Recently there has been some confusion in how property values are established. There used be an idea that the true value of a property was what the seller would sell for and what the buyer would pay.
Then we entered the real estate market of 2009-2010. In the local market of east central Florida, we have almost every neighborhood with its share of depressed/distressed properties-short sales, foreclosures and the usual "widow/widower-need-to-sell-and-move-on" transaction which is typically low. Now appraisers have to look at those sales, whereas in the past, they could be excluded as not typical. So value becomes the market value based on past sales (usually the most recent six months.)
Here's the problem: Some lenders will not allow a buyer (whose appraisal come in low) to bring more cash to the closing table than the 20% required.
How are we to come out of a falling housing market if the lending community will not allow a buyer to bring more cash to close? How on earth can a bank be at risk if a property is mortgaged at 60% of its sales price rather than 80%?
I wish I could say this was a hypothetical scenario but that's not the case. I am curious about your opinion and if you have had similar experiences.