Profile picture for tami918

How do i know if an appraisel is accurate and the appraiser was honest?

I bought a condo in June and the bank i used gave me the appraisel report that stated the property was the EXACT amount of the purchase price. I find this highly odd. Could it be that since the bank wants me to take out the loan they asked the appraiser to put the same exact amount rather then a lower amount so that we would g ahead with the purchase and take out the loan?
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October 28 2009 - Kew Gardens Hills
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Answers (14)

If it was a lower amount you may have lost your deal--not unusual for appraisals to be the number as agreed in the contract. 

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November 14 2009
Proprty goes down? You mean goes up. If it goes down, you will never get out of the pmi. what rate did you get? on the mortgage loan.
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November 06 2009
Profile picture for Pasadenan
"Recovers"?  You mean when prices will be 40% lower than presently?

The volume of sale and the bubbling prices was what was "abnormal", thus recovery must mean allowing that to correct.

Or perhaps you just mean after the 3 more years of back-log of loan defaults based on coming resets and too high loan to value ratios?

And of course people are still losing jobs and still not getting hired at the rates of layoff, thus the inventory of available housing should still be rising for some time to come, especially with baby boomers retiring and moving to retreat housing, retirement housing, or institutional housing...
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November 06 2009
Profile picture for tami918
If the property value goes down,perhaps i can get a reappraisel and have my pmi removed. That would be the only beneficial thing.  Just wait it out till the market recovers again. 
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November 06 2009
The listing agent must have been really good. Or your agent  was really good for helping you pick the price you chose for the purchase price. Or you weren't that bright for buying a house that was right on the money. Most likely in 6 months the value will be down 15%.
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November 06 2009
If it was a conventional loan, the bank didn't pick the appraiser (more than likely) b/c of the new laws. How did you feel about the sales price? Were you expecting the appraisal to come in lower for some reason? Please keep in mind that appraisers have taken a huge amount of the blame for our housing problems even though most of them are honest and upstanding. If they appraise the property too high above the contract price, then the buyers may not get the loan b/c the bank thinks something is going on. If they appraise below the contract price, the seller thinks the appraiser had a deal w/the buyer/Realtor/lender. As I see it, they are safest appraises the house at contract price if the comps support it. Usually no drama that way!
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October 29 2009
What agentblu15 said.
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October 29 2009
Profile picture for agentblu15
If the property was already under contract when the appraisal was done, it is standard procedure for the appraiser to review a copy of the contract while doing the report.  It's actually REQUIRED that they try to obtain a copy of the contract and analyze it.

The theory behind this is twofold. 

First, the appraiser needs to verify whether there are any seller concessions or other unusual financing terms involved, because these can skew value.  For example, if the seller is offering a $5000 flooring concession, or is paying a large percentage of closing costs, it could cause the "sale price" to seem unusually high.

Second, appraised value is, in most cases, "fair market value", which is defined as the most likely price that a typically motivated buyer and seller will agree on in a typical market.  So, assuming the buyer and seller in your purchase are typically motivated, the agreed upon sale price is an EXCELLENT indicator of fair market value--  it's basically like using the house as a comparable for itself.

As long as the other comparables on the report seem reasonable (fairly similar to the subject, and with adjusted prices that fall within +/-15% of your purchase price), you can feel fairly confident that the appraisal is ok.
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October 29 2009
Agreed, it's annoying when the appraisal comes in at sales price but realize the bank would not lend if it came in lower. The appraiser would get paid if it came in lower or higher. However, the appraiser makes the price the purchase price for safety. If he prices it higher and you put the house back on the market tomorrow and don't get it, you would be mad. Just feel confident that the condo was easily worth the purchase price. If it isn't worth what you paid in today's market, just wait a bit. The market will change-- it may take time but markets consistently go up and down.
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October 29 2009
Profile picture for Pasadenan
You tell if they are "honest" the same way you tell if your children are honest.  If you can't tell if your children are honest, you are in a lot more trouble than with a dishonest appraiser.

As for "accuracy"; compared to what?  They are giving an estimate based on current market conditions, and give the factors used and disclaimers in the report.  Are you stating there might be arithmetic errors?  How many people do you know that were 100% accurate on all their school work and never got less than 100%?

Of course they are not "accurate", and it is not relevant.

If it makes any real difference to you, hire 3 independent appraisers to each give you a number.  But they will still be impacted by any "recent sale" if it is within the ballpark.

Why make either party "mad" by appraising above or below the offered and accepted price if it is within a few thousand dollars?   It is not "Kelly Blue Book".
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October 28 2009
Profile picture for tami918
Thanks everyone for your answers.  As for the question regarding the appraiser getting a copy of the purchase price, i think that is a bit shady too! and that is one of the reasons why the economy is so bad.  There is too much greed, corruption, illegal, improper actions by companies just wanting to get as much money as they can.  I dont think there will ever be any real regulations since there are too many companies to look over and there is always a way for them to slip though the cracks.
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October 28 2009
Profile picture for falsedawn
Why should the appraiser get to see the contract and your offer? Is that standard practice? It sounds a bit dodgy to me and surely would affect the impartiality of the appraiser.
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October 28 2009
Profile picture for sunnyview
Many appraisals come back for the exact purchase price. Appraisers do see your offer price and that can heavily sway their decisions about picking comps to support their opinion of value as long as those comps are available. In some markets, comps are hard to come by and HVCC has also changed the way that companies handle appraisals. 

The upshot is that you need to look at the comps that the appraiser chose and see if they are good, solid comps to the condo that you are purchasing. In the end an appraisal is just an educated opinion. You are the buyer and you actually decide what the house is worth to you when you make your offer. It would seem that the appraiser is just agreeing with you.
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October 28 2009
tami918
I know from being in the industry, the appraiser and the bank have to be independ of each other.  Condo values in gereral have decreased in value in some case 25% over the last 12-18 months.  Appraisers do get a copy of the contract.  It's pretty normal to see the value come in close or exact.  If you have anymore questions, please feel free to call or email me @ jbianco@eaglesavings.com or 233-7166

Thanks
Joe
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October 28 2009
 
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