Market Values (short sales, lender, homes)

[jaytarheel]

Website tools are nice for a rough idea. If you truly want to know the value of your home, get it appraised. And no, my house HAS NOT lost value in the 2 years that I have been in the home.

Purchase price :191k (2006)
Appraisal: 205k (2008)

This is in the worst crash in housing history. Not many areas in the country can claim an increase in value over the last 2 years. Even though it's only increased about 7.5% in 2 years it's certainly a lot better than most cities can claim.

I'm sure the higher value homes in Charlotte (350k-600k) have lost some value, but every situation is unique.

[sheenie2000]

Originally Posted by jaytarheel

Website tools are nice for a rough idea. If you truly want to know the value of your home, get it appraised. And no, my house HAS NOT lost value in the 2 years that I have been in the home.

Purchase price :191k (2006)
Appraisal: 205k (2008)

This is in the worst crash in housing history. Not many areas in the country can claim an increase in value over the last 2 years. Even though it's only increased about 7.5% in 2 years it's certainly a lot better than most cities can claim.

I'm sure the higher value homes in Charlotte (350k-600k) have lost some value, but every situation is unique.

I don't think appraisals matter that much. You'd have to look at what homes sold for in the past couple months, that would be the best indicator what you could get for your home.

If wages have stagnated in the past decade and now there are no more fancy mortgages, it's *impossible* for homes in general to exponentially increase in value. (On top of that people lost money in the stock market, suffered pay cuts, no bonuses, pay raise freeze, etc). Where do homeowners/sellers expect buyers to magically get this money from?

[jaytarheel]

of course in this climate nobody will get what their house appraises for, however for the purposes of getting some equity out of your home the appraisal is whats used.

[CouponJack]

Originally Posted by jaytarheel

of course in this climate nobody will get what their house appraises for, however for the purposes of getting some equity out of your home the appraisal is whats used.

You hit the nail on the head. My house was just appraised (for my refi) and I can guarantee you its higher than what it actually would sell for. Also, concessions and loads (realtor fees) also have to be counted in the mix.

Appraisals do not equal sale price fo sho'

[anifani821]

Originally Posted by sheenie2000

I don't think appraisals matter that much. You'd have to look at what homes sold for in the past couple months, that would be the best indicator what you could get for your home.

If wages have stagnated in the past decade and now there are no more fancy mortgages, it's *impossible* for homes in general to exponentially increase in value. (On top of that people lost money in the stock market, suffered pay cuts, no bonuses, pay raise freeze, etc). Where do homeowners/sellers expect buyers to magically get this money from?

Sheenie - educate me here cause I was thinking about this a lot last nite and hubby and I were discussing this thread this morning. And I need your input.

Aren't appraisers supposed to use comps to base square footage price on? So wouldn't they necessarily have to include the foreclosures if those are the closest comps (closest meaning - like properties in closest proximity to the subject property)? Cause this whole matter of determining "value" - we all know this can fluctuate greatly at any given moment in time.

As I have said for many years, the "value" of any given property at any moment in time really comes down to what someone is willing to pay for it at that moment. So this depends on many factors, including having willing buyers who CAN QUALIFY for a loan.

My contention is . . . lenders expect that appraisers are going to turn in very conservative appraisals, based on comps that include foreclosures as like properties, in an attempt to weed out borrowers.

Am I wrong? Or is it more complicated than this?

[chicagocubs]

Originally Posted by anifani821

Sheenie - educate me here cause I was thinking about this a lot last nite and hubby and I were discussing this thread this morning. And I need your input.

Aren't appraisers supposed to use comps to base square footage price on? So wouldn't they necessarily have to include the foreclosures if those are the closest comps (closest meaning - like properties in closest proximity to the subject property)? Cause this whole matter of determining "value" - we all know this can fluctuate greatly at any given moment in time.

As I have said for many years, the "value" of any given property at any moment in time really comes down to what someone is willing to pay for it at that moment. So this depends on many factors, including having willing buyers who CAN QUALIFY for a loan.

My contention is . . . lenders expect that appraisers are going to turn in very conservative appraisals, based on comps that include foreclosures as like properties, in an attempt to weed out borrowers.

Am I wrong? Or is it more complicated than this?

Ani, you are exactly right, however, different lenders have different guidelines. Where I work, we require that the appraiser use as a comp the most recent (three months) sales that sold at the lowest price. So, if there were comps in your area (approx. 5 mile radius) that sold for regular prices and there were also comps (and I am talking true comps) that were foreclosed or short saled, they would have to use THAT comp instead. I have seen appraisals returned and declined because the appraiser did not use the lower comp and came up with a higher value for the home. So, appraisals are not a science, they are an opinion, but, they have to conform (to a degree) to what the lender expects.

[chicagocubs]

I am working off electronic/desktop appraisals, not a true appraisal. Although what I am seeing, the true appraisals either match the desktop or are below it. I am trying to help people reopen their lines of credit that have been suspended...this is one part of my job. I am also underwriting new loan requests for new lines of credit. (and, yes, they are being approved, but, at much lower values) And, this is the trend that I am seeing ... much lower values overall. I get screamed at daily with people saying just what many of you are saying..."NO WAY"...but, yes, this is the case. And, it is all over the country, but, has recently hit the Charlotte area. Those seem to be the folks that are having the hardest time with it because "we are special" or something. That is why I opened this thread.

