AEIdeas

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Discussion: (3 comments)

  1. The lenders are fighting the last battle when appraisals reflected past sales even though values were declining.

    Example, I just refinanced my principal residence. There is/was an IDENTICAL house next door that had sold 11 months previously and the appraiser marked the value DOWN about 8% for the time adjustment; even though every report shows RE values increased everywhere 6% to 10% during that period.

    Not only that the underwriter wrote down $1.1 mm in federally-insured bank deposits by 35% because “those assets might decline in value”.

    I can’t believe it either.

  2. My home was put on the market on February 13, 2013. By February 15, 2013 we had two competing offers after showing the home 7 times. We accepted the better offer for the exact amount that we listed the home for. However, the appraisal came in at 18k less!!!! We are selling because we want to move to a newer home less than a 1/4 mile away that is larger not because we HAVE to – in other words we were unable to negotiate a new deal. Exactly one month later, we accepted a second offer (not as high as the first), but still decent. This time the appraisal (FHA), came in even lower!

    Our home has a remodeled (rooms were taken down to the studs) kitchen and dining room, updated living room, updated bathroom and new carpet in the master bedroom and living room/hallway, new HWT, new exterior doors, new AC (one year old), a 10 year old 20×20 garage, and new landscaping. We also have a deck and a bricked in patio area next to the deck for grilling. It backs up to forested area that we are allowed to garden on, and keep cut back. The school district is great and we are within walking distance from our local metropark on Lake Erie. In other words, it is a quality home in a quiet neighborhood but the appraisers are not taking any of the updates, curb appeal, the forest view, etc into consideration.

    The issue seems to be that there are no nearby comparables sold within the past 6 months so the appraisers are comparing our home to run-down shacks that are more than 5 miles away and do not even begin to compare to our home other than the basic number of rooms, square footage, and lot size.

    Are low appraisal values a problem in housing? YES!

  3. In Response to AK;

    It seems as though you expect the appraiser to rubber stamp your contract price. The appraisers job is not to help you, but rather to protect the lender. You stated that there are no sales to support the contract price and that the appraiser went 5 miles searching. If there were better comps, I presume you would have stated that. They can’t invent data, either there are homes to support your sale or there are not. Facts sometimes are uncooperative.

    If you had to loan your own hard earned money. Would you make that loan knowing that if the buyer defaults, there are no other sales in the area to support what you loaned on this property?

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