To the Lender, the buyer, the seller...?
I certainly understand establishing the value of a property to avoid abusive borrowing practices, or inflated pricing, or any number of other reasons - for the good of the parties?
As REALTORS, many of us spend alot of time assisting our clients in establishing the value of a seller's home for marketing purposes? We understand that the true value of a property is what a buyer is willing to pay for it. Some of us even go a bit further - beyond comparing the CMA, we take a look at the current properties for sale to see were the property we are marketing fits in. (Buyers can't see the sold properties, but make their decisions based on what they see - I believe our sellers should see the same comps and make their price decisions based on all of hte facts.)
Then after all the sepcial care and marketing efforts we get a contract and have excited buyers and sellers - who are interested in getting their transaction to closing, doing all of the right things, providing all of the right docs and cooperating with the lending process... Then we get to the appriasal ... and all is for naught. This person has the right of VALUE in his pocket. I will cite a recent experience.,..
The house in question is a ranch style, 5 bedroom, 3 full bath, 2 car garage, 2600 sf., fully finished, full basement. Oringinally poriced at $220K, this home went undercontract within 35 days of marketing. The buyers negotiated that the seller would contribute $4400 toward their closing costs and pre-paids... VA Loan.
Appraisal #1: Value $180,000. Appraiser compared this property to other homes without a basement (even though homes were sold in the neighborhood) - which had sold for $150K - allowing $30K for the basement and finish. Ridiculous - especially when other homes has sold for within the value range. Sellers agreed that a reconsideration of value was necessary and one was done. However, in the months that it took the Lender (BofA, any surprise?) to come back with approval to submit the reconsideration - the appraiser would not even consider it - we were already 3-4 months beyond the date of the appraisal. The lender then suggested if we wait until the appraisal is 6 months old, another could be ordered and the sellers would be given another opportunity to get a fair appriasal, buyers agreed.
Appraisal #2: Value $212,000. A bit more in keeping with the values of the property however, now this appraiser felt is necessary to subtract the value of the concession ($4400) - which he subtracted from all of the proeprties he used (as concessions are a norm in our area) - then he awarded $5000 for the differnce between our home condition of AVERAGE+, the the comps were all deemed to be GOOD (even though he didn't get to see those).
Bottom line is it is obvious that the buyer and seller who had agreed to a price of $220K dind't know what they were doing? The REALTORS - they didn't know either. It is only the opinion of the appraiser (who has his own iron int he fire) that matters.
That being the case - it is any wonder why sellers don't get appraisals of their properties prior to listing them... it is because without the appraiser having the contract and knowing the negotiated sales price, that they have no way of knowing where they should be price wise - how can that be? Why do they get the contract anywa - what does that have to do with the value of the home?
I know it is not an exact science - but the current method stinks! Especially the deduciton of seller concessions - which are negotiated byt he buyer and seller and included in the final agreed upon sales price. To deduct is is a double whammy for the seller. Not to mention that the comps that sold with concessions are also being double hit as their final price included the concesison - maybe already deducted from their value... It is a cycle that is ridculous.
And can we make our case - NO! THe appraiser's are no longer authorized to speak with the REALTORS? By god, we are where they get their inforamtion in the first place. What would happen if they weren't able to call and speak with an agent to obtain the necessary info for the comps that they use. Maybe they shouldbe required to obtain their information by their own leg work. The information superhighway is not a two-way street in the appraisal system.
Bitter, you bet! I'm tied of the way the system has failed home owners and buyers who have not done anything but desire to buy and sell a home. They are not a part of the Mortgage Fiasco and yet they are the victims.
Msaybe it is the lenders who should not be colluding with the appraisers by providing the sales contract and all of its negotiations.
OK, enough is enough. I won't B*TCH anymore, but does anyone know of a viable solution to this mess... Please, let's figure out a way to be heard. Has this happened to anyone else?
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