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Nancy2, Home Buyer in Dunkirk, MD

Why r appraiser comparing non-foreclosed homes to foreclosed homes for appraisal pricing....?

Asked by Nancy2, Dunkirk, MD Mon Jul 4, 2011

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Hi Nancy,

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!
1 vote Thank Flag Link Tue Jul 5, 2011
Nancy,

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.
Thanks
1 vote Thank Flag Link Tue Jul 5, 2011
Three years ago, when I did a CMA, (Comparative Market Analysis) I would exculde Shortsales and REO's because I didn't want to skew the numbers. I would analyze each house down to that detail.

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
0 votes Thank Flag Link Tue Jul 5, 2011
if they are in the same neighborhood they are comparable. Does the none foreclosed home built from Shooty Materials that they are different, NO. Does foreclosed homes have less marketability than non-foreclosures, no, does the foreclosure sell for less, ultimately bringing the TRUE Value of your home down, YES, which is what you are probably upset about. NOW, the concern is who you are upset with, you are putting the blame on the Appraiser, who appears to be doing a great job. The person you should be upset with is your government which started the downward fall of real values in the Mid 70's when they went ditched the GOLD Standard! BUT this is a bigger discussion that you nor I could improve upon in this forum.

http://blog.house-guy.com/

Best of luck to you...
0 votes Thank Flag Link Tue Jul 5, 2011
Hi Nancy,

The appraiser is comparing the most recent sales. And he should take the condition of the home into consideration.
0 votes Thank Flag Link Tue Jul 5, 2011
If they are a completed sale then a foreclosure is also factored into the appraisal equation, why do you think Real Estate Professionals have been crying foul all these years, Or homes have to go up against foreclose homes, and since they affect the market price they have to be calculated into appraisals, They are sales and they count!
0 votes Thank Flag Link Tue Jul 5, 2011
When appraisals are done, all sales of similar homes are compared to each other to determine their value. If doesn't matter if the home is a foreclosure, short sale, regular sale, or auction sale. Although a homes location, amenities, and options are all factors that play a part in determining value, all sales of similar homes are considered by the banks to determine if the value is there.
0 votes Thank Flag Link Tue Jul 5, 2011
The lender wants to compare the property they are investing in (your home) to the comparable homes on the market. If you default on the note, they want to see how quickly it would take them to liquidate their asset (your home) in 30 days in "as-is" condition.
0 votes Thank Flag Link Tue Jul 5, 2011
Nancy;

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.
Ania
aniamiller@kw.com
Web Reference: http://www.aniamiller.com
0 votes Thank Flag Link Tue Jul 5, 2011
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