Roughly 40 percent of all home sales this year were foreclosures or short sales, meaning the property sold for less than the mortgage. In some markets, like Las Vegas and Phoenix, they've hit more than 50 percent.
Appraisers determine the value of a property by looking at recent sales of comparable homes. They take an apples-to-apples approach, excluding or making adjustments for certain features, such as a swimming pool or finished basement. And generally, a foreclosure isn't used as a comparison for a standard sale.
However it is getting increasingly difficult to find homes that are not Short Sales or Foreclosures for comparable. As a result homes that should be valued for more (as compared to what a buyer would pay and a seller is willing to accept) money are being appraised for less. All this does is kill deals or make it even harder for the Seller to make back their money on the home. Fortunately, here in the Salt Lake City, Ogden area that trend is not as drastic as in other area's. I have seen homes that have appraised for a lessor amount, but only by less than $10,000. Where as in a few examples in California the difference can be as much as $55,000 less than the buyer had agreed to pay. What is the problem, since the buyer is willing to pay that much? Well if the value of the home is $55,000 less, then the bank will not approve a loan for the increased amount. If the buyer has the cash, then the difference can be made up. But in the end usually the seller loses out, thus making this a clear "Buyer's Market"
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