Hi Mary, Good to see you!

Mary, the lender looks to the appraiser that the home, TODAY, is being purchased at the same (near) price as comparable properties. The appraiser takes the most RECENT sales, to create a CURRENT market comparison. Occassionally they will do a current replacement value on the cost to replace or rebuild a similar structure. The appraiser works for no one but himself. All appraisers are independent contractors with the exception of those that work for government entities. The independent contractor status is an attempt to avoid the colusion or corruption of the information they provide.

The lender...his concerns other than the fair market price of the home....are with the underwriting guidelines. Your credit worthiness and the risk/reward for the lender. He wants to be sure that you have the ability to pay, or equity (down payment) in the property or Private Mortgage Insurance.

Guidelines are tighter these days, credit scores, debt/equity ratios, Non conforming products are few and far between.

A correlation is the investor who buys at the top of the stock market. I asked a broker I know last september if it was time to go short.....he replied...."stay long"....well I followed my own good advise, and my knowledge of historical cycles and trends, and technical analysis. The housing market also has long cycles, and properties were FLAT here for several years, prior to the most recent highs. Real Estate over time has an average return of 8% per year, and is still one of the best solid investments, with the ability to leverage your cash dollars with 20% down. That doesnt mean it doesnt have cycles too.

I have a new VIDEO INFORMATION LINK BELOW

Sat Jan 19 2008, 11:07

Hello fellow Trulia voices,
I've given your reponses alot of thought. I am still trying to get a complete understanding of what the bank appraiser's authority, expertise and responsibilities are to both the lender and the home buyer. In the loan process there are many areas which need to be redesigned -- as my Electtrical Engineering professor at Baylor always said "Design is iterative". The area that I viewed as a single point of failure was the appraisel from our lender -- They should have the "whole picture" of historical values - rates of appreciation for the area they do business in. If you have a market that starts to skyrocket..the beginnings of this intergalatic voyage by the buying masses can be brought back to earth by the voice of Houston (bank appraiser ) who can indicate the level of risk involved in paying 20/30/40/50 percent over the standard/historic rate of appreciation see in an area...and I think that all would agree there are "sustainable rates of appreciation" and "unsustainable rates". There are many parts to the process of purchasing a home..the buyer, the seller, the realtor, the lender, inspector and appraiser..It is a team effort and if two of the players (lender and appraiser) are not looking out for the team best interest the final score will be dismal. We should be looking in the direction of the goal not a recession
Thanks for listening and read a good book
Mary

Sat Jan 19 2008, 08:34

Thanks David, for the plug and Jim, thanks for the compliment! (His webmaster is me.)

Mon Jan 7 2008, 08:10

David

I occasionally post on questions that are outside of California if my comments are general in nature, as they were in my old post below.

I just thought that the idea of linking the offering price on a house to an assessed value from 3 years ago was the opposite pole from "having some grounds in reality " as Mary was so convinced to believe.

I thought I would have some fun with that first part of the question. - Duke and Gloria had already answered the interrogative second part of the question.

I verified your claim for John's Search Engine Optimization result. His webmaster rocks!

Sun Jan 6 2008, 10:32

Are you still from Roseville? What are you doing poking around this neck of the woods? Well, glad to have you here in Vancouver. Do you live here now? I hear Roseville, Sac, Stockton are getting pummeled in this decline. If you are still in that market chase down buyers who will benefit from so many homes now being within the FHA loan limits. Also, give a shout to my buddy John Lockwood if you happen to submit an offer on some of his listings. To learn a more about John Lockwood just type in Sacramento Real Estate into Google.. his is the first listing that appears in the organic search results. Sacramento-home.com

Sat Jan 5 2008, 16:17

An appraisal is dated.

It only has validity on the date that it is signed. You cannot hold an appraiser accountable for the values three years after the appraisal date or for years before.

If time was not one of the dimensions, then a seller could demand that his 3 year old value be honored by prospective buyers.

Similarly, A buyer could point out an valuation dated from the 1990's and demand that the seller deed the house at that lower price.

Oh, they do make those demands? Okay, never mind.........Emily Latilla. (Gilda Radner SNL character)

Speaking of memories. Do you remember when Rare Beanie Babies traded for hundreds of dollars.?
Or more recently the rare Pokemon cards that traded for hundreds of dollars?

Here is an economic lesson worth a hundred Pokemon cards: and I give it to you all for free:
Current Market Value is not the same as intrinsic worth.

Thu Nov 29 2007, 09:35

Hi Mary,

In my opinion, the assessed value is only as valid as to the value of the property as anyone's else. Everyone may have an 'opinion' as to the value ofn a property, but as in any product, it is only worth what someone is willing to pay. That applies to everything from pencils to homes. I have known buyers that are willing to pay a higher price for a home because it was what they wanted and were willing to pay it just to get it. Their decision is made even though they are counceled on the present value of homes in the area (Comps). Does this mean that the home isn't worth what they paid? That's always gojing to be the agrument. It's also what changes the comps for an area driving home prices up or down. A home owner willing to sell at a reduced value has its affect on the comps as well.

A home sells because the buyer and seller agree to the price, no agreement, no sale...

I agree with Gloria, "Market value, by its very nature is..."what someone is willing to pay". "

Thu Nov 29 2007, 09:14

Well, Im not sure we can tag the appraisers. Their job is to ascertain and provide an OPINION of the property's "fair market value", The very fact that someone is willing to pay a certain price...kinda becomes fair market value...Of course it must be substantiated by other comparable properties sold recently. Its important to know that appraisers are always INDEPENDENT (except when working for government), and we do see appraisals come in low, but almost never high.

Another important factor in tax/appraised value, is that in the past..assessed value often LAGGED the market considerably, as there was a lag in data and updating the tax basis. Sometimes, not properly adjusted until a property sold (could have been 10 or more years). All That has changed with the speed of information. So there was a time the assessed values were not near market value.

Market value, by its very nature is..."what someone is willing to pay". Mary, whats your interest in clark county??Washington?

Thu Nov 29 2007, 08:40