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Related: About this forumSoaring Home Prices Are Roiling Appraisals and Upending Sales
Soaring Home Prices Are Roiling Appraisals and Upending Sales
More properties are being valued below their agreed-upon sales prices, causing deals to collapse
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About 13% of appraisals of homes came in below the contract price in August, according to housing-data provider CoreLogic.
PHOTO: BRANDON BELL/GETTY IMAGES
By Nicole Friedman
https://twitter.com/nicolefriedman
nicole.friedman@wsj.com
Oct. 10, 2021 5:33 am ET
Jason and Talitha Brooks listed their house in Orange Park, Fla., in June at $320,000. After receiving multiple bids, the couple accepted an offer at $335,000. But the appraiser, hired by the buyers lender, valued the home at only $305,000. The Brookses and the buyer couldnt agree on a new purchase price, and the deal fell through.
This whole appraisal process, its just so subjective, Mr. Brooks said.
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Hugh_Lebowski
(33,643 posts)then you better have a good sized down, or absolutely phenomenal credit. And REALLY want the house.
Makes sense really.
mahatmakanejeeves
(56,904 posts)Thanks for writing.
paleotn
(17,781 posts)Appraisers know what prices were, but if the market appreciates faster than their comp data could they get left behind? This feels like a symptom of an asset price bubble. Or maybe the go, go 2000's made me overly sensitive to such things.
IbogaProject
(2,694 posts)Pay more for a MAI certified appraiser, they are always very close between different appraisals. At the price range the variation would likely be under 6,000 maybe even less. Properties can be valued three ways, comparables (most variable), rent ability (what the property could rent for) and replace ment value (cost to build new on same lot). A cheep appraiser might not have goid comparables for #1 & #2 and they won't do all 3 and use a formula to combine the 3.
Again use a MAI certified appraiser if you want to avoid this situation.
jimfields33
(15,474 posts)unless one of the parties request them. Not sure why they have to get their noses involved.
3Hotdogs
(12,210 posts)So the bank isnt loaning $500k in a building that is worth $400k.
The bank wants equity on a property before they loan $$$. So if they foreclose, they get at least their investment back.
Mosby
(16,168 posts)Some times is a full appraisal or a "drive by".
jimfields33
(15,474 posts)SWBTATTReg
(21,859 posts)too long, as I suspect that interest rates will continue to go upwards (all during which time insurance, and other costs continue to spiral upwards). How long can the housing market (and other markets) continue to spiral upwards? What goes up, must come down. If there is a shortage of single family homes, perhaps one needs to look at why, that is, why aren't there more single family homes?
I suspect that (1) people are happy w/ where they're at, don't want to mess around w/ a shifting real estate market (2) building a single family home is getting more and more expensive (3) wages are somewhat going up (due to COVID, other factors) but how long will these wages continue to increase?
The title name of this article seems rather confusing to me too..."Soaring Home Prices Are Roiling Appraisals and Upending Sales
More properties are being valued below their agreed-upon sales prices, causing deals to collapse". How can home prices be soaring when the properties are being valued by appraisers at a lower price? (per the article title and first sentence). In fact, it seems like to me that home prices aren't soaring? Go figure.
I usually had 3 appraisals done on a property too, to ensure that I did in fact, have a fair market value established, for I have had in the past an appraisal done by an appraiser (that the lending institution picked, and they were way, way off (and I proved it by providing the lending institution proof via 3 recent appraisals of the same property all which beat the new appraisal). The lending institution relented and said that they would proceed but by then, I was so turned off by their behavior, I demurred and went elsewhere. If you can't trust them during this process, what other things might happen down the road that you'll eventually regret too, if you picked this particular institution...it was too bad as I had dealt w/ them for quite some time.