Appraisals

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[quote author="tmare" date=1248868952]A friend just had her house fall out of escrow for the second time in 2 months. They accepted an offer for 505K, the appraisal came back one week before escrow was to close at 476K. The buyer was spooked and didn't even want to negotiate any further. They had a backup offer of 450K and although it was significantly lower, they decided to just take it and move on (this is actually their 3rd escrow, the other one fell out a year ago and they took the house off the market). This time, the appraisal came in at 406K, just a month after the 476K appraisal. I find this incredibly shocking that the appraisal came in 15% lower in just one month. They asked for another appraisal which subsequently came in at 430K. They were pretty fed up and felt that they wouldn't have enough money to purchase a larger house and decided to take it off the market entirely. What is going on with appraisals and is there any chance that these problems are going to be fixed soon? Everyone seems to want the market to bounce back but how is this helping anyone?</blockquote>


just curious would you have opened a thread if the appraisal comes 70k more then the listing price? i believe, no. Its the reality now.

Second, is it possible to see the comparable homes used in both of the appraisals, that may give you some clue, why there's so much difference?
 
I'm awaiting approval from a recent seller to post an actual appraisal for you here.

Hopefully it should help shed some light on the process for those of us here.



-IR2
 
[quote author="IrvineRealtor" date=1248937407]I'm awaiting approval from a recent seller to post an actual appraisal for you here.

Hopefully it should help shed some light on the process for those of us here.



-IR2</blockquote>


I was hoping you'd pop in and set us straight. Thanks Deuce.
 
[quote author="irvine2010" date=1248936462][quote author="tmare" date=1248868952]A friend just had her house fall out of escrow for the second time in 2 months. They accepted an offer for 505K, the appraisal came back one week before escrow was to close at 476K. The buyer was spooked and didn't even want to negotiate any further. They had a backup offer of 450K and although it was significantly lower, they decided to just take it and move on (this is actually their 3rd escrow, the other one fell out a year ago and they took the house off the market). This time, the appraisal came in at 406K, just a month after the 476K appraisal. I find this incredibly shocking that the appraisal came in 15% lower in just one month. They asked for another appraisal which subsequently came in at 430K. They were pretty fed up and felt that they wouldn't have enough money to purchase a larger house and decided to take it off the market entirely. What is going on with appraisals and is there any chance that these problems are going to be fixed soon? Everyone seems to want the market to bounce back but how is this helping anyone?</blockquote>


just curious would you have opened a thread if the appraisal comes 70k more then the listing price? i believe, no. Its the reality now.

Second, is it possible to see the comparable homes used in both of the appraisals, that may give you some clue, why there's so much difference?</blockquote>


Hard to say, there would have been no need for the second appraisal in the first place. I don't really think I would have even known about it if that were the case, the loan would have closed and that would be that. In the case of my friend's home, I did not see the comps the appraisers used. In the case of the Floral Park home, they used only out of neighborhood comps even though there were plenty of recent comps within blocks of the home. It's sort of a non-issue now for my friends as they have decided to pull the house off of the market, but now you've got me curious, I'll ask her if she received a copy of one or both of the appraisals (I don't remember if the seller actually gets a copy, I only remember getting one as a buyer, which would make sense if the buyer is paying for it).
 
[quote author="irvine2010" date=1248936462]just curious would you have opened a thread if the appraisal comes 70k more then the listing price?</blockquote>


I think she would have. The problem is appraisals right now are difficult to make consistant because there's so little volume and so much noise in the system. T is simply pointing out it's a problem.
 
Did you ever say what percentage the down payment was?

It seems to me the problem is not the appraisals, but rather buyers' and sellers' dependence upon lenders in order to complete a deal. If a buyer is putting enough down, does the buyer really care what the appraisal is? If the margin for differences of opinion are enough to break a deal, there is something wrong with the deal, not the opinion. I know the huge majority of people do not think like this, but that is the problem. Do you get my point? The appraisers and appraisals are not the problem. The problem is this country's reliance on credit for anything and everything. Appraisers are not required for a home sale.

I know I am repeating myself, but I want to say it one more way.

Appraisers and appraisals are not the problem.

People's reliance on 90% financing or a deal at the margin of their affordability is the problem.

All of the deals that tmare mentioned would have closed if the buyer was putting down 25% or 30% or 50%, and the buyer was not buying to the extent of their projected DTI.
 
[quote author="awgee" date=1248939182]Did you ever say what percentage the down payment was?

It seems to me the problem is not the appraisals, but rather buyers' and sellers' dependence upon lenders in order to complete a deal. If a buyer is putting enough down, does the buyer really care what the appraisal is? If the margin for differences of opinion are enough to break a deal, there is something wrong with the deal, not the opinion. I know the huge majority of people do not think like this, but that is the problem. Do you get my point? The appraisers and appraisals are not the problem. The problem is this country's reliance on credit for anything and everything. Appraisers are not required for a home sale.

I know I am repeating myself, but I want to say it one more way.

