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Homes are now Being Appraised at Less That the Materials to Build Them?

Well, I Just had a brand new home appraised using distressed properties as comparables. The builder discounted the home , and the appraiser just devalued it $80,000. That's 37%. If builders cannot build a home and at the very least cover the materials, we are in for an economy with no new home starts.

Something needs to be done. Giving banks money is not solving our problems. Appraisers are using the lowest comps they can find regardless of condition or age. If banks don't need the loans to make money, the appraisers run unchecked. This is a very bad economic indicator.

Posted by Mark Horan P.A. "The Resident Chef" on 07/20/2009 12:53 PM

Comments (7)

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7 Comments on Homes are now Being Appraised at Less That the Materials to Build Them?

JUL

Distressed properties are part of the overall market. I understand using them, not to the exclusion of all comps, however. But, if the market is overhwhelming being dictated by foreclosure, then that segment must be represented as well.

Mark

Absolutely amazing how homes cost more to build than what they are selling for.I wonder how that comes into play with large commercial properties with fast and massive depreciation. It will get better soon.

Don- There are new home sales that were ignored. If you are using foreclosures as comps, an interior inspection needs to be done, and they are not being done. Age adjustments need to be done, and they are not. There needs to be major adjustments made to foreclosures. New homes have warranties, the foreclosures used do not. New home starts are a major economic indicator. Appraisals can send us into a depression at this rate. Appraisal rules need to be changed.

Tom- unfortunately there is no indication anything is getting better. Much less, soon.

Mark, You are wrong. It IS getting better...after all Larry Summers said he looked at the google search numbers and it IS getting better. See...don't you feel better?

As far as new homes go, that's got to be rough...banks are now posting large profits and yet sitting on TARP money. How is that possible? I mean can you post a $20,000 profit in YOUR business if you took out a $100,000 SBA loan to get started and haven't paid it back yet?

This is the type of craziness that ensues the federal red tape crosses over into the free capital system.

Ron- Like Glenn Beck said on Friday, "If We Turn It Upside Down" it's getting better! This is verging on insanity.

You're absolutely right, giving banks money was the worst thing we could have done! Now they are moving slower than ever, we have no inventory and the buyers are getting discouraged. How are we gonna fix it?

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