Shame on Us – Appraisal FAILS Replace LOW Appraisal
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Appraisal under contract price…
The blame game just won’t quit. Now instead of dealing with a ‘low appraisal’, it’s now a “FAILED appraisal.”
It’s always “our” fault properties don’t sell – when the contract sale price is higher than the appraised value.
It’s never the fact that the home may have been over-priced, the buyer was desperate or over-emotionally involved, or the seller super greedy.
The latest example highlighting “our” deficiencies:
Excerpts from the Mortgage News Daily article:
“…collateral problems are consistently the third most frequent cause of loan denials.”
“…appraisals coming in below the contract selling price is common. Data from other sources show 10 to 13 percent of appraisals nationwide come in below the contract sales price…”
“…CoreLogic points out that the frequency of too-low appraisals in Michigan at 20 percent and Hawaii at 18 percent are very close to their failed collateral percentages…”
“Most states show a small-to-modest decline in the number of appraisals that come in under the arms-length contract price as the recession recedes, but they nevertheless stay close to the 7-9 percent range.”
“As of November, nearly one in five appraisals in Florida and Michigan come in under contract price.”
“Mayer concludes that due to its reliance on sales comparisons, the quality and accuracy of home appraisals can only be as good as the availability and quality of the appraiser’s comps. The pool of available comparables can be impacted by many factors such as local sales activity, level of housing distress, whether the subject property is itself distressed, and where the property falls in the price tiers. These, along with appraiser experience, can all influence the appraisal accuracy.”
Actually folks, just keep doing credible reports, based on accurate market based data. The fact that someone wants to pay more is not your problem.
Ijust went through an assignment situation where a property had an escalation clause addendum, which raised the desired purchase price $10,650 over the original contract price. I appraised it for the original price, because that’s what the data told me was correct for market value. This property just sold for $2,000 over the original contract price – after lots of hand wringing and attempts to get me to increase the value – by everyone involved.
If you stand your ground and have proper data to support your value, you will stand tall. Might not be totally pleasant, but you’re protecting the lender and the overall financial situation. Although the selling agents might have to sell another property to get enough green to make their ‘beamer’ payment next month, or take their trip to Cabo. That’s not your problem, either.