For Reliable Appraisals, Accurate MLS Data is Required
Have you ever heard the phrase "garbage in, garbage out"? Do you have any idea what that means?
It basically indicates that the quality of the input determines the output quality. This means that the quality of the information we input in the MLS has a direct impact on the quality of information that appraisers use for creating appraisal results.
The success of appraisers and real estate agents is directly related to the quality of information that each produces. Appraisers rely on the information provided by our local MLS offices and the more accurate and detailed it is, the better.
Accurate data aids appraisers in producing the most credible evaluations that reflect current market conditions. These appraisals are then used by lenders and brokers to help finance and sell properties.
It goes without saying that the more accurate the MLS listing is the higher the quality of the appraisal report. Furthermore, the more detailed a listing is, the more data an appraiser will have to use to gauge the market and make modifications for their reports.
Accurate MLS Information Helps with Adjustments
Adjustment amounts are one of the most common questions surrounding an appraisal. Brokers want to know how much a pool is worth or how much a finished basement adds to the value of the house.
There is no rule of thumb on adjustments. They will vary depending on many factors. They will differ based on the location of the property as well as other reasons. There is no such thing as a "little black book of adjustments" that works.
The various adjustment amounts are determined by appraisers examining information from the sales comparables. The information they analyze is what is included in the MLS, therefore as previously stated, the more information in the listing, the better the analysis appraisers can perform and the more valid their results will be.
So, “what type of information should be included in the MLS” you might ask. The answer is “as much information as possible”!
Seriously, though, the more information the better. This is especially true of aspects like the living space, which we know have a direct impact on value.
The Square Footage Should Be Accurate
The accuracy of square footage information is crucial. Many times, the accuracy of square footage in MLS listings varies greatly depending on where the information is sourced.
Square footage information is commonly obtained from three main sources: public records, house plans, and the appraiser. As you might expect, information obtained from house plans and the appraiser is often the most accurate, resulting in the best price per square foot modifications.
While square footage adjustments are the most common, there are other features that might affect the value of a home. Swimming pools, bedrooms, baths, basements, storage buildings/barns, garages, and other structures are examples.
It is possible to establish whether a feature contributes to value by including as much data as possible in the MLS. Because the appraiser might use numerous tools, including regression analysis, to aid in calculating adjustments, it is critical to input this information.
If It Isn't Described, You Can't Measure It
Solar power is one characteristic that has recently been in the news. People want to know if a house with solar panels will sell for more money than a property without them.
The only way for an appraiser to establish whether solar power adds value to a property is to have enough information in the MLS. This means that there should be an input field for solar so that the appraiser can sort and analyze this data. It should be noted that only solar systems that are owned will contribute to value.
It will not add to the property's assessed value if it is a leased solar system. It would be beneficial to include a field that indicates if the solar panels are owned or leased.
As you can see, appraisers can calculate the contributing value of any characteristic that is described in the MLS and can be sorted and studied by appraisers. Since you can't measure what isn't recorded or explained, this is an excellent motivation for brokers to be as precise and detailed as possible while putting together their MLS listings.