Substantial loss of value since 2006?

Asked by Carlyn Nugent, Louisville, KY Thu Mar 28, 2013

I just had my home appraised for a refi. My home is in the Highlands, 2200 sq ft and in average condition (older home, some repairs needed). I refi'd in 2006 and the home appraised at 150K. It is in a very similar condition now and appraised for $106K. I was blown away. Comparables used were all in Germantown and Smoketown, which have much lower prop values. My next door neighbor had hers appraised the same weekend. Her home is 1/2 the size of mine and in very similar condition. Hers was $93K. This will not affect whether I get my loan but is still upsetting (and will mean I will need to pay PMI, which had expired on my current mortgage). I don't know whether to dispute or what steps to take--or if the market has been hit so hard that this is potentially accurate value. (Note, there is a 900 sq ft house right around the corner--with no substantial updates or renovations--listed at $144K!!)

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Philip Staton, Agent, Brownsboro Village, KY
Thu Apr 18, 2013
Appraiser's are typically very accurate with their value evaluations but that value is only good for 6 months. The Market is ever changing and values will rise and fall depending on what kind of activity is going on in your area. Your area there must not being seeing a lot of Buyer Activity causing some of your neighbors who are trying to sell their homes accept a lower price out of desperation. When they do that, it hurts everyone in your neighborhood. The good news is that activity in the Louisville and surrounding counties has been picking up lately and this could have a positive effect on your homes value. Concerning the home around the corner, you cannot base your value on the price of Active Listings in your area, only the most current Sold Properties. You do however, consider that home to be the competition and price your home accordingly.
One last thing, when pricing your home for sale, keep in mind that once you get a contract, it must appraise, if it doesn't, the whole transaction is in jeopardy of falling apart. I recommend you price your home a few thousand dollars above market value with the idea that you are going to negotiate the price down into the top end of the market value. If any, try to keep Buyers Closing Costs coverage to a minimum if possible.
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Janecralle, Home Buyer, Louisville, KY
Sun Apr 14, 2013
Sad to say but my beautiful and most desired Highlands neighborhood home appraised @ $500,000 in 2003, $500,000 in 2008 and after ONE YEAR on the market sold @ $440,000 net $424,000. 102 Valley was the listing. I found people shopping in this market are not buying unless they feel they are getting a BARGAIN.
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Michael Stin…, Home Buyer, Louisville, KY
Wed Apr 10, 2013
I havent seen any losses that big, however my house with many upgrades and updates appraised for the exact same amount.

new roof
carpet changed to laminate
linoleum to Tile
energy efficient insulation
sump pump installed(previous did not have one)

however my difference was a appasial to refinance compared to selling. I have heard that an apprasier will go on the low end for refinancing and high end when selling.
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Carlyn Nugent, Home Buyer, Louisville, KY
Fri Mar 29, 2013
I really do appreciate everyone's input. I am not sure the bank will be willing to reevaluate the property based on my protests, but I do think I will--at least--submit my concerns. I do understand listed homes aren't always realistic, but I did research sales in the area (to the best of my ability). The 1100 sq ft house next door to me sold for $130,000 2 years ago. The 1100 sq foot house on the other side of me appraised for $110,000 last year. The first was remodeled to a slightly higher standard, the other is in very comparable condition to mine. The appraiser noted other items that weren't accurate. For example, she said there was lead-based paint peeling in my bathroom. There is absolutely no indication from prior sales disclosures that there was lead-based paint in the home, and the home was entirely repainted right before I moved in 10 years ago. After 10 years, the paint is peeling...because someone painted latex directly onto an unsuitable surface (wallpaper) and that combined with moisture from shower steam, etc., has caused it to bubble and peel. It does need a repaint, but why she would say "lead-based," I've no idea. This was only one of a few odd "safety concerns" she noted (another was a broken window which is boarded until I can get a proper repair. She indicated that there was broken glass still there and I needed to repair or board it for safety.

Also, her comps were on Shelby, Logan, and Oak near Jackson. I just didn't think that was right, at all. I live on Winter, between Baxter and Barret, so the homes aren't as expensive as some nearby areas in 40205 or even 40204 (e.g., Tyler Park or Cherokee Triangle), but it's not as low as Smoketown. I've seen houses in comparable or worse condition just north and south of me sell for $130-$170K, easily, in the last year. I wasn't expecting anything unrealistic, I didn't think.
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Neil Blumberg, Agent, Louisville, KY
Fri Mar 29, 2013
Hi Carlyn

Not knowing your address or having seen the house, its impossible to give an accurate analysis. But here's what I did: I used zip 40205 for comps. Total living space between 1900 and 2500 sq ft. Sold in past 12 months. There are lots of ways to improve accuracy with more knowledge, but here is the very rough result:

Status Total Avg Price Avg $ per Sqft Median Low High Avg DOM

SLD 50 $212,290 $121.37 $216,000 $135,000 $258,900 40

Here is a list of all actives in the Highlands, in map form

Here is a map of all recent sales in the Highlands

These maps can be manipulated to deliver VERY accurate information. If you'd like me to walk you through the process, please feel free to call. 502-254-9600.

Best of luck.
Web Reference:
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Rita A. Walk…, Agent, Louisville, KY
Thu Mar 28, 2013
Email me and I will send you some comps to use if you wish to dispute.
Look at these properties carefully when doing comparisons. Apples to apples.

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Rick Schmidt, Agent, Louisville, KY
Thu Mar 28, 2013
The fact that a smaller property around the corner is listed at $144k really means nothing, since it hasn't sold. Once it's under contract the lender will have it appraised. At that time, the buyer and seller may be in for a big surprise, just like you have experienced. Unfortunately, the market has dropped considerably since 2008 and is just starting to recover. I suggest you visit my website/blog, as I've written numerous articles about what has happened since 2008. Visit Feel free to contact me with any questions! Rick
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Frankie Story, , Louisville, KY
Thu Mar 28, 2013
It's entirely possible that the value you received is what the market is supporting right now. If there was a foreclosure or a short sale in the area, this could bring your value down considerably. Values are ever changing with the sale of homes in the area. Six months down the road you would more than likely get an entirely different value. You could ask for them to request the appraiser to take another look, but I highly doubt it would change. Good Luck!
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