Tuesday, January 05, 2010

Foreclosures Dragging Down Home Appraisals

I recently saw a car parked on our private road. There is a home across the street from us that has been on the market for over a year. Since I am a real estate agent and since having been very frustrated with the home being listed twice by two different agents that did nothing to market the home, my desire to investigate took over. "Can I help you" I asked the driver sitting in the car in front of the home.
He responded, "I am an appraiser and I am setting the value on this home for the bank". I inquired further. Having been an appraiser for 26 years prior to going into sales and marketing,I could not resist pressing further. "Are you a local appraiser?"
The answer I received was shocking and typical. "Oh no, I am from Los Angeles!" This home I am speaking about is located approximately 2 hours north of Los Angeles in Oak View, California. I inquired further...... "How do you determine the value with limited knowledge of the comparable properties?" He responded, "Oh, well you know it is hard to find appraisers to do rural type properties, I just look up the closest comparable properties and adjust".
VERY Fascinating!! Since I live in the area, I happen to know that the last two comparable properties was one that needed a $100,000 beam replacement and the other one was such a dysfunctional floor plan it was a joke and needed a total rehab on the inside and was bank owned!!
Well, you have probably figured out by now that the beautiful home near mine will be appraised well below what it should actually be selling for.
This leads me to the fact that across the country, agents and homebuilders are complaining that too many appraisals are coming in low, scuttling deals and keeping prices depressed. The National Association of Realtors says nearly one in four of its members has reported clients losing sales because of botched appraisals. Designed to limit conflicts of interest that can bias an appraisal, the rules bar mortgage brokers from ordering appraisals themselves, forcing them to order them through mortgage lenders. The result can be.....appraiser hired from outside the area and finding they do NOT have the local knowledge to find homes that can be better benchmarks for regular homes.
I am a witness to this!! The houses falling under this scenario are often not appraised accurately and in my opinion are actually pulling our market fictitiously down.....just food for thought.

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