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We are about to go into escrow with the buyers of our house. They only have 10% down but do have pre-approved financing. The one hurdle our realtor said that we may face is the appraisal review (2nd appraisal that is required with 10% down). Do any of you have any experience with appraisal reviews? Thanks for your comments.
I do them all the time. As a Certified Appraisal Reviewer (NAIFA) there is a lot to it. IF the appraisal was done by an appraiser that thinks he is trying to help one party or the other, the appraisal can be cut substantially. If the appraisal does not provide adequate support for the opinion of value it can be cut substantially. If there is adequate support for the value, if there is sufficient explanations for the adjustments and the adjustments are reasonable, then there should be no problems. If there are some questions, often the appraiser will have an opportunity to readdress the issues the reviewer raises. If those are dealt with professionally, it should not delay anything.
Thank you very much Goodpasture. I'm not quite sure why our agent made that remark about appraisal reviews - he might have had some bad experiences, I need to ask him. Our house is all upgraded and beautiful but it is my understanding that appraisals are not done so much on upgrades as they are square footage - don't know if this is true...there again, our home is about 500 square feet larger than most homes in the neighborhood...so I'm crossing my fingers that everything will come out okay....thanks again for your thoughts - I really appreciate your reply.
Appraisals are supposed to be based on the market response to the subject property. That SHOULD include amenities, upgrades, condition, age........ANYTHING that can be measured by the market. The reason the Realtor is concerned is that over the past few years a lot of appraisers would "appraise" to the selling price or to some predetermined value (illegal, but they would do it to ensure a steady stream of work) and reviewers like me would analyze the market and put the value where the market says it is rather than where the LO/Realtor/Buyer/Seller wanted it to be. This caused deals to collapse. Due to the current environment, created by the excesses of the past few years, lenders are getting a lot more cautious. If your house is substantially larger than all the other houses in the neighborhood then you might very well meet the definition of superadequate. If that is the case (if the appraiser used all comparables that are substantially smaller) and simply adjusted a lump sum per square foot for the difference, there could easily be a problem. In the appraisal classes I teach I find a lot of appraisers have no idea how to extract the price per square foot from the market, so they use a flat rate of $15 or $25 or $30 or something, as a square foot adjustment without any support. As the price is what someone paid for a specific house with specific features in a specific condition, more than one (more than 10 usually) have to be looked at to develop an accurate estimate of value for the various amenities in various conditions. It's a complicated process, and a lot of appraisers take shortcuts. It is the credibility of these shortcuts that create the problem.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Quote:
Originally Posted by Goodpasture
Appraisals are supposed to be based on the market response to the subject property. That SHOULD include amenities, upgrades, condition, age........ANYTHING that can be measured by the market. The reason the Realtor is concerned is that over the past few years a lot of appraisers would "appraise" to the selling price or to some predetermined value (illegal, but they would do it to ensure a steady stream of work) and reviewers like me would analyze the market and put the value where the market says it is rather than where the LO/Realtor/Buyer/Seller wanted it to be. This caused deals to collapse. Due to the current environment, created by the excesses of the past few years, lenders are getting a lot more cautious. If your house is substantially larger than all the other houses in the neighborhood then you might very well meet the definition of superadequate. If that is the case (if the appraiser used all comparables that are substantially smaller) and simply adjusted a lump sum per square foot for the difference, there could easily be a problem. In the appraisal classes I teach I find a lot of appraisers have no idea how to extract the price per square foot from the market, so they use a flat rate of $15 or $25 or $30 or something, as a square foot adjustment without any support. As the price is what someone paid for a specific house with specific features in a specific condition, more than one (more than 10 usually) have to be looked at to develop an accurate estimate of value for the various amenities in various conditions. It's a complicated process, and a lot of appraisers take shortcuts. It is the credibility of these shortcuts that create the problem.
Can I convince you to move to my county? Please, please, pretty please
Can I convince you to move to my county? Please, please, pretty please
Thanks for the kind words. I would, I really really would, except.......have you ever seen the tall grass prairie bloom with Indian Blanket? Can you live on $1500 a month? I like Oklahoma and I am at home in the Indian Nations.....but maybe one of these days I can teach in Your part of the world.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,957 posts, read 22,302,067 times
Reputation: 6471
I haven't, it sounds gorgeous. I think I'll stick to the snow capped Sierras $1500? Only if I give up my vices and I'm not prepared to do that yet. I have a broker friend around here who is also licensed in OK, He splits his time between the 2 places introducing CA investors to the sanity of OK prices
Goodpasture - great name for Oklahoma! I live in Oklahoma too and am having my house appraised tomorrow (last minute). I have been out of town for two weeks and my house is a mess right now. Does the Appraiser look at how neat your house is or just looking at square footage? I just don't have time to clean the whole house up for her by tomorrow a.m. Thanks!!
We don't care about clutter and dust too much. As long as we can see the floors, walls and other pertinent areas a little clutter doesn't bother us and should not affect the value of the house at all.
Clutter etc becomes problematic if it creates pests and other damaging conditions.
Good luck on your appraisal!!
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