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In this market, I am hearing that appraisers are reluctant to place "too high" a value on homes. In the past, I believe, if you told them you had an offer of $350K, they would appraise at or above the $350K (as long as it was reasonable, of course).
My agent says that now it is almost a crap shoot as to what the appraisal will come in at. Two different appraisers can have two very different numbers.
So, say I get an offer that I accept at $350K. Then the buyer has an appraisal done (after an offer, right?). The appraisal comes in at $340K. Does this void any agreed upon offer? In other words, are offers made contingent upon appraisal? (I assume they would have to be.)
Does that leave the situation where either 1) the buyer has to come up with $10K cash, 2) the seller has to come down to the appraised value, 3) some combination of these, or 4) the deal is voided.
This is probably my biggest concern after whether I get any offer at all. The comps just don't exist right now for my house but there are bigger homes selling for less than I am asking when they are bank-owned or short sales. I also assume those hurt any appraised value? Or do they not affect it?
The tax assessment for the house is $376K FCV. My agent says that carries no weight whatsoever.
Thanks for any input. I promise I won't argue. Took my meds today.
In this market, I am hearing that appraisers are reluctant to place "too high" a value on homes. In the past, I believe, if you told them you had an offer of $350K, they would appraise at or above the $350K (as long as it was reasonable, of course).
As a professional, Certified Real Estate Appraiser I take offense to this. Yes, there were appraisers who who "bring the value in" but that is NOT how it should be done.
I have no interest what-so-ever how much the contract is for. In fact, I don't even look at the contract (which we are required to analyze as per FNMA) until I am pretty much done with my report.
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Does that leave the situation where either 1) the buyer has to come up with $10K cash, 2) the seller has to come down to the appraised value, 3) some combination of these, or 4) the deal is voided.
Pretty much.
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The tax assessment for the house is $376K FCV. My agent says that carries no weight whatsoever.
Your agent is right.
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This is probably my biggest concern after whether I get any offer at all. The comps just don't exist right now for my house but there are bigger homes selling for less than I am asking when they are bank-owned or short sales. I also assume those hurt any appraised value? Or do they not affect it?
Depends on your market. If the majority of the properties in your neighborhood are short sales or REOs, then that becomes your market.
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My agent says that now it is almost a crap shoot as to what the appraisal will come in at. Two different appraisers can have two very different numbers.
Nonsense. While it is not unusual for there to be a 5% (or so) difference between appraisals, anything more than that should be scrutinized closely.
In this market, I am hearing that appraisers are reluctant to place "too high" a value on homes. In the past, I believe, if you told them you had an offer of $350K, they would appraise at or above the $350K (as long as it was reasonable, of course).
My agent says that now it is almost a crap shoot as to what the appraisal will come in at. Two different appraisers can have two very different numbers.
So, say I get an offer that I accept at $350K. Then the buyer has an appraisal done (after an offer, right?). The appraisal comes in at $340K. Does this void any agreed upon offer? In other words, are offers made contingent upon appraisal? (I assume they would have to be.)
Does that leave the situation where either 1) the buyer has to come up with $10K cash, 2) the seller has to come down to the appraised value, 3) some combination of these, or 4) the deal is voided.
This is probably my biggest concern after whether I get any offer at all. The comps just don't exist right now for my house but there are bigger homes selling for less than I am asking when they are bank-owned or short sales. I also assume those hurt any appraised value? Or do they not affect it?
The tax assessment for the house is $376K FCV. My agent says that carries no weight whatsoever.
Thanks for any input. I promise I won't argue. Took my meds today.
I think you answered your question there.
As to short sale being COMPs, in some area it may be difficult to avoid since that is THE market. When we bought ours the appraiser used one closed short sale as COMP out of the three he used. Also, he showed two active short sales as reperesentative of the current market in the area. So, it might depend on what's there arround you..
As a professional, Certified Real Estate Appraiser I take offense to this. Yes, there were appraisers who who "bring the value in" but that is NOT how it should be done.
I have no interest what-so-ever how much the contract is for. In fact, I don't even look at the contract (which we are required to analyze as per FNMA) until I am pretty much done with my report.
My apologies. I meant no offense. You are the kind of professional I greatly respect.
I re-financed my house twice in the 18 years I have owned it. Both times, the appraiser asked us how much we were wanting to borrow and what we thought it was worth; the appraisal came in at exactly what we told them. The second appraiser never came in the house. He just walked around the outside with a tape measure and was gone in about 15 minutes.
What my agent said was in regards to this market now, not in general. The problem, I think, is that here in AZ no one knows what anything is worth any more. A 4,000 SF home on short sale goes for $300K when it sold for $600K two years ago. A 2700 SF custom home is listed at $375K and then one down the street at 3600 SF goes into foreclosure at the same price.
The values per SF are everywhere.
I would love to know how a caring pro like you obviously are would appraise in this market.
My apologies. I meant no offense. You are the kind of professional I greatly respect.
