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I agree with you, Schousse. The value needs to be independent of influence.
Perhaps withholding the contract value from the appraiser would contribute towards the integrity of the outcome.
USPAP (Uniform Standards of Professional Appraisal Practice) requires that we consider and analyze any current or recent sales agreements as part of the appraisal. Doubt that will ever change, since withholding the sales price and sales history from the appraiser was one contributing factor in the huge real estate crisis of the late 80s and early 90s.
Pardon me, but there is no such thing as a "low appraisal". It is an appraisal that does not meet the sales price. Perhaps the sales price is high?
This is sort of the whole point though.
We had one deal in our office recently that the buyer was one of three offers on the property, at around full asking price. The appraisal came in $20,000 lower than that amount.
Isn't a price that 3 different buyers were willing to pay an accurate reflection of "fair market value"?
The sale fell, and the seller had to short sell the property at the appraised amount, when they would NOT have had to if they could have sold it to ready, willing and able buyers, of which they had multiple.
Basing an appraisal off foreclosures and short sales will force the housing market to continue a downward spiral, because the short sales and foreclosures are a "deal". If they weren't a good buy, people wouldn't go through the months of waiting involved in purchasing them. You can't compare the normal market to the "distressed properties" market. It isn't right.
As long as the appraisers keep using short sales and foreclosures as comps, the housing market will NEVER recover. And as long as the housing market doesn't recover, consumer confidence won't recover, and as long as consumer confidence doesn't recover, the economy won't recover. See the vicious cycle there?
We had one deal in our office recently that the buyer was one of three offers on the property, at around full asking price. The appraisal came in $20,000 lower than that amount.
Isn't a price that 3 different buyers were willing to pay an accurate reflection of "fair market value"?
The sale fell, and the seller had to short sell the property at the appraised amount, when they would NOT have had to if they could have sold it to ready, willing and able buyers, of which they had multiple.
Basing an appraisal off foreclosures and short sales will force the housing market to continue a downward spiral, because the short sales and foreclosures are a "deal". If they weren't a good buy, people wouldn't go through the months of waiting involved in purchasing them. You can't compare the normal market to the "distressed properties" market. It isn't right.
As long as the appraisers keep using short sales and foreclosures as comps, the housing market will NEVER recover. And as long as the housing market doesn't recover, consumer confidence won't recover, and as long as consumer confidence doesn't recover, the economy won't recover. See the vicious cycle there?
All you have to do is change the definition of "market value". Then you're in business. Oh yea, you'd better convince the lenders that their investment will be better protected once foreclosures and short sales are not considered.
I've been an appraiser long enough to remember when "market value" meant "highest price". Then they wised up and changed it to "most probable price".
As long as the appraisers keep using short sales and foreclosures as comps, the housing market will NEVER recover. And as long as the housing market doesn't recover, consumer confidence won't recover, and as long as consumer confidence doesn't recover, the economy won't recover. See the vicious cycle there?
It is not our job to help the market recover, it is our job to report the market. And if the majority of the sales in the neighborhood are foreclosures, then that IS the market.
It is not our job to help the market recover, it is our job to report the market. And if the majority of the sales in the neighborhood are foreclosures, then that IS the market.
It is not our job to help the market recover, it is our job to report the market. And if the majority of the sales in the neighborhood are foreclosures, then that IS the market.
It is not our job to help the market recover, it is our job to report the market. And if the majority of the sales in the neighborhood are foreclosures, then that IS the market.
One of my favorite stories came from an owner who automatically disregarded the closed comp of a neighbor's home because , well, you see, "they were motivated to sell".
One of my favorite stories came from an owner who automatically disregarded the closed comp of a neighbor's home because , well, you see, "they were motivated to sell".
This is why it is so important that the appraiser thoroughly analyze the market, which is something most realtors/loan officers/lender still don't *get*.
I still receive "offers" to do an appraisal for $200. You know what? The manner in which our office does appraisals we would lose money. And we can stay home and not make money, let alone work and lose money.
The people who accept these kind of offers try and make up for it with volume. And if you do 3 appraisals a day there is NO WAY you have time to do your due dilligence.
I guess lenders still don't care .......
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