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Given that appraisals are supposed to be fair market value- do you think that really low appraisals based on foreclosures are skewing market value to an extreme?
Not just for new homes- as in the below link- but for existing neighborhoods?
An appraisal is one person's opinion of value, at the time of the appraisal.
Two appraisals on the same property are not likely to have the same outcome.
Square footage/lot size are critical elements of an appraisal, as recorded in the county records. Whiles this is usually the only information available, it is not always accurate. Appraisers are at a disadvantage because they do not know what's inside of the homes they are using as comps. They do not know the floor plan, condition or updating. They do not know if the basement has 5' ceilings.
MLS listings say the kitchen is updated. What it fails to say is that the updating occured 20 years ago or that the new kitchen cost $10K in one house and $75K in another. And the neighborhood supports the later.
Short sales are rarely derilct properties. Foreclosed homes may or may not be derilict. No mention is made of Relocation company-owned properties which are often the best values in the marketplace. Knowing why a property sold for what it did, whenit did, is critical.
I have no idea how an appraiser can certify that chosen comparable sales
are the most similar to the subject properties, when they have not seen/walked the comparables. It seems a holdover from days gone bye, when homeowners were not obsessed with Toto toilets, professional grade appliances, EE furnaces/AC and on and on. And of course, all of this stuff, like cars, depreciates the minute it leaves the warehouse.
There should be a data base for each zip code containing objective opinions of all properties, for sale based upon common criteria, as viewed by someone who has actually seen the property.
Appraisers could subscribe to this data base for a nominal fee. I think the market would bear a surcharge for an appraisal that relies upon better information.
This is a business opportunity for someone, somewhere.
Given that appraisals are supposed to be fair market value- do you think that really low appraisals based on foreclosures are skewing market value to an extreme?
Not just for new homes- as in the below link- but for existing neighborhoods?
Is it FAIR, that the MARKET has tanked in so many areas and home values have been impacted? THAT is the real question here. The fact that new homes have been impacted the most should surprise no one with any kind of grasp on how the market works.
And that article by the president of the NAHB truly shows how out of touch with reality he is. To assume that cost = value is an absurdity. For appraisers to do what he suggested would land them in trouble with their state appraisal boards, and be grounds for removal of their license or certification.
Given that appraisals are supposed to be fair market value- do you think that really low appraisals based on foreclosures are skewing market value to an extreme?
Not just for new homes- as in the below link- but for existing neighborhoods?
What really is fair market value? Maybe foreclosures should be factored in because there is a reason for all the foreclosures...homes are over priced. Foreclosures are bringing things down where they should be. Obviously people can't afford those prices.... If a home is on the market today it is on because: a. people can't afford it anymore, b. a relocation c. they are fishing for the best price before things get worse. So realistically most homes that are on the market are distressed properties. Unless of course you are fishing.
MLS listings say the kitchen is updated. What it fails to say is that the updating occured 20 years ago or that the new kitchen cost $10K in one house and $75K in another. And the neighborhood supports the later.
I have no idea how an appraiser can certify that chosen comparable sales
are the most similar to the subject properties, when they have not seen/walked the comparables. It seems a holdover from days gone bye, when homeowners were not obsessed with Toto toilets, professional grade appliances, EE furnaces/AC and on and on. And of course, all of this stuff, like cars, depreciates the minute it leaves the warehouse.
There should be a data base for each zip code containing objective opinions of all properties, for sale based upon common criteria, as viewed by someone who has actually seen the property.
Appraisers could subscribe to this data base for a nominal fee. I think the market would bear a surcharge for an appraisal that relies upon better information.
This is a business opportunity for someone, somewhere.
You know, I sold a house a couple of months ago that had tons of showings because my photos were really good. The house needed work, which I said on the MLS, but the photos looked good.
I have been called about that house as a comp 4 times now by appraisers. Each time they said "did it really need work because the photos look good." I had to tell them about the odd floor plan, the owner self done crooked tile, etc.
The house just two lots up is for sale and it is decked out and nice. My sold home was comp. I had been in the one currently under contract and told the appraiser all the differences between the two. It felt weird trying to get another house to value, but you would never know by looking at the photos the huge discrepancy in quality. I honestly felt the other house (not my listing) was priced well, but I know it won't appraise because of my listing and the appraiser's lack of knowledge about the differences in the two.
What really is fair market value? Maybe foreclosures should be factored in because there is a reason for all the foreclosures...homes are over priced. Foreclosures are bringing things down where they should be. Obviously people can't afford those prices.... /quote]
Hi. I thought I would chime in here as I just got my appraisal for the property we are under contract to buy this morning. We are buying a condo unit in a condo building that has been hard hit by foreclosures. We are buying from a private seller (owns his condo unit outright - no mortgage), and yes we have real estate agent representation. There are about 400 units in the building total and they had 24 foreclosures last year. Since the only sales in this condo building in the past 6 months have all been foreclosures, the appraiser only had foreclosures when making his comparisons. There was no concession made for the fact that we are buying from a private seller and all the comps are foreclosures. The comps were compared to our unit based on square footage and floor difference.
Fortunately, the appraisal also came in $15K higher than our agreed upon sales price. (I did take into account foreclosure comps when I made my offer to the seller.)
Hi. I thought I would chime in here as I just got my appraisal for the property we are under contract to buy this morning. We are buying a condo unit in a condo building that has been hard hit by foreclosures. We are buying from a private seller (owns his condo unit outright - no mortgage), and yes we have real estate agent representation. There are about 400 units in the building total and they had 24 foreclosures last year. Since the only sales in this condo building in the past 6 months have all been foreclosures, the appraiser only had foreclosures when making his comparisons. There was no concession made for the fact that we are buying from a private seller and all the comps are foreclosures. The comps were compared to our unit based on square footage and floor difference.
Fortunately, the appraisal also came in $15K higher than our agreed upon sales price. (I did take into account foreclosure comps when I made my offer to the seller.)
Given that appraisals are supposed to be fair market value- do you think that really low appraisals based on foreclosures are skewing market value to an extreme?
Not just for new homes- as in the below link- but for existing neighborhoods?
It isn't a matter of fair. How we choose our comparable sales depends on the market. I fthe Subject is in a market where the predominent sale is a foreclosure, that is what the market is. If the Subject's neighborhood has a few foreclosures but is generally strong, then a foreclosure sale should not be used.
We appraisers don't set the market .... we merely report it.
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Maybe foreclosures should be factored in because there is a reason for all the foreclosures...homes are over priced. Foreclosures are bringing things down where they should be. Obviously people can't afford those prices.... If a home is on the market today it is on because: a. people can't afford it anymore, b. a relocation c. they are fishing for the best price before things get worse. So realistically most homes that are on the market are distressed properties. Unless of course you are fishing.