I re-financed my house twice in the 18 years I have owned it. Both times, the appraiser asked us how much we were wanting to borrow and what we thought it was worth; the appraisal came in at exactly what we told them.
!
I was not offended by you, but rather by the fact that there are such appraisers out there.
The appraisers who asked you for that information were WAY out of line.
...So, say I get an offer that I accept at $350K. Then the buyer has an appraisal done (after an offer, right?). The appraisal comes in at $340K. Does this void any agreed upon offer? In other words, are offers made contingent upon appraisal? (I assume they would have to be.)
Assuming you are using the standard AZ contract, and the buyer is financing (not all cash), then, the buyer will have 5 days to cancel the deal. It is not automatically void. If the buyer does not cancel, then deal proceeds.
Does that leave the situation where either 1) the buyer has to come up with $10K cash, 2) the seller has to come down to the appraised value, 3) some combination of these, or 4) the deal is voided.
Yes on 1, 2, and 3. Deal is only voided if buyer serves cancellation notice within 5 days of getting appraisal report. Typically, buyer will try to negotiate to adjust price.
This is probably my biggest concern after whether I get any offer at all. The comps just don't exist right now for my house but there are bigger homes selling for less than I am asking when they are bank-owned or short sales. I also assume those hurt any appraised value? Or do they not affect it?
Yes, in the Phoenix area, recent closed short sales and bank-owned sales are used for appraisal comps. They are a large part of the market and can't be ignored.
The tax assessment for the house is $376K FCV. My agent says that carries no weight whatsoever.
Your agent is correct.
Thanks for any input. I promise I won't argue. Took my meds today.
Thank you all for the answers. I am deeply saddened that they short sales and foreclosures lower the value of my home. It is another case of the grasshoppers "stealing from the ants." Those of us who have never been late on a bill in the 45 years since we started working, have kept a responsible budget, maintained our home at top levels, etc. are hurt badly by those who are irresponsible and/or walk away from their homes. Life isn't fair, Chapter 612...
Thank you all for the answers. I am deeply saddened that they short sales and foreclosures lower the value of my home. It is another case of the grasshoppers "stealing from the ants." Those of us who have never been late on a bill in the 45 years since we started working, have kept a responsible budget, maintained our home at top levels, etc. are hurt badly by those who are irresponsible and/or walk away from their homes. Life isn't fair, Chapter 612...
Guy-
Sounds like you need some of your own cheer about now.
I feel for you. There is plenty of blame to go around. Irresponsible people who bought more than they can afford, irresponsible lenders who gave mortgages out like Halloween candy, irresponsible banks who sold those irresponsible mortgages to foreign investors looking to get some return on their money, irresponsible government removing the barriers to being irresponsible, all the way to the irresponsible FCBs.
If it's of any consolation, there are a lot of others who are in the same situation or worse who do not have the resources to deal with the situation in a responsible way.
And, whatever you decide to do, remember that sometimes it's better to take a loss than try to catch a falling knife. While I may end up being incorrect, there more reasons to believe we are far from a recovery in housing as there are reasons to believe we are actually in a lasting recovery.
My agent says that now it is almost a crap shoot as to what the appraisal will come in at. Two different appraisers can have two very different numbers.
Professional relocation companies order at least two independent appraisals and I can assure you they rarely agree. This happens in appreciating and declining markets.
Having said this, I would not call it a crap shoot. There are trends in all markets, driven by unsold inventory and time on the market. Every single "I do not need to sell" seller is hurting the market just as shorts and foreclosed sales are.
Have the majority of closed sales for comparable homes, in the past 60-90 days been shorts/foreclosed? If so, they are your local market.
Thank you all for the answers. I am deeply saddened that they short sales and foreclosures lower the value of my home. It is another case of the grasshoppers "stealing from the ants." Those of us who have never been late on a bill in the 45 years since we started working, have kept a responsible budget, maintained our home at top levels, etc. are hurt badly by those who are irresponsible and/or walk away from their homes. Life isn't fair, Chapter 612...
True, but at the same time, people weren't complaining when their property values were shooting up stratospherically because of the "irrational exurberance" generated by the irresponsibility of the system during the bubble. In a lot of areas, the prices had gone up so much over the past 5 years that, even with the bubble bursting, many long-term owners aren't going to come out significantly different in terms of value than they would have if the property values had risen at the slow pace they have historically. While you won't get the inflated price for your property that you probably would have gotten 3 years ago, if you've owned your home for 18 years, you'll undoubtedly still make a profit on the sale. It's the people who bought at the grossly inflated prices of the past 5 years who are truly hurt badly by the current market.
Not to make light of your situation, because no one wants their home to be worth less at any given time than it was in the past, but I'd be willing to bet there are a lot of people on this board who would be willing to trade circumstances with you right now.
Fingers crossed you get a good offer, negotiate a good deal, and get an appraisal that lets everything work out.
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Took my meds today. 
