Tag Archives: appraisals

Appraisals Catching Up to Rising Home Values

 

Hard to find comparable sales on this home. Photo credit: http://hekk-m.com/post180818332/
Hard to find comparable sales on this home. Photo credit: http://hekk-m.com/post180818332/

 

In recent months, real estate professionals have had to hold their breath as they waited for an appraisal on a property to come back. Would it be lower than the agreed-upon selling price  — and by how much?

Many real estate professionals have blamed a high number of derailed transactions on low-ball appraisals.

But now the industry is noticing a change in appraised values: Appraisals are getting more in line with the agreed upon selling price, CNNMoney reports.

Appraisers are valuing homes at or above their selling prices as home prices nationwide climb and inventories of homes decrease, says Lawrence Yun, chief economist for the National Association of REALTORS®.

For example, in Wallingford, Wash., real estate pro Michael Ackerman told CNNMoney that he was concerned a transaction would fall apart when a buyer agreed to pay $755,000 for a home since other comparable homes in the area had sold for $690,000.

“Everybody’s jaws dropped” when the appraised value came in at the full, agreed-upon selling price,” says Ackerman.

In some cases, appraisals are even coming in higher — which was practically unheard of just a few months ago. For example, real estate pro Cara Ameer in Jacksonville Beach, Fla., says with home prices in the area rising 15 percent over the past year, she was concerned the appraisal on a two-bedroom townhouse wouldn’t reflect the current rise. A buyer offered to pay $5,000 above the $189,000 asking price. The appraisal came in above the selling price, Ameer says.

Source: “Home appraisals no longer derailing sales,” CNNMoney (May 15, 2013)

 

For all your real estate needs
Email or call today:

John J. O’Dell Realtor® GRI
Civil Engineer
General Contractor
(530) 263-1091
Email jodell@nevadacounty.com

DRE#00669941

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Fighting Back Against Lowball Home Appraisals

Photo courtesy of Atlas Real Estate Appraisals
Photo courtesy of Atlas Real Estate Appraisals

Record-low interest rates are a boon for home buyers and for homeowners seeking to refinance.  But low appraisals are making it difficult or even impossible for some borrowers to take advantage.

  • Lenders report that “overly pessimistic appraisals caused by appraisers using distressed sales as ‘comparables’ are a key reason why deals are falling through.
  • Part of the problem is that home prices have plummeted further than many people would like to believe.
  • Another key factor is the appraisal changes enacted in the wake of the financial crisis that were designed to eliminate improper pressure on appraisers that often led to inflated valuations during the housing boom.  However, critics say those changes resulted in unnecessarily conservative valuations and the greater use of appraisers with little knowledge of local market conditions.
  • Additionally, accurate valuations can be difficult to come by when sales are thin and prices are just beginning to edge upward after prolonged declines.  Many borrowers are “in a holding pattern for extended periods” because it’s difficult to find comparable sales to support the appraisal value.
  • Despite these issues, there are ways consumers can improve their odds of getting a deal done.  For example, borrowers can look at comparable sales from the last three to six months before seeking a mortgage to know the range of home values in the area.
  • Secondly, although borrowers cannot choose their appraiser, they can accompany the appraiser during the inspection, pointing out improvements that add to the home’s value.  They also can provide the appraiser with comparable sales that can be used to support the valuation.
  • Borrowers also can request that the lender review the appraiser’s findings, though the chances of success are slim.  If the borrow thinks the value is unreasonably low, they should first look for factual errors, such as an erroneous number of bedrooms or miscalculated square footage.

Read the full story

 

For all your real estate needs
Email or call today:

John J. O’Dell Realtor® GRI
Civil Engineer
General Contractor
(530) 263-1091
Email jodell@nevadacounty.com

DRE#00669941

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Appraisal, Are You Getting Your Money’s Worth?

Photo courtesy of Red Clay Media

Despite Federal Reserve regulations that took effect April 1 requiring lenders to pay appraisers fair fees, many appraisers say they are still offered $200 to $250 by lenders for work billed to consumers at $450 or more.

