Check with your agent to see a trending analysis of the sold price for homes in the neighborhood where your investment home is located. You need to determine--just as Jeremy alluded to earlier (with his "1% per month" comment)--whether the prices are continuing to march downward and by how much. You also need to be strategic about ordering appraisals--especially as more time passes, because you may have to disclose the results of the latest appraisal.

Keep in mind that the longer you wait--especially in a market where the current market value is declining steadily--the less you'll receive (if you opt to sell in this market). Instead of flipping that property to a retail buyer, as an investor myself I think it might be better for you to rent the property, and hold it or flip that rental to another investor. The property probably will sell for a higher price if it were flipped as a rental.

Hello Jeremy:

You are correct and I should qualify that "here in California" we are seeing a great deal more activity on housing in many areas. As a result, homes prices have improved every so slightly from the amounts that may have been seen even a few months ago. In many cases, properly priced homes (especially those in the $600K and below range here in Northern California) are receiving multiple offers--often over asking price. In fact, my clients and I visited a home that had over 33 offers on the property!! What a change from January!

However, the Valuation Appeal, as I've experienced it, does not cost the homeowner or home buyer any money, so it does not hurt (especially if the current appraisal has already disqualified the homeowner from refinance or purchase) to ask for this in the hopes that there may be a new comparable that might help the homeowner's cause. Otherwise, the home owner is stuck with the current valuation without ever attempting to exercise any available options.

Sorry to hear of the economic problems in Michigan, Jeremy. We often forget in other parts of the country, how severely those in Midwest are suffering due to the poor performance of the American automaker. Chrysler is coming out of bankruptcy in better condition, and I sincerely hope for the best with GM too!!

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty

Im not sure if I agree with that last comment by Grace. In Michigan home values have been falling at a rate of 1% a month for a couple years now and with GM and Chrysler in Chapter 11 we can only pray things get better. Before you consider asking for another appraisal and hope that home values for just last month jumped up about 40k I would recommend talking with your realtor or lender.

Jeremy

Its Like "Jerry" but with an "M"

Hello Fostermamas:

Thanks for your question and I want to assure you that you are NOT alone in this predicament. Many homeowners who had appraisals done as early as just last year are finding that their home values have been significantly and adversely affected by the large number of foreclosure properties. Unfortunately, as Jerry pointed out already, foreclosure homes are considered "sold" and, as a result, do become a sales comparable for your property.

If you are in the process of refinancing your home, you do have the option of requesting a valuation appeal from the mortgage broker and representative. Although the valuation appeal may not necessarily increase the value of your home, it certainly doesn't hurt to ask. Thankfully, with more homes closing all the time, between the time when you received your appraisal and now, there may have been a few more closings that can qualify as a comparable and help to boost your home's value. For more information on this process, speak with your Realtor or mortgage specialist.

Good luck!!

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA

Fostermamas

I am glad you are here! As you are in shock right now so are so many other homeowners who are looking to sell their home. With so many bank owned homes and short sales happening it is putting a downward pressure on ALL home values not just yours.

As for the use of foreclosure homes as comps, they are considered to be SOLD homes in your area, by law banks, lenders, mortgage companies and apprasers are required to use them as factual data when determining a price on your home.

Now you said you had a CMA done and it comp'd at 225k, do you still have all those comps in writing? Im curious if the realtor gave you the comps how recent they all SOLD and how level they were.

I wish you the best

Jeremy Sulak

Unfortunately what you paid to fix up the home has almost no bearing on the appraised value, unless perhaps you added square footage to the home. Even then you won't get dollar for dollar. An appraisal is a reflection of current market conditions, and while in the past most lenders and appraisers wouldn't really use foreclosures to guide their values, the fact that foreclosures and distressed sales constitutes most of the market right now compels them to factor in foreclosures.

A realtor might be using comps that are older or maybe a little further in distance and functionality to guesstimate what they think your home is worth, but most lenders are being as cautious as possible right now and are either throwing out comps that are more than 3 months old or adjusting the values downward to take into account a deteriorating market.

Now I'm assuming this appraisal is for the purposes of refinancing? If so, you could work with another lender who would order their own appraisal, however this may result in the same answer and additional costs to you. If the appraisal wasnt for refinancing purposes, then you probably just need to grin and bear it and wait the market out.

best of luck

good afternoon...you did things right...don't forget..the improvements help hold up or max the value but the comps are what is holding you down........thing will improve, but who knows when .best of luck.bob mcclure- success mortgage partenrs- plymouth, michigan...

I would love to know that. I had my home appraised Sept. in 2008 and again in May 2009 and it dropped almost 50k and that is after new carpet, lots of redecorating, a brand new electric fireplace, a hot tub and more.

That makes it impossible for a refi or a sale now.