Appraisers and appraisals are not the problem.

People's reliance on 90% financing or a deal at the margin of their affordability is the problem.

All of the deals that tmare mentioned would have closed if the buyer was putting down 25% or 30% or 50%, and the buyer was not buying to the extent of their projected DTI.</blockquote>
Very well put and I agree with you. The more cash down a buyer is putting the less relevant the appraised value will be. That being said, the appraisal (appraised value) is a contingency unless the buyer waives it with the offer (like if it is an all cash purchase since an appraisal is only really used/required by the lender) and some buyers may be able to use a lower appraised value as leverage with sellers even if they sufficient cash down that a lower appraised value doesn't reduce their loan amount. Again, it's one of those perception things in that case.
 
[quote author="awgee" date=1248939182]Did you ever say what percentage the down payment was?

It seems to me the problem is not the appraisals, but rather buyers' and sellers' dependence upon lenders in order to complete a deal. If a buyer is putting enough down, does the buyer really care what the appraisal is? If the margin for differences of opinion are enough to break a deal, there is something wrong with the deal, not the opinion. I know the huge majority of people do not think like this, but that is the problem. Do you get my point? The appraisers and appraisals are not the problem. The problem is this country's reliance on credit for anything and everything. Appraisers are not required for a home sale.

I know I am repeating myself, but I want to say it one more way.

Appraisers and appraisals are not the problem.

People's reliance on 90% financing or a deal at the margin of their affordability is the problem.

All of the deals that tmare mentioned would have closed if the buyer was putting down 25% or 30% or 50%, and the buyer was not buying to the extent of their projected DTI.</blockquote>


Personally, when I bought my house I put down 50%, so I'm not disagreeing with you. An appraisal was still necessary to get the other 50% financed. The appraisal actually came in lower than the sales price, but obviously the bank didn't care since it wasn't there risk (BTW, credit unions have pretty much always had conservative appraisals). I guess I just feel sorry for my poor friend who has tried so desperately to sell her house due to her expanding family. I don't know anything about the people who were supposed to buy the house, obviously they were counting on less than 25% down. Her first mistake was not selling it over a year ago for a price that she and her husband thought was too low, I told her then and now she's telling me, it's so strange when people do that and act like you never told them in the first place.
 
The interesting thing to me is, it seems like you are implying when a home appraisal dropped $70k in one month, that the problem was with the second (lower) appraisal. Maybe the first guy doing the appraisal was overly optimistic...



Delroy
 
[quote author="C Delroy Spuckler" date=1248945088]The interesting thing to me is, it seems like you are implying when a home appraisal dropped $70k in one month, that the problem was with the second (lower) appraisal. Maybe the first guy doing the appraisal was overly optimistic...



Delroy</blockquote>


Or maybe they were both off a bit, just in different directions. Later in the thread he mentioned a third appraisal at 430k, in between the first two, which leads credence to this theory.
 
[quote author="Geotpf" date=1248950298][quote author="C Delroy Spuckler" date=1248945088]The interesting thing to me is, it seems like you are implying when a home appraisal dropped $70k in one month, that the problem was with the second (lower) appraisal. Maybe the first guy doing the appraisal was overly optimistic...



Delroy</blockquote>


Or maybe they were both off a bit, just in different directions. Later in the thread <strong>he</strong> mentioned a third appraisal at 430k, in between the first two, which leads credence to this theory.</blockquote>


SHE :P
 
[quote author="tmare" date=1248868952]A friend just had her house fall out of escrow for the second time in 2 months. They accepted an offer for 505K, the appraisal came back one week before escrow was to close at 476K. The buyer was spooked and didn't even want to negotiate any further. They had a backup offer of 450K and although it was significantly lower, they decided to just take it and move on (this is actually their 3rd escrow, the other one fell out a year ago and they took the house off the market). This time, the appraisal came in at 406K, just a month after the 476K appraisal. I find this incredibly shocking that the appraisal came in 15% lower in just one month. They asked for another appraisal which subsequently came in at 430K. They were pretty fed up and felt that they wouldn't have enough money to purchase a larger house and decided to take it off the market entirely. What is going on with appraisals and is there any chance that these problems are going to be fixed soon? Everyone seems to want the market to bounce back but how is this helping anyone?</blockquote>




I am having that problem right now, in somewhat other level. I am a first buyer and I fall in love with a townhouse in Miami Florida. The seller is asking for 140k ... since I loved the house my offer was really appealing (as what I understand,... I have being shopping for a house for over 4 months now) I offered 140k plus 3% closing cost seller contribution, The seller doesn't want to negotiate and she only wants to pay 2,000 seller contribution.... well... I like the house and I?m willing to take those 2,000 out of my pocket, but.... I am afraid she won?t want to negotiate if the appraisal comes for less of the sell price. The comparables on the same condominium sold in the last few months for 130K... but they do not have granite kitchen counter tops, stain stile appliances, remodel bathrooms, and laminate floors in the upstairs floor..... I am afraid because a month ago I was about to close a house and the bank did not approved the association and I loss $400 in the appraisal (which came 136K, the same as selling price for a 890sf townhouse. with regular kitchen and bathroom pretty old ) Now, what you guys think, will this house come for 140K ? it has 1500 sf. Patio, like 7 closets, front yard(payment) I live in Miami, this house is located a half block of one of the most important streets (kendall Drive) help! i do not want to loose another appraisal and I do not have the money to put if it comes below!
 
