in this area just because a sale is in the same school system, does not mean it should be used as a comparable. If an appraiser comes in from out of town they may not know this and incorrectly choose a sale that is not appropriate, so knowledge of the market is paramount.
Another important thing for appraisers to have is accurate and reliable sales data to use in their appraisals. An appraisal is only as accurate as the data within it. In the Birmingham market the main sources of data include the Birmingham MLS system, AGDA, and county records. I wrote about AGDA in a post titled “What Is A.G.D.A. And Why Is It Important?, and you can read more about it there. If an appraiser does not always do work in an area they may not subscribe to local data sources because it can be expensive, but it is important to have this information if you want accurate appraisals. The Birmingham MLS system does not typically include the square footage of homes, and county records is not that accurate.
The combination of local knowledge and precise data can mean the difference in getting an accurate appraisal compared to one that is not worth the paper it is written on because it is full of inaccurate sales data and lacks knowledge of the local market. Have you had problems with appraisals being performed by out of town appraisers not familiar with the market? Drop me a line below to tell me your story, I would like to hear from you.