  • Last year’s Dodd-Frank financial reform law mandated that appraisers receive fees that are “customary and reasonable” for their local market areas, yet the Appraisal Institute says that is not happening.
  • While a portion of the difference between what consumers are billed and appraisers are paid goes to the management companies that connect lenders with local appraisers and take a percentage for their services, often times lenders make a profit from the appraisal as well.
  • Home buyers should care about this for several reasons.  For starters, accurate appraisals are a concern for consumers, as appraisals can be deal-breakers if the appraisal comes in too low. When performed competently, appraisals can be accurate measures of the equity in a home when the homeowner refinances or seeks a second mortgage.
  • Most experienced independent appraisers refuse to work for $200 to $250 because they can’t pay their overhead at that rate, leading less-experienced appraisers, who sometimes travel long distances and are unfamiliar with the area, to conduct the appraisal, which can lead to inaccurate, appraisals.
  • The Appraisal Institute is seeking to persuade the Federal Reserve to tighten its regulations, which created a loophole for lenders and management companies that wanted to keep paying low fees to appraisers.  In the meantime, consumers should demand transparency, asking how the appraisal fee was distributed and why.

Read the full story

For all your real estate needs call or email

John J. O’Dell
Real Estate Broker
O’Dell Realty
(530) 263-1091
Email jodell@nevadacounty.com

DRE# 00669941

New Appraisal Rules for Fannie Mae & Freddie Mac

appraisal-of-house

There is a new “Home Value Code of Conduct” that went into effect on May 1, 2009.  All Fannie Mae and Freddie Mac mortgages have major changes in ordering and processing home appraisals.

Under the new rules, mortgage brokers will no longer be able to order appraisals directly for loans sold to Freddie and Fannie. This will force mortgage brokers to be “hands off” in choosing appraisers and potentially influencing the outcome of the appraisal.

Fans of the new code say appraisals will be more accurate, and there will be less fraud and lower costs. But others say the new rules will result in less reliable appraisals by some who may not be thoroughly familiar with an area, delays in getting loans processed and steeper costs.

In his latest blog post, Mortgage Broker Dennis Smith of Stratis Financial Services in Huntington Beach writes about how he sees the new code affecting home buying.

Smith writes about the process:

“First, the HVCC is a requirement for all loans that are being funded by Fannie Mae and Freddie Mac, no exceptions.  Under the rules of the HVCC any person or company that collects a commission as part of the mortgage transaction may not have any contact with the appraiser, including ordering the service. 
 
“Starting with all transactions with applications dated [on or] after May 1, 2009 the originating entity, me, must order any appraisals through the funding entity (lender) who must use an “adverse selection” process to select a national appraisal company. 

“When the appraisal is ordered the fee for the appraisal must be paid in full through credit card transaction; the borrower will need to provide this information for the transaction to move forward.  The national appraisal company upon receiving the order will then contact an appraiser in the area or region of the subject property and place an order for the appraisal.
 
“The appraiser will contact the appropriate person for access to the property and complete the appraisal.  He will then send the appraisal electronically to the national appraisal company who will review the appraisal and send it electronically to the underwriting unit of the lender.  The underwriter will review the appraisal and if acceptable will post it on the company website and notify the borrower.
 
“Attention! It gets interesting here.  Under the HVCC policy the borrower must receive a copy of the appraisal at least three days before ‘closing’.  I put closing in quotes because in some states closing and loan documents are the same time-this occurs in non-escrow states.  In states such as California where we order loan documents and then close after they are signed an reviewed most lenders are requiring that the borrower receive the appraisal at least 3 days prior to drawing loan documents.  In short, loan documents will not be drawn until 3 days after the borrower has received a copy of the appraisal.  And that copy must come directly from the lender. 
 
“This process will take several weeks to flush out but in California the most obvious problem is the appraisal contingency that is part of all CAR contracts — expect a revision in the near future as the HVCC becomes better understood by the CAR attorneys — since no one intimately involved in the transaction has any contact or control over the process from selecting the national appraisal company to selecting the appraiser, no one involved in the process can say for certain when an appraisal will be delivered so all aspects are known.” 

I left out the rest of his comments, since as a mortgage broker; he does not like the new rules. Mortgage brokers like to work with appraisers who they are familiar with and who know the area that they are working in. My own personal opinion is the more hands off the process is, the better it is for all of us.

What do you think?