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Old 09-24-2013, 09:42 AM
 
39 posts, read 67,070 times
Reputation: 35

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Quote:
Originally Posted by Tarzanman View Post
So, everyone agrees (more or less) that appraisals in LV are lagging behind the actual prices that buyers are paying. This is the trend seen again and again, correct?

Only strato58 has given a reason for why this is the case... and no one who disagrees with him has offered a very valid explanation as to why this is happening again and again except to say that it is a "seller's market", which is strange since credit is still fairly tight... unless cash investors are completely responsible for the behavior.

As a completely uninformed, objective observer... I put a lot more stock in strato58's explanation. He has explained a logical rationale for appraisals consistently being lower than sale price... and I don't think that anyone who isn't a real estate professional would be stupid enough to believe that anyone involved in the process doesn't see a buyer as a huge, walking dollar sign.

There is far more future-work associated risk with an appraiser who puts a lender at risk (versus the buyer). Whether this is because of a conflict of interest, or the current post-2008 climate is a matter of opinion. The end result is the same and the same party ends up holding the bag when all is said and done.

It certainly soundslike a racket to me.
Yeah...and to add to that...the preferred lender for the house i'm interested in will issue FHA loans up to 120% LTV..which shouldn't happen. That's pretty scary. Something just seems very sketchy now about what's going on. It appears they're finding new loopholes to process bad loans or something. I guess the idea with the 120% LTV thing, the lender must be insuring the remaining portion, but they're taking a huge risk.
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Old 09-24-2013, 09:57 AM
 
11,171 posts, read 15,966,442 times
Reputation: 29879
Quote:
Originally Posted by Tarzanman View Post
So, everyone agrees (more or less) that appraisals in LV are lagging behind the actual prices that buyers are paying. This is the trend seen again and again, correct?

Only strato58 has given a reason for why this is the case... and no one who disagrees with him has offered a very valid explanation as to why this is happening again and again except to say that it is a "seller's market", which is strange since credit is still fairly tight... unless cash investors are completely responsible for the behavior.
Actually, it is very simple. Appraisers use closed sales as their comps; and since contracts requiring mortgages take 45-60 days to close, the most recent of those comps is approaching 2 months old. IOW, if you buy a house today, an appraiser will look at similar sales from July and earlier as nothing that has sold in August or September is available for him to compare. (Well, the first part of August might be available by now.) And to find 3 or 4 similar comps, the appraiser may have to go back several more months. In a rapidly appreciating market such as Las Vegas has been in since last year, that makes those appraisals stale. By their very nature, they cannot represent the current value of houses. Consequently, the appraisal will come up low, or as lvoc puts it, the apprasier is shooting behind the moving duck.

Last edited by MadManofBethesda; 09-24-2013 at 10:22 AM.. Reason: typo
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Old 09-24-2013, 10:20 AM
 
28,803 posts, read 47,593,875 times
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Someone finally explains it without being in the middle of an argument and responding with a partial comment. And I now understand it. Thanks.
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Old 09-24-2013, 10:58 AM
 
2,928 posts, read 3,540,141 times
Reputation: 1882
Quote:
Originally Posted by Tarzanman View Post
So, everyone agrees (more or less) that appraisals in LV are lagging behind the actual prices that buyers are paying. This is the trend seen again and again, correct?

Only strato58 has given a reason for why this is the case... and no one who disagrees with him has offered a very valid explanation as to why this is happening again and again except to say that it is a "seller's market", which is strange since credit is still fairly tight... unless cash investors are completely responsible for the behavior.

As a completely uninformed, objective observer... I put a lot more stock in strato58's explanation. He has explained a logical rationale for appraisals consistently being lower than sale price... and I don't think that anyone who isn't a real estate professional would be stupid enough to believe that anyone involved in the process doesn't see a buyer as a huge, walking dollar sign.

There is far more future-work associated risk with an appraiser who puts a lender at risk (versus the buyer). Whether this is because of a conflict of interest, or the current post-2008 climate is a matter of opinion. The end result is the same and the same party ends up holding the bag when all is said and done.

It certainly soundslike a racket to me.
I gave the answer very succinctly in one sentence a few posts back in this thread. Caution after a near depression is an understandable reaction from the banks. They've encouraged the appraisers they use to give overly cautious appraisals so that the loans they give out have less risk to them.
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Old 09-24-2013, 11:11 AM
 
3,598 posts, read 4,940,352 times
Reputation: 3169
Quote:
Originally Posted by phillk6751 View Post
Yeah...and to add to that...the preferred lender for the house i'm interested in will issue FHA loans up to 120% LTV..which shouldn't happen. That's pretty scary. Something just seems very sketchy now about what's going on. It appears they're finding new loopholes to process bad loans or something. I guess the idea with the 120% LTV thing, the lender must be insuring the remaining portion, but they're taking a huge risk.
What you just said is in direct opposition to the "credit is tight" argument.
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Old 09-24-2013, 11:25 AM
 
