Douglas 1948 site built home redcued - HUD property.
Here in Cochise County we continue to suffer from two phenomena, banks are not lending and appraisals are low.
Looking at appraisals, there seems to be a nationwide issue that is unresolved. New regulations stipulate that appraisers be hired by the lender from either an in-house appraisal firm or through an “appraisal management company”. What is happening is that appraisers are coming from long distances to conduct an appraisal and are unfamiliar with the local area and market.
Another problem for the appraiser is finding comparable sales from with to make a determination of a property’s value. Some appraisers view the sale of a foreclosed property similar to the one being appraised as a fair comparison. After all, if the home across the street that was foreclosed is the same as the one being appraised, shouldn’t the fact it sold for $50,000 less than the contract price be considered? That is an easy way out for the appraiser and may have some merit.
However, if the foreclosed property is like so many here in Cochise County, there are no appliances, there has been some damage to the property and it sat vacant for many months. Does the $50,000 difference cover the cost of appliances, repairs, re-landscaping? And with MLS sales data being used for making comparisons by an appraiser, it is very infrequent that the condition of the property is described in MLS so the appraiser will not be aware of these issues.
I am aware that appraisers have a difficult time. And there are some that are trying to do what is right. As a buyer or seller there are some things you can do.
- Ask the appraiser if he (or she) is familiar with the area. Ask for specific addresses in the area they appraised and when.
- Your agent should be prepared with comparables for the appraiser, and the appraiser may have others.
- If a comp was a foreclosure (or short sale), be certain to get as much info as you can from the agents representing the seller and buyer as to the condition of the property at the time of sale. Are there photos in MLS that show the condition?
- If you feel the appraisal is not right, tell the lender and provide justification warranting a second opinion.
You can read an interesting article in USA Today here about appraisal issues.
Don Grafues
