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The really amusing part is the discussion of their belief that sales of foreclosures or otherwise distressed homes shouldn't be viewed as comparables, as they "distort" the market picture. Ha!
There's way more to this than reported. In the old days, distressed sales were thrown out - they were mentioned but disregarded.
Common sense needs to prevail but it is not. The quality of appraisals being done now is horrible. Appraisal management companies (owned by the banks) are paying the appraiser a very low wage on these; the quality is suffering.
There's way more to this than reported. In the old days, distressed sales were thrown out - they were mentioned but disregarded.
Common sense needs to prevail but it is not. The quality of appraisals being done now is horrible. Appraisal management companies (owned by the banks) are paying the appraiser a very low wage on these; the quality is suffering.
In the old days, distressed sales were generally not comparable properties - ones that were in shambles. Nowadays, in most markets they're perfectly good houses. How then can they not be considered comparables?
It is all fun and games until demand starts falling.
Quote:
Their main gripe seems to be that lenders are relying more on appraisal management companies as middlemen to handle the assignment and execution of appraisals, and the companies — according to the howlers — are assigning appraisers to neighborhoods and entire regions they are wholly unfamiliar with. That then leads to lower appraisals, they say, since only a local would be able to understand the nuances of that particular market.
So... appraisers don't understand the nuances of that particular market, therefore the appraisals are lower.
Wait.. what? Why do appraisers need to have familiarity with an area? Isn't this supposed to be an objective process, with a clear formula that can be applied to any real property?
And why would unfamiliarity with a certain neighborhood cause lower appraisals than familiarity?
This whole idea that a "distressed" sale should not affect appraised values is pretty goofy. When a REO or short sale shows up on the market, it will be sold, as with any other, at the best price the market will bear at the time.
I bought my house last year from a bank after it sat for nearly a year on the market. If someone would have offered the bank more than I did, they'd have taken that offer instead. The market prices were absolutely determined by the presence of my house, and several other REOs I was considering at the time. Just because most traditional sellers had emotional ties or unrealistic expectations that prevented them from engaging in competitive price discovery does not negate the very real fact that market price was and still is driven by the pricing of many distressed properties saturating the local markets.
Years ago I took a real estate appraisal course.One night as class was about out,the teacher, who was an appraiser,said this:"actually people when all is said and done, A house is only REALLY worth what someone will pay you for it"
The really amusing part is the discussion of their belief that sales of foreclosures or otherwise distressed homes shouldn't be viewed as comparables, as they "distort" the market picture. Ha!
Real Estate Brokers and Mortgage Brokers have sunk below Used Car Salesmen. These ads for "Short Sales" should have the disclaimer "no houses available at this price"
Years ago I took a real estate appraisal course.One night as class was about out,the teacher, who was an appraiser,said this:"actually people when all is said and done, A house is only REALLY worth what someone will pay you for it"
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Low appraisals
