The one thing I have always loved about real estate is nothing ever stays the same. You're market is probably the same way, isn't it? Just when you think you have something figured out, you realize you don't know as much as you thought you did. I don't know about you, but I have always prided myself in staying informed, learning what is new, staying up on changes in the market etc. But these days, it is almost a full time job!
I was a bit surprised late last year; or, may be it was the first of this year (at my age, time goes so fast, I can't keep up), when I learned of a change in the Georgia appraisal statute. What first surprised me is the change had gone into effect August, 2006 and I was just hearing about it for the first time. I realize I'm not a loan officer, but being affected by this change it just seems the information might have trickled down to us a bit sooner. Most agents I come in contact with still don't know. And, I'm curious...are these type of changes being seen in the real estate industry across the country?
Here is how our Georgia statute currently reads:
Paragraph 539-3-.02(1)(C)2.D. As approved by the GREAB and EFFECTIVE AUGUST 1, 2006
"SELECT COMPARABLE PROPERTIES FOR VALUATION OF A PROPERTY THAT ARE LOCATED WITHIN THE MARKET AREA OF THE SUBJECT. ABSENT OF CREDIBLE REAL ESTATE APPRAISAL EXPLANATION FOR A DIFFERENT MARKET AREA, THE MARKET AREA FOR RESIDENTIAL PROPERTIES SHALL BE PRESUMED TO BE COMAPARABLE PROPERTIES LOCATED FIRST WITHIN THE SAME SUBDIVISION AS THE SUBJECT AND SECOND WITHIN ONE MILE OF THE SUBJECT."
It is against the law to use comparable sales outside the subdivision without a good explanation.
DECLINING MARKETS/MARKET ANALYSIS: Declining markets are here now. We (appraisers) are now required to report DOM, REO activity and rising listings (supply) as sales fall (demand). Due to the changing markets, we are required to utilize comparables within six (6) months of the effective date.
Notice the last line... six (6) months. As of last week, we were told by our primary mortgage company no more than three (3) months. Just an indication of how tight things have become. Personally, I am glad. Many of the changes taking place in lending and appraisals is a good thing, I think. But boy, am I ready for the worm to turn!