During the boom years, appraisers were questioned on presenting appraisals that were multiple percentage points higher between similar houses closing within a month's times of each other. Now the tables have turned and the appraisers are being questioned on the de-valuing of houses when they are appraised and under contract. So the house is listed and often as a short sale. A buyer has presented their best offer, the funding lender orders an appraisal and it comes back lower than the offered price. Well now the listing agent must go back to the seller's lenders and ask for further reduction in payoff.
Why is this happening? Well it is the new guidelines the appraisers are having to work under. First, loan officers, mortgage brokers and real estate agents cannot have any role in selecting appraisers. So the lenders are outsourcing the selection process to AMC's or Appraisal Management Companies. These management companies take a hefty fee of nearly half of the appraisers fee for giving them the assignment. Instead of the appraiser working in a specific area of familiarity, they are being asked to work anywhere and everywhere requiring them to travel great distances for an appraisal on a property they are not familiar with. Now when doing an appraisal you make adjustments to the comparable properties. So that requires a little research to figure what the adjustment for an extra garage bay or an extra bedroom or larger lot size should be compared to other properties. So the appraiser has more homework to do for half the pay.
Other considerations or adjustments appraisers need to account for (in my opinion) is properties that are sold as foreclosures versus short sales versus normal transactions. A foreclosed property usually has limited disclosures, no SPDS report, no CLUE report, shortened inspection period (some lenders even requiring the inspection to be done BEFORE presenting the offer). So naturally that would lead someone to present an offer at a discount because they are limited in the knowledge of a property. Whereas in a short sale or normal transaction, you will receive a Seller Property Disclosure Statement, you will receive a Comprehensive Loss Underwriting Exchange report so the buyer knows the claims history on the property and if there are any problems the owner knows about. Also a foreclosed or lender owned property will result in a daily per diem charge if the property does not close in time. A short sale or normal transaction the close of escrow date can usually be extended with no harm to either side.
How about financing, does a cash purchase have as high of closing costs as an FHA loan? No it does not, and therefore in a cash transaction shouldn't there be an adjustment on the price as to what someone would have paid if it were financed? Well just some food for thought.
If you are interested in buying or selling your house in Gilbert, Phoenix, Scottsdale, Mesa or another city or town in Maricopa or Pinal counties, contact Marie Zubkoff at 480.233.7051 or Andrew Walsh 602.527.2639 with US Preferred Realty.Visit us at http://YourGilbertHome.com Thank you!
