There's been a lot of complaint lately about a new rule that separates appraisers from lenders, realtors and sellers, much less buyers. In effect, a lender must contact an intermediary, who then assigns an appraiser to a specific property.
Theoretically, it negates any possibility of hanky-panky, like getting an appraisal at -- or over -- a contract negotiated price, a practise that happened a lot in the go-go days of the real estate boom. And practically, the intermediaries have assigned appraisers from out of town, or even less-experienced appraisers to handle the workload. That leads to what may be inaccurate appraisals. Such appraisals are usually lower than a contract price, and -- in effect -- scuttle the deal.
That happened to one of my clients recently, and I'm personally saddened by the loss of a nice contract. More importantly, I'm not happy that my buyers could not get the place of their dreams. So we're looking again.
So I spoke with Manatee County Property Appraiser Charley Hackney at lunch on Tuesday. And we agreed that it's not so much the choice of appraisers that's pulling the plug on so many deals, as it is the fact that comparable sales in some neighborhoods are ALL either foreclosures or short sales. And that means that a normal, arms-length transaction for a property not in that category will be compared against distressed sale prices.
And distressed sales are coming in at low, low dollar figures, thus bringing down the value of everyone's properties.
The fix? The foreclosures have to go on through the courts and be sold. The short sales also have to be resolved. And there are still many such properties still on the market, or worse, not yet on the market.
That means it will still be a good time to buy for the foreseeable future. Not a great time to sell, unless one really, really needs to sell. And can tolerate a lower than true market value selling price.
For more information on this problem, and a different take on the situation, check out these two recent Sarasota Herald-Tribune articles:
Some say firms undervalue homes, in the process scuttling home sales and crippling any housing market recovery Published July 6, 2009 http://www.heraldtribune.com/article/20090706/ARTICLE/907061036
Real estate agents say too many sales are being scuttled by too-low appraisals. Published July 7, 2009 http://www.heraldtribune.com/article/20090707/COLUMNIST/907071022
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