I sold a Carmichael home for around $1M last year. Last week, my seller got a $665K appraisal for his refinance. Ouch! Did his home really drop that much in value?
No. No. No. In fact, homes over $700K in Carmichael have retained their value over the past two years. (look at the chart below) So what went wrong?
Appraisers have different goals with their appraisals. On a refi, they are trying to confirm to the bank that the loan is a good one. They know what value they are trying to confirm. In this case, they only needed $665K of value to approve the refinance. So why go beyond?
With changes in our lending/appraising laws, appraisers are now PERSONALLY liable for errors they make. Review appraisers, sitting in a windowless office somewhere, a little cranky that they are not outside playing today, will be checking the original appraisal. And the appraiser gets spanked if they have over-valued a home. They may not get hired again. Since this refinance worked at the lower value, why should the appraiser have stuck his neck out and take on extra liability, even risking a spanking, when there was no need?
If you want a Fair Market Evaluation of your home to find out the true value, let the appraiser know that's what you are looking for. Or call a Realtor. We're free. We do market evaluations, Comparative Market Analysis (CMAs), all the time. We not only look at the same comparable sales an appraiser looks at, but we also filter in our experience of what buyers are looking for, what your listed competition offers, and current trends in home buying. In my (ever so humble), Realtors are the best gauge of your homes current market value.
copyright © 2011 Sally Dunbar
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