55 posts, read 187,645 times
Reputation: 90
Quote:
Originally Posted by MadManofBethesda View Post
Actually, it is very simple. Appraisers use closed sales as their comps; and since contracts requiring mortgages take 45-60 days to close, the most recent of those comps is approaching 2 months old. IOW, if you buy a house today, an appraiser will look at similar sales from July and earlier as nothing that has sold in August or September is available for him to compare. (Well, the first part of August might be available by now.) And to find 3 or 4 similar comps, the appraiser may have to go back several more months. In a rapidly appreciating market such as Las Vegas has been in since last year, that makes those appraisals stale. By their very nature, they cannot represent the current value of houses. Consequently, the appraisal will come up low, or as lvoc puts it, the apprasier is shooting behind the moving duck.
Now it makes sense how they make appraisals for resale home.How do they determine the loan value for new homes.My main question is why they banks will loan more money on a new home,exactly the same as a resale just a few years old.Does it have something to do with the mortgage brokers.The mortgage brokers who work for the builders will tell you upfront that your mortgage will be sold to a big bank.Why is a bank more willing to buy a larger mortgage loan from a builders mortgage broker than a mortgage broker of a resale home?
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Old 09-24-2013, 11:43 AM
 
39 posts, read 67,070 times
Reputation: 35
Quote:
Originally Posted by logline View Post
What you just said is in direct opposition to the "credit is tight" argument.

Not exactly...i think the big banks are still being cautious...but maybe the smaller lenders are taking the risk as maybe they're acting as high risk "investors"....they're banking that either the larger loan will get paid (more interest for them) or if it's repossessed, the value will have increased more than the original loan amount of 120% LTV (hopefully) allowing them to profit. Or maybe only offering the 120% to exceptionally qualified buyers (700+ FICO only).


The scenario of the big banks is maybe where people are coming up with the additional cash over appraisal, because the banks are being cautious and are expecting the borrower to take that risk if the buyer wants to buy it at the "market value price"
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Old 09-24-2013, 02:54 PM
 
365 posts, read 422,322 times
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Quote:
Originally Posted by Raiderman View Post
Out of curiosity, as this is a Las Vegas forum, might the market differ than the one you live and work in 3000 miles away? I would tend to believe what LVOC says, as he lives and works in the real estate market HERE.
No not really. Appraisal practice is the same. The realtors keep saying its an all cash market but those are still comparables. A house does not have to be financed to be considered as a comparable. All u need to do is produce the hud1 for proof of closing and closing price and use it as a comparable. If you want to pay over market for a home then by all means do so.
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Old 09-24-2013, 03:00 PM
 
365 posts, read 422,322 times
Reputation: 381
Quote:
Originally Posted by MadManofBethesda View Post
Actually, it is very simple. Appraisers use closed sales as their comps; and since contracts requiring mortgages take 45-60 days to close, the most recent of those comps is approaching 2 months old. IOW, if you buy a house today, an appraiser will look at similar sales from July and earlier as nothing that has sold in August or September is available for him to compare. (Well, the first part of August might be available by now.) And to find 3 or 4 similar comps, the appraiser may have to go back several more months. In a rapidly appreciating market such as Las Vegas has been in since last year, that makes those appraisals stale. By their very nature, they cannot represent the current value of houses. Consequently, the appraisal will come up low, or as lvoc puts it, the apprasier is shooting behind the moving duck.

so what you are saying is that the market is appreciating so much and so fast that in 2 months time there are no comparables to support value...I say hogwash. Produce recent hud1's for the appraiser and he will use them. If what you say is true about the rapid appreciation I say this bubble is in trouble soon.
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Old 09-24-2013, 03:03 PM
 
365 posts, read 422,322 times
Reputation: 381
Quote:
Originally Posted by ddrhazy View Post
I gave the answer very succinctly in one sentence a few posts back in this thread. Caution after a near depression is an understandable reaction from the banks. They've encouraged the appraisers they use to give overly cautious appraisals so that the loans they give out have less risk to them.
you gave YOUR answer but that does not mean you are correct or even know what your talking about. ONCE AGAIN BANKS HAVE NO CONTACT WITH APPRAISERS. THEY DO NOT TELL THE APPRAIER TO BE CAUTIOUS. THIS IS SO BEYOND FOOLISH ITS PLAIN STUPID. YOU REALTORS ARE LIKE WILD PACK ANIMALS. GET YOUR FACTS STRAIGHT BECAUSE YOU COULD NOT BE MORE WRONG. PEOPLE ASK ANY APPRAISER IF THE BANK IS ASKING THEM TO BE CAUTIOUS. DO YOURSELF A FAVOR BECAUSE YOUR BEING FED B.S. BY THE PEOPLE THAT ARE SELLING YOU HOMES
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