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11 Comments on Low Appraisals....Realtor Problem? Lender Problem? Definitely A Client Problem!
Been there. Done That. Still there. Feel your pain. I am now into the 3rd month on one escrow because of a stinkin' and ridiculously low appraisal. Grrrrrrrrrrrrrr
I think this will continue to be a problem for some time! Appraisals are one person's opinion backed up by the selected comps. Selecting the comps when you haven't actually seen the properties is difficult, at best. I always meet the appraiser at the property and give them the comps that I used to justify the price. Most of them appreciate that, other times they reject almost all communication. It's the luck of the draw!
Sometimes, it's worth getting a second appraisal, but it adds cost to the transaction. It all depends on how much the buyer really wants the house, and whether or not the seller will compromise on the purchase price, along with the buyer's ability to make a larger down payment.
If pricing a home could be completly quantified and didn't require experience and market knowledge, the automated valuations would be 100% correct and we wouldn't need appraisers or nearly as many agents!
I am not sure that pointing the blame at the appraisers is right. Clearly the standards of appraising have changed and it is up to us to go with the flow. I still think that real estate is at least 205 overvalued and we will continue to see this happening until we hit bottom.
Not blaming the appraiser, per se. Except that the rules make it so difficult for them to make a living, many good ones have moved on and some of the ones that are left are so hungry that they take jobs which are way out of their area. That's not a good system. I think it's unfair to blame appraisers for the housing crisis when it was caused by sub-prime loans. Value is always based on supply and demand.
Getting a deal to the closing table just continues to get more and more difficult with time, rather than better.
Debi
Karen - Feeling your pain. I too have had way too many transactions negatively affected because of low appraisals. I have appealed every HVCC appraisal I have received. I win some and I lose some but I am getting a 50% chance of getting a positive review when I do appeal the appraiser. Talk to your LO about the appraisal appeal process. It's there for a reason but be prepared to fight for a more accurate value. Good luck.
Karen,
It will probably the the better part of this year and 2011 before we can acquire any type of expected "rhythm" of expection with appraisals. I absolutely agree with you that losing out on the opportunity to communicate with the appraisers has been the hardest aspect. Our clients look to us for some explanation of "why" and with HVCC, that answer is longer in coming, if ever.
Great post and equally great comments. Have not come across this problem yet but I am sure I will someday. Good to know that you can appeal the HVCC appraisal.
Karen yes we've had many situations like this - not quite 30K off that I recall. What I find interesting is the listing agent is quick on the draw to cancel the contract without giving the buyer a chance to 'maybe and that's an iffy maybe' find a solution. Seller must be needing to move on quick and/or there is another buyer in the wings? Why, by the way would the seller think the earnest deposit goes to them? If they house didn't appraise it normally goes to the buyer.
It is a serious problem but some people ( in decision making positions) out there believe that the appraisers were the biggest factor in creating the inflated values leading to the bubble bursting. I do not agree, but that is what some people believe. What CAN be done is provide MLS numbers for the comps in the area that make sense. Include those MLS numbers on the appraisal order. It is much easier to get the results you need if you provide them upfront vs trying to get an appraiser to change his/her mind afterwards. It is like they are admitting they were wrong. Not as easy to do.
I don't understand how the housing market can turn around when buyers are will to pay the price and the appraisers are shooting it down. When this happens how can property ever increase in value? When the property does increase in value the comps don't show that especially if your property is the first to start increasing. It's a catch 22 .
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