Dreading the day

Did you ever have one of those days when you knew something bad was going to happen for your client and you had no control?  Couldn't help them thru the situation?  Your hands were tied because of the 'rules'?  

My intuition was correct one day last week!  $33,000 under appraisal recently on a townhome listing that I have.  The appraiser said he was stuck because the only recent sales were those of short sales right in that subdivision. This is playing out that way all over my area and let me tell you I'm sick of it!

The people that lost their homes to foreclosure or short sales are setting a market price that is undervalued and the appraisal industry is complacent and are being pressured by the banking industry.  

Now according to appraisal industry standards:

"Appraisers technically shouldn’t consider neighborhood foreclosures when valuing a home, since foreclosures don’t meet the Appraisal Institute’s definition of a property reasonably exposed in a competitive market."

Marketing 101 made simple: short sales and foreclosures are always priced at or less than the 30 day price.  

Why must all appraisals suddenly come out low?  Why are 2nd rate underwriters in Utah reviewing appraisals and asking appraisers to clarify issues on a home 1000 miles away?  The banks are now pressuring the appraisers under the guise of the new HVCC regulations and no one is standing up to them.

How can the market get any better in my area if I can't sell anything and get it to close?  So even sellers that are transferred and not in financial duress are held hostage and financially bloodied by foreclosures and short sales.  There were other traditional sales in the area within the 1 mile radius but they were dismissed and not considered.

The seller has already threw in her pound of flesh with the deal because she paid $305,000 for this house and sold it for $280,000.   This was all her equity gone just so that she could be competitive in the market place and take a transfer.  She wasn't unreasonable!  She priced the home to be competitive!  In fact, she was the largest model with the lowest price and still she couldn't win.

Houses in our area do not drop $50,000 in price in less than a year!