by Aaron Chapman and Marco Santarelli

The world of real estate finance is riddled with varied forms of verification. Since taking someone at their word has been jeopardized by the unscrupulous, having a disinterested third party verify the data has become the standard. Most of this third-party data is based on facts associated with the buyer and the property. One example of third-party verification is an appraisal. This is basically a mixture of facts sprinkled with a lot of opinion. 

When acquiring real estate, one should have an idea that what they are paying is what the market will support. Since many of us are not experts, we rely on a professional who is certified and licensed for expertise on the subject. Those listing the property for sale also have expertise on the subject; however, they are also aiming for the highest possible price the market will allow. Since that makes them an interested party who benefits from the highest possible valuation, it is reasonable to consider the disinterested Real Estate Appraiser would be a safe place to get a reasonable “opinion of value.”

Appraisers are tasked with analyzing the subject property (the property to be appraised) and finding other sales in the area most like it in criteria such as room count, size, style, amenities, condition, appeal, and quality. Many neighborhoods have commonality in the houses within it as builders tend to have a limited number of floorplans available at the time of construction. In these cases, it can be an easier task for the appraiser to settle on a value that is acceptable to all parties involved since there is little variance on appraisal criteria.

Many sales agents, sellers, and appraisers differ in the value opinion when it comes to more customized neighborhoods or older neighborhoods peppered with remodels. The sale of real estate is recorded in multiple places, but the data recorded with the county can be very limited in what the property condition may have been at the time of sale. An appraiser is reliant on sources other than the county recorder to validate a comparable sale as having a close enough likeness to the subject property that it would qualify as a usable comparable sale.

When it comes to online sources, there is also a lack of accountability on the data provided. Anyone can upload anything they want without any checks and balances. Many sellers graciously collect information on the sales in the immediate market area and provide these to an appraiser at the time of the subject property inspection. This does help the appraiser in their task; however, they are still mandated to ensure the accuracy of the information. The only ways they can confirm the accuracy of such information is to either enter the comparable sales themselves to verify room count, size, style, amenities, condition, appeal, and quality or to go to a source that is policed for accuracy.

Enter the Multiple Listings Service (MLS)

Many of the markets in which SecurityNational Mortgage has been financing investment purchases show a small percentage of sales sold on the MLS. Dave Payerchin of Columbus Turnkey & Sell House Columbus in Columbus, OH said, “We have not purchased a property on the MLS in over two years, but I have found the value in listing all my sales on the MLS so appraisers have a source of valid sales data for their reports.” Payerchin and his partner, RJ Pepino, purchase homes in need of drastic rehab. They remodel these homes and list them for sale on the MLS. Even if they sell inside a network of clientele, they still list them on MLS via an agent.

If they didn’t list the terms of their sales on the MLS, they risk being subject to what an appraiser can validate without their verifiable sales data. That would mean using what was available, which could be lower-priced homes in inferior condition. In this case an appraiser would be forced to make adjustments for condition. The condition adjustments have limits. An appraiser typically sets that percentage and sticks with it. That can be very detrimental to folks like Payerchin and Pepino. Without like-for-like comparable sales they could suffer from a lower valuation because of a lack of data for the appraiser to support the price.

Those who sell to their own network or through varied online sources should be encouraged to use the MLS as a tool. Build the database of comparable sales within your market and encourage others in their area to do the same. If it is not currently in your business model, ask yourself, “Is it in your business model to be forced to drop your justified but unverifiable price, or spend dozens of hours requesting a reconsideration from the appraiser?”

We all know a sale is a sale and should be treated that way. However, in the world where the MLS appears to hold this all-encompassing power over the comparable sale, we should use it for how it can benefit the markets and not keep kicking against it in hopes to take a moral high ground that more often than not sells you and your property value short.

DISCLAIMER: This article is for informational purposes only, contains the opinion of the author, not necessarily the opinion of SecurityNational Mortgage Company, and should not be construed as lending advice. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet LTV requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines, and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over life of loan. Reduction in payments may reflect longer loan term. Terms of the loan may be subject to payment of points and fees by the applicant. Equal Housing Lender. SecurityNational Mortgage Company Inc. NMLS# 3116. See loan officers featured for a personal consultation and accurate pricing.

The above information is the sole intellectual property of the author. Any distribution without written consent of the owner is strictly prohibited©.

Aaron Chapman has been in the finance industry since 1997. His clientele ranges from first-time home buyers to those investing in multiple properties for long-term cashflow. He is presently ranked #14 in an industry of more than 300,000 licensed loan originators.

Marco Santarelli is the founder and president of Norada Real Estate Investments, a national real estate investment firm offering turnkey investment property in growth markets nationwide. He is also a published author and host of “The Passive Real Estate Investing Show,” a podcast for real estate investors interested in building substantial passive income and creating long-term wealth. Learn more at

Tags | MLS
  • Aaron Chapman

    Aaron Chapman has been in the finance industry since 1997. His clientele ranges from first-time home buyers to those investing in multiple properties for long-term cashflow. He is presently ranked #14 in an industry of more than 300,000 licensed loan originators.

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