A ‘low’ appraisal is now a ‘bad’ appraisal
I was asked to post this essay to this forum:
Well, that’s according to the headline. The article does not stress ‘bad.’
See this article in Money.com: https://money.com/coronavirus-low-home-appraisal/
“We” appraisers are now experiencing the same level of buyer goofiness and panic we encountered in 2006-2008, before everything melted down. Inventories are low, and buyer interest is intense.
In my immediate neighborhood less than a month ago, an older vacant home came up for sale…listed in the MLS. I looked at the home (actually looked in the windows, etc.) and ‘almost’ received the assignment under a fee and turn-time bid, but another appraiser got it. At the time, I did comp research and decided that the contract sale price could not be supported….and frankly, that’s how I would have done the report. I do not “massage the data” just to make agents, MLO’s and lenders grin.
The loan was approved (for more than the actual sale price!), and the buyers moved in this past week.
Two days ago, our lovely lady mail carrier deposited a gloating postcard from the listing brokers who told residents living nearby that the home sold for $15K over the list price, with multiple offers received. Yep, they are real proud of that. By the way….that amount by itself resulted in $450 more commission to them….enough for a couple of plane tickets to Cabo, and a few ‘toddies’ while there!
Because ‘we’ appraisers are often considered villains in the lending process, all ‘we’ can do is spend extra time researching recent comp sales to find the most appropriate ones, and then do enough analysis to plug in a positive time adjustment to the comps if warranted. (I do this on most reports….because that’s what the Excel spreadsheet data tells me.)
If you can’t legitimately report a value at the contract sale price, oh well. It’s not really your problem.
Again, buyers are desperate and many use escalation clauses in their home purchase offers to jack up the resulting sale price above what it would be in a ‘normal’ market. Agents are gleeful, singing high praises – through their masks so as to “protect” anyone nearby.
Fun times, again……for those of us who’ve gone through this before – before masks were mandated. (Not really!)