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Appraisals can be driven by lender guidelines. What is market value ultimately driven by?

Asked by Trulia San Francisco, San Francisco, CA Tue Jan 29, 2013

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Since when do lender guidelines drive appraisals? Lender guidelines change from time to time and usually do so because of greed and stupidity. Never miss an opportunity to bash a lender aka a robber without a gun. Every lender knows exactly what balance to reach when creating their guidelines. Lender guidelines can make it easier for unaware borrowers to accept a mortgage they should not have accepted and they may be so stringent that they keep borrowers from qualifying. But, to imply that lender guidelines drive appraisals is a statement only written to create responses. Is Trulia taking some sort of poll?

The market is, as a general rule, driven by demand. The only time I can think of when demand was not the driving force was when it was influenced by lenders who stopped foreclosing and selling their REO property. By keeping so many homes off the market they cornered the market and kept values higher than they should have been.
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0 votes Thank Flag Link Tue Jan 29, 2013
Ultimately? Buyers drive the market....along with new construction prices. The fact that we have see multiple price increases by individual national builders since last summer is a very positive indication. They can raise their prices but they still must appraise for the contract prices.
0 votes Thank Flag Link Tue Jan 29, 2013
The buyers by doing a timed and very specific marketing plan. I have done this 612 times since 1978.
0 votes Thank Flag Link Tue Jan 29, 2013
By purely economic definition, the term 'market value' means 'the highest price a willing buyer would pay and a willing seller would accept, both being fully informed, and the property being exposed for sale for a reasonable period of time. The market value may be different from the price a property can actually be sold for at a given time (market price). The market value of an article or piece of property is the price that it might be expected to bring if offered for sale in a fair market; not the price that might be obtained on a sale at public auction or a sale forced by the necessities of the owner, but such a price as would be fixed by negotiation and mutual agreement, after ample time to find a purchaser, as between a vendor who is willing (but not compelled) to sell and a purchaser who desires to buy but is not compelled to take the particular article or piece of property'.

These being said, as Realtors we provide our buyers with comparable sold homes data before making an offer for a certain property and we also analyze all the sold inventory with the home sellers before listing a property. The offers and negotiation process is based on these data and more importantly, on the ability and willingness to pay and respectively accept a certain price and terms for a property. Of course, sometimes, the offering prices clash with the appraised values, but that is another subject.


Alina Aeby-Broker Associate
Pacific Union International
0 votes Thank Flag Link Tue Jan 29, 2013
People mistakenly think it is the Realtors that are driving prices up. However, it is actually the buyers who set the price of any property. If it is too high priced, the property will sit on the market. If it is priced too low, then there will be multiple offers. If people are desperate enough, they could effectively drive the price up OVER the actual market value. That's why it's best to have a Realtor on your side who can give you accurate information to help you decide on what price to offer for any given property.
0 votes Thank Flag Link Tue Jan 29, 2013
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