This is actually a good thing as it is likely your foreclosure purchase went below market value. The appraiser will make an adjustment on condition if needed to account for the foreclosed status. However if your home is in good condition it should be compared equally with non-foreclosed homes. Here's hoping you appraisal came in above asking price. Hello equity!
The appraiser will search in a two mile radius for comparable homes and also how recent the sales were. The goal is really to establish what the home is worth and that may or may not support the sales price. Then they will make adjustments say for an extra bed or bath, sq footage etc.the condition of the home is also taken into account and any upgrades but it's never a home inspection. Then they come up with their opinion of value. Appraisers can comment on foreclosures in the area and also if say one home sold below market which could hurt neighborhood property values. Hope this quick over view help and please let me know if you need more.
Nowadays, SS & REO's can make up as much as 80% of a sample! We cannot ignore that big of a number. That is what Statisticians call "significant".
The houses are innocent victims in this parade; they didn't choose to be neglected and abandoned. And hopefully, they will be restored and grandiose again.
I belive that Appraisers are in the same boat, only more so: They are trying to compare the subject house to near-by Comp's and when they go looking for comp's, they can't find any that meet the guidelines. They don't want to go too far out; that would really be too much of a difference.
It's going to be years until this gets back to "normal".
Good luck and may God bless
Best of luck to you...
Unfortunately, when looking for the current market value of a property, what has sold that is comparable to the subject home is taken into consideration. Other factors are taken in, like the square footage and the like.
I would speak with an appraiser and let him or her explain the process to you.
Good luck to you in your home purchase.