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Answers (11)
- Tristan Celayeta, "Tristan Celayeta"
- Contributions:400
Use the appraisal as evidence to reduce the sale price. Prices are still descending. Understand that if you can't buy neither can others who need loans.
Raising down payment? Are you qualified to purchase at a higher price?
Why hasn't your agent explained the pros and cons of each option?
Raising down payment? Are you qualified to purchase at a higher price?
Why hasn't your agent explained the pros and cons of each option?
- klarek the realist
- Contributions:7044
Appraisers are stopping banks from giving loans to people who are paying too much for a house because the market is in an artificial upswing. People are all scrambling for their low rates, "low" prices, and $8000 buyers bribe. On top of that, there is an artificial supply scarcity. So appraisers are seeing these idiotic buyers bid up prices and will not vouch for their stupid purchase prices.
- Tiffany Bond, "TiffanyBond"
- Contributions:3010
A goos appraiser should be figuring out the difference between the smaller homes and different quality of homes and adjusting for that. Assuming the appraiser is competent, I would find a house where the appraised price meets or exceeds the sales price...unless there is some overwhelming sentimental reason to purchase it (maybe your favorite rock star lived there or your grandfather built it?).
- Pasadenan
- Contributions:21413
Julie says "yes", but "yes" to WHAT? to "trust the appraisal", or to "over pay for the house"????
It appears she is saying "yes" to BOTH!
Now where does this "automated value model" come from? Do they use actual site conditions input into the computer model by the appraiser? OR is it only "county records"?
Zillow's model is one of the better ones using only county records and recent area sales; but their tolerance is only about +/-15%, and it is clear that it is not in the ballpark for certain cases.
Everyone knows that Zillow's Estimate and CyberHomes Estimate are NOT used by the APPRAISERS, nor by the LENDERS.
SO, who thinks they have written a better estimating algorithm? Where is it published?
A local Appraiser knows the neighborhoods much better than a machine, and an experienced person knows what to look for when examining a structure from inside and out. The machine cannot "examine" the property.
And we all know that "present market value" has little to do with next year's market value.
It appears she is saying "yes" to BOTH!
Now where does this "automated value model" come from? Do they use actual site conditions input into the computer model by the appraiser? OR is it only "county records"?
Zillow's model is one of the better ones using only county records and recent area sales; but their tolerance is only about +/-15%, and it is clear that it is not in the ballpark for certain cases.
Everyone knows that Zillow's Estimate and CyberHomes Estimate are NOT used by the APPRAISERS, nor by the LENDERS.
SO, who thinks they have written a better estimating algorithm? Where is it published?
A local Appraiser knows the neighborhoods much better than a machine, and an experienced person knows what to look for when examining a structure from inside and out. The machine cannot "examine" the property.
And we all know that "present market value" has little to do with next year's market value.
- Greg Cook, "Greg Cook"
- Contributions:119
The biggest mistake you can make is paying too much for a home in this market, especially if you don't think you will be living there for a long time.
If the difference is small and your REALLY want the house, over 10-20 years a couple thousand dollars won't make much difference.
There is no guarantee of appreciation in the future and paying too much now will be with you for a while, if you're thinking of selling.
If the difference is small and your REALLY want the house, over 10-20 years a couple thousand dollars won't make much difference.
There is no guarantee of appreciation in the future and paying too much now will be with you for a while, if you're thinking of selling.
- Julie Messina, "CNN Mortgage"
- Contributions:70
The short answer to your question is YES. Here are some reasons why:
There are three ways to value a home:
replacement cost (cost to toally replace structure on the land)
income approach (if the property was used for cash flow purposes)
sales comparison (market value)
In residential real estate lending, the market approach is the most relavant number, as the lender will want to know what they can re-sell the property for in the event of borrower default. That number is a moving target subject to demand and supply, but the loan will be made on the number the appraiser uses at the time the appraisal report is done.
To determine market value, the sales approach requires the selection of at least three similar homes within the immediate 1 mile radius that have closed in the last 60 - 90 days. At the present time, forecosure sales make up most of the sales activity (pretty much everywhere in the country). Appraisers are not allowed to "guestimate" what "normal" market conditons would bring for your property. They must base value on current facts. Lenders are additionally running an AVM (automated valuation model) on every appraisal to meet the transparency and securitization requirements of today's secondary market for mortgage backed securities. Hopefully this AVM will support the original appraisal report. When it does not we run into big problems as the AVM usually trumps the original report (if the AMV is lower).
Hope that helps. Colateral valuation is obviously not an exact science, but right now the lenders are making hard decisions; albiet conservative, for long term preservation of housing finance.
There are three ways to value a home:
replacement cost (cost to toally replace structure on the land)
income approach (if the property was used for cash flow purposes)
sales comparison (market value)
In residential real estate lending, the market approach is the most relavant number, as the lender will want to know what they can re-sell the property for in the event of borrower default. That number is a moving target subject to demand and supply, but the loan will be made on the number the appraiser uses at the time the appraisal report is done.
To determine market value, the sales approach requires the selection of at least three similar homes within the immediate 1 mile radius that have closed in the last 60 - 90 days. At the present time, forecosure sales make up most of the sales activity (pretty much everywhere in the country). Appraisers are not allowed to "guestimate" what "normal" market conditons would bring for your property. They must base value on current facts. Lenders are additionally running an AVM (automated valuation model) on every appraisal to meet the transparency and securitization requirements of today's secondary market for mortgage backed securities. Hopefully this AVM will support the original appraisal report. When it does not we run into big problems as the AVM usually trumps the original report (if the AMV is lower).
Hope that helps. Colateral valuation is obviously not an exact science, but right now the lenders are making hard decisions; albiet conservative, for long term preservation of housing finance.
- NTETS, "Mr Caveat"
- Contributions:6436
the appraisal process was implemented to protect you from overpaying... if you really want to ignore them and overpay, thats your right, but no bank will loan you the money to do it and no one on this board will advise you to do it.
- Jeff Konstant, "jkonstant"
- Contributions:1970
Did you have comparable information before you made your offer? Who provided it?
- space_acer
- Contributions:4311
After nearly 10 years plus of appraisal manipulation by realtors and mortgage lenders, appraisals are now more honest than ever before.
Prices along with comps are falling and will fall until they go back to the long term trends... inflation line.
http://www.housingbubblebust.com/OFHEO/Major/SoCal.html
Prices along with comps are falling and will fall until they go back to the long term trends... inflation line.
http://www.housingbubblebust.com/OFHEO/Major/SoCal.html
I don't understand your position. If your appraisal is lower, why are you trying to find a way to pay more for the house. If comps don't support the value, then use that as a negotiating tool. The comps are not going to change and unless the seller is a hard-headed fool, they would have to face reality and re-evaluate their options.
- Jason Parker, "Security National"
- Contributions:70
For a purchase this is in your favor. Now you can negotiate a lower purchase price.
IS everyone else having a bad time with appraisals?
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