Is anyone having issues with low appraisals coming in?

Asked by Shelley Bryant, Englewood, CO Sun Oct 14, 2012

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12
Julie Montgo…, , 80238
Tue Feb 12, 2013
You'll never have problems with appraisals if the house is listed at market value from Day 1. A comp is comp -- make sure you understand how appraisers determine value and its has nothing to do with price per sq ft.
1 vote
Randy Stoker, Agent, Carmichael, CA
Wed Jun 11, 2014
Not a problem in Yuba City; at least on my transactions! Before listing a house or writing an offer I always review the comps to make sure the proposed sales price is reasonable and that an appraiser could agree. Some times I have to write an offer over asking price due to multiple offer situations but never in excess of comparable sold properties. There is nothing worse than your buyer paying for an appraisal only to find their offer is too high.
0 votes
Tracy Shaffer, Agent, Denver, CO
Tue Jun 10, 2014
Market is moving faster than appraisers comps. Make sure they have the counter if that's higher. I've heard others say this but haven't had an issue.
0 votes
John Walin, Agent, Libertyville, IL
Tue Feb 26, 2013
Shelley
This question belongs in the agent2agent section, Not to be a soupnazi about it, but this is kinda a rhetorical question. No soup for you! :)
0 votes
Patrick Murr…, Agent, Greenwood Village, CO
Tue Feb 26, 2013
Here's a good article that addresses your question: http://www.themreport.com/articles/nahb-appraisal-reform-nec…
0 votes
Patrick Murr…, Agent, Greenwood Village, CO
Sun Feb 24, 2013
I have seen on 5 occasions - (over the past 3 years on purchases & client refinances- refi was last week) where the appraisal came in lower than similar sold comps. Since 2007 onward, DORA, the Colorado Department of Regulatory Agencies, has clamped down on Mortgage brokers and Appraisers for inflated values, etc. This in turn, in my opinion, has made Appraisers become extra conservative & sensitive on their values, so they won't flag themselves for an over-inflated price or even a proper market price with respect to the appreciating Denver-metro housing market. Though I think this issue is occurring on a small scale, the Appraisers are not always in line with our current market trends which shows signs of increased home values.

Moreover, and this is my speculation, I believe the banks (lenders) are also tight w/ values, as they were burned from our recent housing collapse. Can't blame them though, as it's understandable. I think all of us would be overly conservative in lending considering what occurred. The underwriting guidelines for buyers are a bit more grueling / demanding than 5-7 years ago. As I represented banks with their REOs in conjunction w/ in-house lending, banks control how they loan their money, ie. appraisal values. At the moment, we are experiencing the transition period between appreciating home values and the banks response (with their financial restraints) to the improving housing recovery. The appraisal is one of those banking restraints. Does it need to be loosened? We as Realtors, Mortgage Originators, Buyers, and Sellers think yes. The banks & Fed are probably still researching & haven't fully adapted yet - thus we are seeing a small handful of conservative appraisals.

So ultimately, yes, there are some appraisals coming in lower than fair market value (in our eyes). In my opinion, this issue must be addressed by the banks, Feds, & DORA- all of which are major components behind aligning revamped procedures for the improving housing market. Though I caution, the increased values of homes in the Denver market is strongly influenced by a low inventory, and may not be a true indicator of a re-built or robust housing recovery.
0 votes
allan erps,A…, Agent, Pearl River, NY
Tue Feb 12, 2013
The answer is YES and sometimes you just have to fight through the negative & provide the Appraiser better comps than what they use(that is if they wake up on the right side of the bed that morning!).
0 votes
Cory Fitzsim…, Agent, Golden, CO
Mon Feb 4, 2013
Interesting question and common problem. Appraiser are having to prove the value to quality control and underwriting. I had a home go under contract, over asking price, the day after I put the sign up and 3 days before it went on the market WITH backups. I still had appraisal issues and they went back almost a whole year for comps. So "value" is what the bank determines IF you are getting a loan. Good point Dana!
0 votes
Dana Brown, Agent, Denver, CO
Thu Jan 17, 2013
Oh yes - and appraisers calling for repair items, and appraisers taking the appraisals and then delaying the appraisal process (too busy)! What I don't understand is that if we can provide comps which show proof that like properties have sold recently at higher prices, why aren't the appraisers acknowledging these? Isn't an accurate "value" determined by the actions of a willing seller to sell at a given price and a willing buyer to buy at that price?
0 votes
Cory Fitzsim…, Agent, Golden, CO
Mon Oct 15, 2012
0 votes
Cory Fitzsim…, Agent, Golden, CO
Mon Oct 15, 2012
Absolutley! They are unable to reflect a changing market and we have no way to police them. How do we know they know the area? Do they even live in CO? Read this thread on the same issue and read the NAR article. I have a feeling we will see some changes soon. http://www.trulia.com/voices/Agent2Agent/Low_appraisal_issue…
0 votes
John Chapin, , Centennial, CO
Sun Oct 14, 2012
Short answer. YES
Long answer. Appraisers are usually a step or two behind the curve.
The market nowadays can turn on the proverbial dime!
John
0 votes
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