[quote author="tmare" date=1248950601][quote author="Geotpf" date=1248950298][quote author="C Delroy Spuckler" date=1248945088]The interesting thing to me is, it seems like you are implying when a home appraisal dropped $70k in one month, that the problem was with the second (lower) appraisal. Maybe the first guy doing the appraisal was overly optimistic...



Delroy</blockquote>


Or maybe they were both off a bit, just in different directions. Later in the thread <strong>he</strong> mentioned a third appraisal at 430k, in between the first two, which leads credence to this theory.</blockquote>


SHE :P</blockquote>


Doh. :p
 
Whats up with the government assigned appraisers? There was a huge difference in price between the lending institution appraisal and the gov. appraisal. The gov. appraiser just killed a deal.
 
[quote author="Knife Catcher" date=1249662749]Whats up with the government assigned appraisers? There was a huge difference in price between the lending institution appraisal and the gov. appraisal. The gov. appraiser just killed a deal.</blockquote>


Details please. That's like saying I had bad service at a restaurant once... but which restaurant?
 
[quote author="Knife Catcher" date=1249662749]Whats up with the government assigned appraisers? There was a huge difference in price between the lending institution appraisal and the gov. appraisal. The gov. appraiser just killed a deal.</blockquote>




"government assigned" appraisers?



Do you have any source for this conspiracy theory other than NAR?





So far as I've read, the assigning of appraisers is done by large (<strong>privately owned!</strong>) servicing companies to their stable of indentured servants/appraisers.
 
[quote author="freedomCM" date=1249699898][quote author="Knife Catcher" date=1249662749]Whats up with the government assigned appraisers? There was a huge difference in price between the lending institution appraisal and the gov. appraisal. The gov. appraiser just killed a deal.</blockquote>




"government assigned" appraisers?



Do you have any source for this conspiracy theory other than NAR?





So far as I've read, the assigning of appraisers is done by large (<strong>privately owned!</strong>) servicing companies to their stable of indentured servants/appraisers.</blockquote>


He (or she) means appraisers for FHA or VA loans. Here's a story about how VA appraisals are coming in way low:



<a href="http://www.pe.com/localnews/inland/stories/PE_News_Local_S_va30.4926870.html">Riverside Press Enterprise story on how hard it is to get a house using a VA loan</a>



<blockquote>HoSee faces a less certain homebuying future. He and his wife have been stopped twice in recent weeks from buying a house because a VA-approved appraiser said the property was not worth what they offered to pay or what the seller demanded.



A five-bedroom house in Murrieta for which they offered $345,000 fell out of escrow Friday after a VA appraisal came in at $290,000.



That came after a VA appraisal was too low to allow HoSee and his wife to buy a house in Winchester for which they offered $357,000, he said. Two weeks later, the house sold for $55,000 over the VA appraisal to a buyer with conventional financing, he said.



Some real estate professionals accuse VA appraisers of being too conservative, while others applaud them for exercising prudence that was lost in appraising during the real estate bubble.



Teresa Pecson, HoSee's real estate agent, said that in today's hotly competitive market, her clients must submit offers above list price to try to beat out others, including those offering all cash, for a house.



Roxanna Stone, the agent representing the family who wanted to sell the Murrieta house to HoSee, said they would have lowered the price but not to the $290,000 VA appraisal, which she called "ridiculous." She said an FHA appraisal of the same house came in at $338,000.



Bruce Norris, a Riverside investor who buys and resells foreclosed houses, said he no longer will consider VA offers because in three cases he was unable to complete sales to veterans when VA appraisals came in almost 20 percent too low.



"It is a pointless exercise," he said.</blockquote>
 
Let me get this straight....





They want a government subsidized loan



but they are complaining that the gov't won't subsidize a loan that appraisers that the gov't trusts (not the same as gov't assigned, btw) won't mark to fantasy?





I guess the era of expectations of "free lunch" isn't over, even if the actual era for anyone other than banks, is.
 
[quote author="freedomCM" date=1249715712]Let me get this straight....





They want a government subsidized loan



but they are complaining that the gov't won't subsidize a loan that appraisers that the gov't trusts (not the same as gov't assigned, btw) won't mark to fantasy?





I guess the era of expectations of "free lunch" isn't over, even if the actual era for anyone other than banks, is.</blockquote>


I think they are basically saying that they don't want to do loans anymore (at least for a while), especially in California, Florida, Nevada and a few other places. They're probably trying to be just as smart as those here who think the market has yet to bottom.
 
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