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Under Water Homes - And Lowball Appraisals Don't Help!

By
Real Estate Sales Representative with Keller Williams Cornerstone Realty

Under Water Homes - And Lowball Appraisals Don't Help!

Under Water HomesThis morning's article in the Wall Street Journal,

Fighting Back Against Lowball Home Appraisals

made me recall some recent similar appraisal issues with home purchases.  The story above is about a couple who want to refinance and the first appraisal would put them under water.  With interest rates continuing to set record lows, who would not want to re-fi?

A recent home sale fell through because the appraiser came in low.  For comparables she use 3 short sales and made no adjustment claiming "that a buyer expects to pay short sale prices even for a resale".  (We consulted another appraiser who said that was not true, and the appraisal should have been adjusted.)

Nevertheless, the deal fell through.  Less than 30 days later we had another contract and another appraisal done.  This time the appraisal came in 15% highter!  How can appraiser be this far apart?  Well as the above article quotes;

"We know we don't influence appraisals at all," says CitiMortgage president Sanjiv Das. "We also know that appraisal is an art form. I will take another opinion to satisfy the customer that two came in at the same level."

 Moral of the story?  Get a 2nd opinion!
   

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Comments (8)

Clint Mckie
Desert Sun Home, commercial Inspections - Carlsbad, NM
Desert Sun Home, Comm. Inspection 1-575-706-5586

Hi Miller Team.

An under water home is just that.

Then a low-ball offer tries to push the seller even further down into the abyss of trouble with the lender.

Many buyers try to get homes for a song. And find out, no matter how under water the home is, they cannot low-ball to the offer to the point that the bank or seller will loose everything.

Have a great day. Good post.

Best, clint Mckie 

Jun 02, 2012 01:17 AM
David Grbich
Realty One Group - www.FindCARealEstate.com - San Juan Capistrano, CA
Orange County Real Estate - 949-500-0484

Appraisals can be deal killers in the current market. Always have the option of getting a 2nd appraisal but adds cost and takes time - jeopardizing the deal. Thanks, Dave

Jun 02, 2012 01:44 AM
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Thanks Clint.  You are right.  Crazy world out there.

 

Thanks Dave.  Exactly.

Jun 02, 2012 02:23 AM
Paul Gapski
Berkshire Hathaway / Prudential Ca Realty - El Cajon, CA
619-504-8999,#1 Resource SD Relo

Thank you for sharing your blog; we need Real estate Professionals to share their comments and information regarding their markets and experiences. Thanks again from beautiful Sunny San Diego!

Jun 02, 2012 07:57 AM
Donna Quinlan
Keller Williams Realty - Newburyport, MA
Keller Williams Realtor & Career Consultant

I love your photo! There are so many underwater homes. The appraisers I come across are doing the best they can. Many spend a lot of time finding value. The banks are expecting so much more in their reports. Let many others, the appraisers are getting paid less for doing more work. 

Jun 02, 2012 10:01 AM
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Thanks Paul

 

Thanks Donna, yes, we are all working harder for less.

Jun 02, 2012 10:16 PM
Anonymous
Joe

Here's my question: If lender's are accepting only appraisal values that are biased to the low side, as I believe they are, how do we ever get out of a declining market? Until housing prices have declined to the point of being a predominately "cash" market (think 1930's prices) with no appraisal contingencies required, the market seems stuck in a classic self-fulfilling negative feedback loop.

Jun 03, 2012 07:02 AM
#7
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Thanks Joe.  Exactly!  In fact I wrote a post on this problem several months ago.  And cash won't necessarily fix the problem, since cash offers are often lower.

Jun 03, 2012 07:33 PM