With foreclosures a large share of property sales in some areas, appraisers continue to factor in the sale price of foreclosed properties when setting values of regular properties. Appraisers are aware the practice isn’t ideal, but in some markets they’re left with little choice because of the large number of foreclosed properties.
Bill Geiger Jr., an appraiser in Cocoa Beach, Fla., told a local magazine that when he has to use a distressed property while doing an appraisal, he contacts the real estate practitioners involved in the sale and reviews computerized listings for the property to find out as much as he can about the condition of the home when it sold. He adjusts the appraisal value accordingly.
There are other factors at work down assessments. Rob Johnson, vice president of lending for San Diego Financial, says the lenders asked for more control of the property if the buyer has a credit score as low or high debt relative to income. That additional inspections may be affected if the lender decides to make the loan was originally estimated.
The third factor is the volatility in the markets in which some vendors do not want to let go of previous expectations.
Experts had hoped that the repeal of unpopular evaluation standards would help the concerns of low valuations, but the repeal does not in itself change the terms of the face of the evaluator. Repeal of rules Home Valuation Code of Conduct was enacted into law as part of an important bill to reform Wall Street a few months ago.