Several articles have been published recently on how low appraisal values have affected the sales market, the twin cities home. These articles have illustrated a number of potential sales in a home for the price between buyer and seller but buyer could not obtain the necessary funding because an estimate value was significantly less than the price agreed to.
This led to a situation where the seller would have to reduce considerably the sale price or the buyer would have to exciting deposit more to close the gap.? This illustrates the problem in no good I call "the current dilemma of Appraiser".
As someone who was the buyer and seller of real estate and most recently who have obtained a license, appraiser, I see that the situation is difficult to identify the upturn bmgori values.
Lenders depend on appraisers to create market value of the property so they do not overextend the amount of dollars loan to a potential buyer. This relationship is much of what created the mess that we find ourselves in at this time. Appraisal free valooaa underwriting standards has led many lenders make loans that were very aggressive compared to the actual value of the property.
We thought you need to worry too much because home prices always supersedes, if there is a problem, all we need to do is wait a little and the market take care of it. The reality is that when home values started to decline many owners found their homes were "????"????, which means that they owed more on their House than it was worth.
The primary method using appraisers to estimate the value of a property is to compare it with recent sales, pending of similar properties in the same area. After you have identified a number of sales will switch appraisers nearby were for the size, condition, quality of construction materials, and other factors. These changes are then similar characteristics so that they will be like property comparables are appraising-comparing "apples apples".
One problem with this method is that it is always looking back in time appraiser to compare previous sales. Appraisers rely on sales during the past six months a year for a day. This means that the market might be getting better today, but the owners are still with sales home depressed from six months to a year ago.
If they continually look at appraisers reverse declining prices, how do we identify and know when to buy and can begin to pay high prices? This will indicate the desire to turn in the market.
If lenders continue to make a loan based on the perception of these lower values, it is more difficult for buyers to pay more for a home unless they can make a larger down payment or pay in cash. This is going to be a drag on the chances of recovery definite values housing; This issue creates a circle of a depressed. If prices were lower than they were supposed to be six months to reflect these values in their own appraisers, loans to eligible homebuyers can only based on that data. Low amounts of mortgage and sales appraisals and lower prices means.
A problem which goes to the appraisers is now a large percentage of the sales or short sales, foreclosures now. Previously, appraisers will not calculate foreclosures or short sales when they are looking for sales equivalent. Now that many sales are divided into these categories is difficult to find good quality parallel sales. Bbmkrim many of these "depressed" properties can sell for 20 to 30 percent (or more) less than normal sales.
How do you account for short sales, and sales of foreclosure that takes into account the conditions of properties and gesticulating seller? And what about the lender owned properties-are they doing as can be to preserve and increase the value to the owner? These are not usually driven sales, in many cases a significant need for rehabilitation of properties to return them into good condition, as a result they are assuming. These sales at the retail values tend to bring down the very neighborhood values.
Not intentionally trying to sabotage the Appraisers transactions with low valuations. Appraisers and lenders have become cautious in light of what happened to the housing market. No doubt, were from the some of the past and no one will want to repeat those mistakes.
All appraisal is, by definition, an opinion of value, and appraisers are backpackers, being cautious. If they are found to be inaccurate appraisal and the deal was bad, are being sued. Licensed Appraisers have a well-defined guidelines, procedures to be used when making this assessment the Bill David-Frank new financial reform has set up new appraiser independence requirements.
The dilemma is accurate appraisals should be, but appraisers need to be able to respond quickly to changes in the market when the values have began to move up. On the other hand, they also need to be precise, because the valuations too optimistic appraiser may leave your organization's future liabilities.
What are some possible solutions?
For any given Property Appraiser selected and paid by the lender or appraisal management company that is hired by the lender. We must ensure that they consider carefully how to select appraiser for any assignment. Here you find a licensed appraiser that the lowest price appraisals.
Should give consideration of skills around the property appraiser must be appraised and depth of market knowledge of the relevant neighborhood of properties. It makes sense to hire someone from 50 miles away, because they will do the job for the lowest cost.
If there is a significant difference between the sale price, value estimation should be an easy way for buyer challenge the valuation within a review by a neutral third party.
Some of the traditional appraisal methods may have to change slightly to accurately identify the changes in the market on the basis of the time. Not all markets are going to recover at the same time, at the same rate. Appraisal is not an exact science, appraisers need to give some latitude to consider some of the changes that are occurring in the market a more subjective.
The road to healing, probably longer uneven so that sellers, buyers, lenders and appraisers have all ???????? them to be a positive force for identify trends up legitimate values.
Herb Tousley manages Shenehon real estate Center at Opus of visiting University of St. Thomas. His column is mablog of the Center for real estate (http://blogs.stthomas.edu/realestate/).Tousley phone hwtousley1@stthomas.edu.
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