Posted on 06/24/2009 6:30:50 PM PDT by Lorianne
Flawed appraisals are derailing real estate sales and depressing values across the United States, the National Association of Realtors said Tuesday as it reported that existing home prices declined 17 percent in May from a year earlier.
"It's pointing to thousands of delayed or canceled transactions," Lawrence Yun, chief economist of the Chicago-based Realtors group, said in an interview. "We've had a massive inundation from members saying this is a big problem."
Appraisal rules that went into effect on May 1 require lenders that sell loans to Fannie Mae or Freddie Mac to set up a firewall between appraisers and loan officers to prevent improper influence. The rules are the result of an agreement between the mortgage buyers and New York Attorney General Andrew Cuomo, who said an investigation found appraisers inflated values under pressure from lenders.
The agreement mandates that banks order a second appraisal on 10 percent of the loans they sell to Fannie Mae and Freddie Mac, and warns against accepting the higher of any two valuations. The guidelines have led to more conservative valuations by many appraisers and a "chill" in lending, according to John Brennan, research director at the Appraisal Foundation, a Washington-based trade group. A low appraisal is one that comes in under the price a prospective buyer has agreed to pay for a property. [Huh?]
Low appraisals have become a focus of the California Office of Real Estate Appraisers, which oversees licensed appraisers in the state. Investigations by the Sacramento-based group rose 36 percent to 418 at the end of May from the same period last year, said Bob Clark, director of the office. The probes are looking into allegations including flawed valuations and use of comparable sales too far from the subject property, he said.
(Excerpt) Read more at mercurynews.com ...
Ahhhh! The beauty of unintended consequences... Another concept lost on the LibTard mind.
It’s time to take back the country.
lol We went to refinance back in April/early May when rates were at their lowest, and the lender said he couldn’t get financing because not enough similar homes in our area were selling to get an accurate appraisal. He said that only the least expensive houses were selling. We checked at another place for a second opinion on that, and the other place said almost the exact same thing.
I’m glad we aren’t having to move anytime soon, because we would be screwed!
Like irresponsible homeowners, treating their homes as a piggy bank, realtors take it as a universal physical constant that home values must continuously escalate. Self-serving, destructive and unrealistic.
That, and the similar attitude among county appraisers, similarly self-serving, had a minor but important role in the housing meltdown.
Just saying.
Appraisers are in CYA mode. Also, they have to find comparable sales w/i the previous 6 months that can be used as the basis to estimate the value of the property they are appraising. Unfortunately, a lot of the sales have been at low prices.
Even IF there were any professional appraisers, how could can there be anything like an accurate real estate appraisal until after the mortagers and banks quit dumping properties on the market? Seriesly.
They caused much of this problem while they got in bed with the bankers and buried people in property loans plus the cities and towns jumped on board to bury people in higher property taxes.
Well, a low appraisal made me unable to buy a condo this year. We offered $310k, but the appraisal came in at $260k, so the bank would only loan us $260k. We did not have $50k to make up the difference between what the seller wanted for the condo and what the bank thought the condo was worth. End result: the sale did not happen. We didn’t get the condo, and our real estate agent did not get a commission. We were unhappy all around.
The thing about being a parasite, is that if you eat too much, the host dies.
This guy is nothing more than a mouthpiece for realtors. I remember seeing article after article quoting him through 2007 and 2008, always happy-talk about the state of the housing market.
This subject burns me and all of my friends.Our property tax has increased 300% in 5 years.
REALTORS - The LARGEST LOBBY IN THE USA!
If the appraisal was low your agent should have suggested you go back to the Seller with a lower offer.
If any other Buyer asks for an appraisal in most States the Seller has to disclose that one has been done and offer it up.
Sounds to me like your Realtor did not do you a favor.
JMHO
Isn’t THIS special.....the banks (and their co-conspirator appraisors) want to have it both ways.....we BOUGHT a house in Sept 2008.....and the BANK GAVE the sales price to the appraisor, after my husband asked them not to.....so, of course appraisors made the appraisal MATCH the sales price....and NOW, we are selling another property (trying to, at least) and they want it the OTHER way....well BOOHOOOOOO
No... the appraisers were under pressure from lenders so lenders could make loans. The appraisers were selected by and paid by the lenders not realtors. If the appraisal did not come in high enough to make the sale, those appraisers would not get more work.
Now, the lender has to use an independent third party who selects the appraiser.
The seller of the condo probably owed more than $260,000. Plus he had to pay the realtor’s commission.
The bank will only finance a percentage of the appraised value. For instance, FHA will required 3 1/2 % down payment of the appraised value or the selling price which ever is lowest. If it appraised for $260,000 only $253,300 could be financed on an FHA loan.
In reference to the $8,000 tax credit. Texas is going to “front” the 8 grand up front for down payment. In other words, 100% financing with a 620 FICO score and a back ratio of no more than 50%. Since I’m trying to make a living selling houses, I’m all for it. Like Tom Tancredo, I want some bail out money!
Actually, the appraisal fee is paid by the buyer unless the seller agrees to pay it. But, the buyer’s lender has always selected the appraiser with the exception being on VA loans. The VA selects the appraiser.
The problem in my area is that foreclosures and short-sales are dominating the market. Non-distressed home sales can’t compete. This makes for a good buyers market, but a crappy time to sell.
While I understand the [huh] from the poster, that statement isn't as silly as it sounds. Market value is, in it's purest form, the value an arms length buyer is willing to pay for a property. The appraisal attempts to support that value by showing that others are buying at or about that same value. Supporting value is only done to insure the "arms length" of the transaction at hand. You want to make sure that there is not an inflated contract price because the buyer is getting a kickback. You can never really know about a kickback, but if the appraiser shows prevailing value to be 200k and your buyer is paying 250k, he is either crooked or stupid and neither is a good basis for lending.
So, saying that value is what someone is willing to pay for a property is really true, but it is only half the story. Lenders are too restrictive on appraisals now. Being too restrictive is just as destructive as being too lenient.
So are the people trying to buy the homes and those trying to sell the homes.
In my neighborhood, foreclosed houses have sold for as little as 1/4 their former value a couple years ago. This drives down the value of all the houses on the street. You can't get loans. You can't sell it. You can't get an equity line.
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