Lake Mary Homes for Sale – Now Is The Time To Buy!

Jan - Thank you!  My web designer referred me to the person that helped design the logo.

Jennifer - I do the same as well.  Central Florida is quite reasonable compared to many parts of the country.  But at the same time, it is all relative.

Lisa - We have to be.  If not, we'll only succumb to the negativity of what's being said.  We're the ambassadors of the real estate market.  Glad I could help with starting your day on a positive note. 

Bill - Let me take this a couple steps at a time.  I think you are miscontruing a couple of things here.  When a bank orders an appraisal, it is independently done and theoretically the appraiser does not know what the contract price is.  So, therefore, as you suggested the appraisal would be based on comparable sales. 

I wouldn't go as far as stating that the home has to be grossly underpriced, but let's go back a couple of years before this run up in housing prices.  Generally, the appraisal came in over the sales price, from my experience that is. 

In regard to the mortgage crisis, I do not feel that the appraisal process played as great of a deal in creating the debacle as I think you may believe.  The banks were feeding the frenzy irregardless of the appraisal process.  There were too many factors involved.  The subprime was only a portion of the problem that we are seeing now.  But it mainly came down to supply and demand.  That is what drove the prices higher and higher.  That's just simple economics. 

The mortgage crisis came from the banks seeing this happen, the housing prices going up and up and they got greedy, so they were lending subprime loans that should not have been done; they were financing many no-doc loans that shouldn't have been done.  The banks didn't have to worry too much about liability because they had very little since they would most likely sell the loan and start the process all over again. 

So, I don't understand why you feel that the appraisal should be tied to the selling price.  These are two independent numbers.  The selling price is what the market will bear and what the buyer and seller have come to terms upon.  The appraisal is somewhat independent of the present market in that it is derived from comparable solds. 

Equity is determined generally by utilizing the current appraisal of the property.  That's how they figure out if the PMI should be removed.  That's how they figure out how much of a Home Equity Loan you may ask for. 

I hope that this answers some of your questions and possibly clarifies my reasoning to you. 

Bill - I understand what you are saying, but we are also not going to come to an agreement on this.  There are more circumstances to take into consideration than just the price. 

Let's say we have two houses, totally identical - we'll call them house A & house B.  Both are priced identically.  House A sells for $250K & House B sells for $225K and they are closing on the same day.  It appears that House B was heading towards pre-foreclosure and wanted out quickly.  You are not going to tell me that the appraisal on B should be 25K lower than A.  Firstly, a good appraiser that while doing an appraisal on the next home (Home C, which is totally identical to A & B) will question the realtors as to the circumstances behind the sales of both A and especially B considering the disparities.  I've had many of these calls over the past several years.  And the appraisal will be weighted properly because of the circumstances surrounding the sale of the two homes.  Firstly, B should have appraised at or at least very close to what A appraised at.  Secondly, as I've already stated, the new appraisal for C will be closer to A than B. 

I understand what you are stating in your example and theortically you are correct, but this is the real world. 

Here's another example that I was saving for another localism post and would rather have not had this tete a tete here, but - OH WELL!!  I have a home that I purchased last year from a client.  I got a great deal and paid quite a bit less than the appraised value which at the time was $282,500.  I refinanced it a year later (9/07) and while I am aware that this was a refi and not a new purchase, the appraisal came in at $287,500. 

We know that appraisals are more subjective than a science.  This is a given for their are two many factors involved.  It is not just a simple mathematical equation. 

Yes, I've enjoyed the dialogue as well!