Who would have thought TRID would impact Appraised Values, but it CAN....Don't forget to continue reading about Fannie Mae's Changes and influence on Lake Values BELOW.
There is ZERO tolerance now in quoting Appraisal Fees to Borrowers by the Lenders. If Lenders do not know (many times they do not) that the loan will be for a Lake Front property or some other complex property (Acreage, Mountain, Golf, etc) they are NOT allowing Appraisers to request higher fees due to complexity when they order the report because they cannot go back to the borrower and raise their estimated fees. (If there are extenuating circumstances, like complex properties not reported at the time the Loan Officer was putting together their Estimates, they CAN raise the fee but not all will!)
Why is this an issue? Because the Experienced Appraisers are REJECTING the lower fees and less experienced Appraisers are getting the JOB. NOT GOOD!
I charge a higher fee for all Lakefront properties because I know what is involved to complete a thorough and accurate job when it comes to determining Lake Site Values. I am a firm believer that YOU GET WHAT YOU PAY FOR! Anyone who deals with Lake Front property knows, you have to have someone who understands lake site values. I usually see LOWER values from an Appraiser who does not understand lake rather than HIGHER Values because they are fearful of making the sometimes large adjustments required for the Lake Site Values.
How can YOU the Realtor take control? Make sure the Borrower (via the Selling Agent) tells the LENDER they are dealing with a Lakefront property purchase, which is considered a complex assignment so the Lender will make sure they are estimating a higher Appraisal fee up front, so that it is not rejected by the experienced Appraiser. ** Lenders are supposed to hire only Appraisers who are qualified for the job....so they should make sure the Appraiser DOES have Lake Lanier experience and only order from those Appraisers**
I would also suggest that you question various Lenders to see if they WILL accept higher fees for complex assignments and ask them if they have aPANEL of Lakefront Appraisers! Thankfully most of the Lenders that I work for DO allow higher fees for Lakefront Appraisals, but some Do Not and many AMC's (Appraisal Management Companies) will NOT. They will just find someone willing to take the originally quoted fee without paying a higher fee.
HOW WILL FANNIE MAE HAVE AN IMPACT LAKE LANIER VALUES?
The most recent update to Fannie Mae CU - Collateral Underwriter (refer to my newsletter on this change that occurred in 2015. ) may impact Lake Lanier Appraisals.
They are going to be looking hard now at VIEW adjustments. My guess is they will want to see LOWER adjustments or at the very least some extensive market support of larger adjustments for view/site.
Lake sites alone are wide ranging in values and adjustments can be as low as $20,000 to several hundred thousand (on Lake Lanier). With Fannie Mae scrutinizing these adjustments, my guess is that many Appraisers will just keep those adjustments on the lower side in order to fly under Fannie's CU radar.
If your Lake home has a fantastic lake site & view this could negatively impact its value because some of the comps will be inferior to your lake site and if the Appraiser is hesitant to make large adjustments to the comparable sales to make them equal to Your Sale, it may result in an appraised value below your sales price.
It takes experience, time and hard work to support lake site adjustments and INDEED they should be supported to provide a credible Appraisal Report for the Banks, but with FANNIE MAE's new CU, they are making it more difficult for Appraisers to call it like they see it when it comes to Lakefront property. NOT GOOD!
Rest assured as far as I am concerned I will continue to make the appropriate market based adjustments for lakefront property. What YOU Can do as a Realtor is provide additional information to the Appraisers regarding the variances in site/view values, if you provide them with Comparable Sales.
I know this is more work on your part, but that is the lending world in which we live and if you are prepared and avoid any of these issues, you are doing your SELLERS are great service.
Thanks for taking the time to read. Please feel free to SHARE any of my newsletters to others, on Social Media, etc. I hope this will help you moving forward in 2016.
5747 GARDEN WALK
Flowery Branch, Georgia 30542