DON'T TAKE AN OVERPRICED LISTING! Declinging Market Information

Mortgage and Lending with Mortgage Services, Inc.



 These are the resent changing rules that will affect an overpriced property. Don't be caught with one. Use this article to inform and prepare your sellers.

 This is what most banks and mortgage companies are requiring from appraisers.

 What is the sale to list price ratio?

Generally, the sale to list price ratio is based on the "original list price compared to the "sale price". For example, Original List Price is $350,000. At day 60, price is reduced to $335,000. The final sale price is $330,000. This represents a sale to list price ratio of 94%. A sale to list price ratio below 90% indicates rapidly declining values that could lead to a reduction in maximum LTV or a loan declination for the buyer. This is why it is more important than ever to price the house right. Do not take over priced listings because they will hurt everyone in this market. It isn't fair but the banks and the government are the ones who make the rules. We just have to learn what the new rules are and play by them.

 Also there are special requirements that apply to appraisals that identify adverse market conditions (for example, an over supply of properties, or marketing times in excess of six months (180 days)). These appraisals need to be documented and reviewed carefully. Required documentation includes:

 •1.)    At least two of the three comparables must be dated within 90 days of the appraisal date.

•2.)    A minimum of one listing or pending sales is required. Ideally and when possible, at least two additional comparable listings or pending sales should be provided.

•3.)    The appraiser must address the impact on marketability and value of both favorable and unfavorable factors and avoid using subjective, racial, or stereotypical terms, phrases or comments within the appraisal report.

•4.)    Days on the market must be reported for subject property and each comparable sale must support the average marketing time listed on Page 1 of the appraisal.

•5.)    Appraisal must contain the total number of listings, and the sale to list price ratios as well as average marketing time for those listings, based on data available for most recent and preceding quarters (last 90 days an last 180 days) If the appraiser is unable to provide two comparables within 90 days and/or current listing(s), the appraiser must provide a detailed explanation and identify whether value adjustments resulted. The explanation from the appraiser must be consistent with other tools utilized to review the appraisal. When the appraiser is unable to provide this (or other) information, second level review through some banks must be required.

 By Ronald A. Giannamore

Managing Loan Specialist with Mortgage Services, Inc. for over 23 years.


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