What is going on with appraisals today??!!
Posted by New Home Resource on September 25, 2012 in
What is going on with today’s home values??!! Whether you’re a buyer or seller in today’s market, it’s probable you’ll encounter appraisal issues!
Low inventory, likely due to AB284, has caused an all-out bidding frenzy for the few homes on the market today. Prices are regularly being bid higher by anxious buyers, and prices set by sellers are often thousands of dollars above the recent comparable sales. And when multiple bids drive a house price thousands of dollars above the listed price, appraisers are still coming in with values below the agreed-upon price.
Considering most comparable sales in the Las Vegas market are of ‘distressed’ properties that have been neglected and/or not maintained, in need of repairs, carpet, paint and landscape, we can see how a property in ‘good’ condition would appraise for less – strictly because the comps are lower. And unfortunately, appraisers are not giving credit for the improvements and better condition of the non-distressed properties.
Appraiser reluctance to report local appreciation is becoming a significant obstacle. Many appraisers are reluctant to make justified upward adjustments for superior property condition or upgrades, because they fear criticism that they are potentially overvaluing the property. Many Realtors® and loan officers feel that appraisers will go with a lower valuation so as not to upset overly-cautious reviewers at the appraisal management companies.
As Realtors®, we are increasingly seeing buyers who want a home that is move-in ready, and as their agents, we must prepare them to consider paying the difference between the appraised value and the agreed-upon purchase price. The bottom-line is simple: Buy a distressed property and immediately put $20,000+ into it, or, pay $10,000-$20,000 in appraisal difference to get the beautiful home that is move-in ready.
Lenders who finance the property use the ‘lower’ figure as the base for lending. So, if the appraisal comes in $10,000 less than the agreed-upon price, that $10,000 is money you’d pay in addition to your regular down payment and closing costs. In days past, sellers usually came down on their price to keep the deal together – – but today that is not the case. Sellers are regularly standing their ground on the agreed-upon price because they know ‘someone’ will pay it.
Until our inventory issues are worked-out, we don’t see a quick end in sight to these issues. If you’re a buyer in today’s market, prepare to pay a little extra $$ above appraisal to get a great house. You need professional help: Call a New Home Resource Realtor® today! You can reach Joanna Piette, Denise Moreno, or Heather Brockhurst today at 702-365-1000 !! Don’t waste another minute!