Appraisal Issues Arise

ninja A recent Ninja conversation.

I'm sure those of you who have taken advantage of some of the recent low interest rates to refinance have discovered that even a well qualified buyer has many hoops to jump through, not the least of which is having your home appraised. Many home owners are loath to pay for an appraisal unless they are sure there are comparable properties available to support the refinance. Fewer sales recently have made that challenging, and even when found appraisers in general are much more conservative with their values than in years past.

In my business, appraisals have been affected by the Home Valuation Code of Conduct, HVCC. adopted by Fannie Mae and Freddie Mac in May of this year. To assure that lenders could not have an undue effect of valuation of a property, lenders cannot directly select an appraiser or had any substantive conversation with them regarding the valuation. While in theory, one would applaud this measure, in reality those in the field have found 1) appraisals taking longer to come in, and  2) appraisers coming in from out of state and relying on internet information to make their appraisals.

I've found it all the more imperative to check with lenders before writing down a closing date on behalf of buyers who are writing a purchase agreement. I've also been alerting both buyer and sellers to the fact that a home priced over market value is much less likely "to appraise" and proper pricing is imperative unless one hopes to sell to a cash buyer (not so likely) that doesn't need a loan, or a buyer that has all cash doesn't care how they throw their money around (again, in a buyer's market not so likely).

Appraisals, and how they shape a transaction, is another important thread in the tapestry of real estate in today's market.