If you don't want to heed this, that is your business. I am trying to give people a heads up. Don't count on your house as being a form of equity that you can tap into. Because, chances are, that equity is not there. It will come back in a few years, but, it is probably not there now and won't be there in the near future.

[anifani821]

Originally Posted by chicagocubs

Ani, you are exactly right, however, different lenders have different guidelines. Where I work, we require that the appraiser use as a comp the most recent (three months) sales that sold at the lowest price. So, if there were comps in your area (approx. 5 mile radius) that sold for regular prices and there were also comps (and I am talking true comps) that were foreclosed or short saled, they would have to use THAT comp instead. I have seen appraisals returned and declined because the appraiser did not use the lower comp and came up with a higher value for the home. So, appraisals are not a science, they are an opinion, but, they have to conform (to a degree) to what the lender expects.

Thank you so much, CHI! This is the conclusion DH and I came to. As you stated earlier, you knew the man you talked w/ yesterday was going to stay on your mind. Well, it so happens his situation stayed on my mind, too.

And it occurred to me . . . the best thing he could do when he realized the dilemma was find out what lenders were not pushing for foreclosures to be that integral in the appraisal process - and simply go to a different lender.

The thing is - tho - how would one know this ahead of time - especially if one is applying for a refi, ELC or HELOC w/ his current lender?

We would love to take advantage of a refi (no cash out) right now if we could get an interest rate of 5% or lower for 15 years. But once you get into the process, and a hard inquiry made on your credit score, if things go South w/ appraisal - you are in a mess. So we are reluctant to even start that process b/c we don't know what lenders are gonna spank us b/c some foreclosure took place a mile from us three months ago. Since things have not really been on the market/sold in our neighborhood, there are very few comps unless one goes back and includes 2007/2008. There have been very few houses even for sale in the last five years. There is only one that is a fair comp to ours.

So the consumer really better know who he/she is dealing w/ b/f getting into this whole process. At least, that is what I am thinking.

[mullman]

Originally Posted by jaytarheel

Website tools are nice for a rough idea. If you truly want to know the value of your home, get it appraised. And no, my house HAS NOT lost value in the 2 years that I have been in the home.

Purchase price :191k (2006)
Appraisal: 205k (2008)

This is in the worst crash in housing history. Not many areas in the country can claim an increase in value over the last 2 years. Even though it's only increased about 7.5% in 2 years it's certainly a lot better than most cities can claim.

I'm sure the higher value homes in Charlotte (350k-600k) have lost some value, but every situation is unique.

Agree, but it is always about location, location, location...

[chicagocubs]

Originally Posted by anifani821

Thank you so much, CHI! This is the conclusion DH and I came to. As you stated earlier, you knew the man you talked w/ yesterday was going to stay on your mind. Well, it so happens his situation stayed on my mind, too.

And it occurred to me . . . the best thing he could do when he realized the dilemma was find out what lenders were not pushing for foreclosures to be that integral in the appraisal process - and simply go to a different lender.

The thing is - tho - how would one know this ahead of time - especially if one is applying for a refi, ELC or HELOC w/ his current lender?

We would love to take advantage of a refi (no cash out) right now if we could get an interest rate of 5% or lower for 15 years. But once you get into the process, and a hard inquiry made on your credit score, if things go South w/ appraisal - you are in a mess. So we are reluctant to even start that process b/c we don't know what lenders are gonna spank us b/c some foreclosure took place a mile from us three months ago. Since things have not really been on the market/sold in our neighborhood, there are very few comps unless one goes back and includes 2007/2008. There have been very few houses even for sale in the last five years. There is only one that is a fair comp to ours.

So the consumer really better know who he/she is dealing w/ b/f getting into this whole process. At least, that is what I am thinking.

Agreed. But, most lenders now are working on the conservative approach to appraisals. They go in a 5 mile radius of your home (so, do your market research first) and can only use sales that occurred within the last 3 months. (max 6 months). They compare square footage, bedroom/bathroom count and type of construction (frame, brick). IF they cannot find any sales within that time frame, the radius becomes wider...6 miles, 7 miles...

If you would drop 2 percentage points in your rate, it would be worth it to refi. If not, probably not because the closing costs would take up too much of your "profit". There are websites out now (don't know them offhand, but, go to change.gov)...I think the Obama team has created them to so that you can see if it would be worth it for you.

In the case of our friend in FL, he simply does not have the money to refi. He is living literally hand-to-mouth as he has not been able to work since having the heart attack. He is a self-employed contractor (which makes it all the worse). He will (according to him) probably loose his house and everything now. I recommended that he look into the many programs out there for people in his situation. Don't know what will become of him. But, somehow, he thought..."MY HOUSE DID NOT LOOSE VALUE...I HAVE DONE SO MANY RENOVATIONS TO IT..." an all-too familiar line that I hear every day. That was the basis of my starting this thread. I want to warn people so that (hopefully) they won't end up in that kind of situation.