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Appraisals In A Declining Market

In a recent RISmedia article, Jason Kotar of Diversity Lending Group gave some minimum guidelines for appraisals based on a small survey of other lenders...

These guidelines are not intended to be all inclusive and may differ depending on the lender. They should be viewed as the minimum requirements used to set the market value by using data for comparable properties.

- Must be within a three to six month period, with similar features such as square footage.
- Must provide days on market for the subject property and comparable sales used.
- Must be within close proximity of the subject property, looking at neighborhood character as well (urban, suburban or rural).
- Must be within a one mile radius of the subject.
- Must provide one current listing or pending sale from the Multiple Listing Service to help support value.

If any of these guidelines cannot be positively addressed or supported in the appraisal, the appraiser needs to provide a detailed written explanation of the circumstances.

While CMAs are in not appraisals, these guidelines are still important to keep in mind when providing Market Valuations for prospect property sellers and buyers as they help to maximize the accuracy of the valuation and minimize risk for all parties.

Posted by Lawrence Yerkes - Broker Associate, Southern New Jersey Real Estate Services on 03/29/2008 11:44 AM

Comments (1)

appraisals, homeowners, sellers, buyers

1 Comments on Appraisals In A Declining Market

These guidelines are not working in rural SC areas and I would assume other states rural areas as well. There many times when these guidelines are not able to be met and I have seen many good, accurate appraisals turned down because of lack of market activity. I dont have a any problems at all in more populated areas and agree with all of the suggestions as they should have been addressed in the appraisal reports as they are the basis of good appraisal techniques. This is making it really tough in rural areas when lenders are not accepting "no other pertinent market data available" along with a detailed history and write up about the subject area. Once again lenders need to really make sure that the borrower is reasonably stable and has shown the ability to pay their bills.

04/24/2008 08:15 PM

by Brian "Nick" Collins (BCAppraisals)

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