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So you go ahead and buy this house and want to sell it a year from now and you find out it is worth $40k less than you paid. Walk away from this and find a new lender...immediately.
We just sold our house and it appraised at full value--I priced it the same as a couple recent sales in my neighborhood. However a couple weeks ago another house around the block was sold and it appraised $45K less than ours in spite of being the same size and having been completely renovated (flipped foreclosure). Now, my house has a carport and the other did not but I doubt it was worth $45K plus it has a brand new kitchen and refinished wood floors. I think it was just the difference between the appraisers and how they used recent conventional sales vs foreclosures and short sales in the area. I really believe that our appraiser used just the most recent conventional sales and the other one used a bunch of foreclosures and short sales going back several months. Right now we have a sellers market here with new buyers only going after conventional sales so they can close before the deadline--there are even bidding wars going on over houses again! That has resulted in increased in sales prices in this county and I doubt the other appraiser took that into account. The result was that the seller of the other house refused to lower his proce to meet the lowball appraisal and the buyer lost the house and probably won't be able to find another one in time to close for the tax credit. The dust still hasn't settled on this appraisal issue and realtors are right in their criticism of the impact it is having on sales.
If a thorough market analysis shows that many of the sales in the neighborhood are short sales/foreclosures, than THAT is the market and those sales must be used.
As far as realtors being critical about "low" appraisals are having on the market .... in my experience there are very few realtors who understand appraising or even their own market, so I am not that concerned about their opinion and/or criticism.
I agree the buyer agent can talk to the appraiser...........
In actuality, the Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, prohibits the disclosure of any confidential information to anyone but the client. USPAP includes the results of an appraisal as part of that confidential information. Intended users are not exempt from this. Simply because someone is an intended user (such as the buyer) does not mean they can contact the appraiser and discuss the appraisal. The only way that a buyer or other intended user can have access to the appraiser is through written permission of the client.
In fact, in todays HVCC environment, the ONLY entity who can authorize me to discuss the appraisal with anyone (including the loan officers) is the AMC......ALL communication MUST go through them.
Quite honestly, I would refuse to talk to any agent of either party unless I have a letter, naming that specific person, authorizing me to talk to them. To do otherwise is a violation of federal regulations.
Last edited by Goodpasture; 10-03-2009 at 09:12 AM..
......... Changing an appraisal is unheard of in the appraisal field of business. As an agent in real estate is a professional so is the Appraiser. It does appear that the 25 years of experience has taught the appraiser little ethics.
Any appraiser who refuses to change an appraisal when there is substantial indication that it needs to be changed is the one who has no ethics.....and has put his pride in front of his job....that of accurately and credibly representing the property and its value as of the effective date of the appraisal. It is always possible that the appraiser missed a salient feature, misreported sale of a potential comparable, or fact of importance. Once the additional verifiable data is presented, if it contradicts assumptions and facts that were first developed, to not change the appraisal would be irresponsible, leading to misrepresentation of the property and producing a misleading report. It is stated in USPAP that an appraiser must not allow a misleading report to be used.
To refuse to change a report when additional data indicates that it should be changed, is a violation of the ETHICS Rule of USPAP.
As buyer's agents we have submitted information about upgrades the appraiser did not know about. In those cases it was new construction and the buyers wanted to roll the cost of upgrades into the purchase price.
In new construction the appraiser should have, as part of the contract documents, a copy of the plans and specifications. If those plans and specifications change in the course of construction, a copy of those revision must be provided the appraiser. But, according to Fannie Mae, they MUST be provided to the appraiser by the lender.....not the buyers agents, the sellers agents, the builder, or the guy down the street.
Quote:
Originally Posted by faabala
In other cases we have got the sales price lowered to the appraiser value for buyers. Mostly for VA loans because the appraisal will be on-file for 6 months and the seller won't get anybody to pay more than it is worth.
Does this mean, that you hammer the appraiser with additional data to ensure you get someone to pay more than it is worth on non-VA sales?
As far as realtors being critical about "low" appraisals are having on the market .... in my experience there are very few realtors who understandappraising or even their own market, so I am not that concerned about their opinion and/or criticism.
As it relates to my market, I agree.
All boats in the harbor rise and fall with the tide.
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