O.K. Here's the deal. I realize the market is down and it's a buyers market. Property values have dropped. I get that. But what I don't get is how can an appraiser appraises a property that appraised for more then $232,000.00 in late 2008 and appraise that same property for under $200,000.00 today. Especially in a market where property values have not dropped much at all. In fact a market where we are seeing an increase in value overall. A slight increas mind you but an increase none the less.
Funny thing is the new appraisal came in at exactly the selling price of this property. In our market the appraiser gets to see the actual purchase agreement before the appraiser does the appraisal. By the way the sellers agreed to the sale price because they want to move the property fast. We did. It was sold in less then 3 days.
In addition I don't believe this home could be duplicated today for less then the prior appraisal. Therefore the cost approach would show a different value. The home is barely 5 years old too.
My concern is that because the appraiser sees the selling price a true appraisal is not actually done. It looks like the appraiser sees the number they need to hit and miraculously it happens to just hit the sale price. This happens a lot.
So you appraiser out there would you please enlighten me? How does this happen time and again?
How about you Realtors out there, are you experiencing the same thing?
I am not surprised by your appraised value. We see this again and again in our market. I did a refinance on my home a while back and ordered the appraisal myself. I spoke with the appraiser and she asked me what value I needed. I told her that I did not need any specific value but wanted a true appraisal. She almost told me that she did not want to do the inspection. It is sad. Have a good weekend! Sandy
Hi Bob, I'm going to stand by and see what the true appraisors have to say about this--we're facing the same thing. Gone are the days that the appraiser did a TRUE appraisal on the property and so often it would come back well over the sales price. I'm anxious to see what gives here!
15% is not much more than the margin of error, is it? Im not an appraiser, but i think you have to look to who ordered the appraisal and for what purpose to get an answer to your question. If the appraisal was done for a mortgage company; they are only interested in knowing that value of the home supports the mortgage. Over 200k and the mortgage is done, under 200 and its not. That 200k number is all thats needed. The appraiser has done his job and the bank is comfortable doing the deal
WEll Ron I do see your point however if a property is truly worth 15% more and the buyer is putting down another 10% they would then own more then 20% equity eliminating the need for PMI. Wouldn'y it be fair for the buyer to klnow that somewhere down the road they will get to eliminate the PMI sooner rather then later? Lenders won't let you eliminate PMI at closing based on appraisal value but with a solid appraisal the buyer wouold be able to eliminate PMI much sooner. Saving themselves porentially lots of money.
Bob,
absolutely, If a property owner can can demonstrate that their loan is 20% less than the value of the property than they should be able to ellimanate the PMI. But as you suggest, they cant use the appraisal done at the purchase for that purpose. That appraisal was done for the lender for their purpose. The owner will have to have another appraisal done for his purpose.
Your comment seems to go to the buyer right to know. .....As the sellers agent I wouldnt worry to much about the buyer. Hopefully he is represented by a buyers agent and already knows the value of what he bought. My guess is one reason he bought the property is because he thought he got it for less than its true value.
And again, back to my point, the lenders dont care that your seller sold the place at a discount to its true value, Thats nice to know, but all they need to know is that their loan is no more than a certain percentage of value. Thats what the appraiser is paid to do for them
By the way, im not an appraiser and dont pretend to be. Im a simple buyers agent, that has on more than one occasion advised a buyer to get his own appraisal (on a property he wants to buy) to guide us in negotiating a purchase contract
Ron. It does in large part go to the buyers right to know but the appraisal has an affect on inspection repair request negotiations. It has indeed had a negative eefect for my sellers in this case. The buyer is looking for everything down to the smallest item addressed by the seller because they say the property only appraised for the sale price.
Appraisers, if they are just appraising to just hit the mark (the sales price) are doing a dis-service to everyone involved and couold cause some deals to fall apart. All because the appraisal was done to just hit the minimum rather then the true value.
Bob
Now you have hit on my pet peeve...ie buyers using an inspection report to re open negotiations...but thats a subject for another post. For now lets just say that the buyers are mis-using the appraisal and the inspection to beat up your seller