All posts in Appraised Values

Mortgages Get Denied Due To Low Ball Appraisals

by Justin Miller on April 10, 2012 in Appraised Values with No comments

 

 

 

 

 

 

 

I have mentioned this time and time again.  This is one of the many reasons that the interest rates and fees should not be what you are most concerned with.  It is obvious that you want to get a good deal and not be taken advantage of but there are other questions you should be asking when choosing your Mortgage Professional.

We at FEMBi use our own appraisers and rotate them so we are compliant with the appraisal standards.  We are not having the issues the article, “Low-Ball Appraisal: Mortgage Denied” is talking about.

You find the home of your dreams. You’re pre-approved for a mortgage. You’ve scheduled the closing. Then … the appraisal comes in too low and the deal blows up……..

Appraisal Process Is Flawed

by Justin Miller on March 4, 2012 in Appraised Values with No comments

 

 

 

 

 

 

 

 

This is one of the reasons I am always saying that a mortgage is much more than an interest rate.  Appraisals are a big problem and especially in Fort Lauderdale and South Florida.  You don’t want to overpay for a property but you don’t want the deal to fall apart because the property under appraises and this happens all of the time.

Luckily at FEMBi Mortgage, we are HVCC compliant and rotate our appraisers but the appraisers on our appraiser list are experienced and know the area they are appraising. With the banks and brokers they use the appraisal management companies which the big banks have an ownership interest in and you never know who you are going to get, their experience, and/or whether they know the area.

I recommend reading the article “Home Appraisal Process Flawed, Government Report Finds.”

A recent NAHB poll showed that one out of three builders surveyed lost signed sales contracts because of flawed appraisals. And a National Association of Realtors survey conducted last fall found 18% of Realtors reporting recent contract cancellations or delays as a result of a low appraisal……..

Appraisals & Distressed Sales

by Justin Miller on February 7, 2012 in Appraised Values with No comments

It’s quite often that a borrower reviews an appraisal that I send to them and they can’t understand why there are short sales and foreclosures included in it.  If there is a recent sales close (same neighborhood or within .5 miles) to the property and within the last 3 months it needs to be included.  A lot of times the appraiser will comment that it was a distressed sale and due to the condition little weight has been giving to it but it has to be included.

Here in Fort Lauderdale and all of South Florida we see this all of the time because there are so many distressed sales.  The article below, “Do Appraisers Use Distressed Sales As Comparables,” give very good examples to answer this question:

Last month, the Appraisal Instituteissued a paper on the subject. In the paper,  the Institute explained that:

“Foreclosures and short sales can provide important information for appraisers, who develop valuations based on market data and market forces.”

On whether an appraiser should use distressed properties as comparables, the Institute was very direct (all items in bold were shown as bold in the original paper):

“An appraiser should not ignore foreclosure sales and short sales if consideration of such sales is necessary to develop a credible value opinion.”

And they explained the possible differences between short sales and foreclosures:

“A short sale … might have involved atypical seller motivations and so might not be an ideal comp…

A sale of a bank-owned property might have involved typical motivations, so the fact that it was a foreclosed property would not render it ineligible as a comp.”

An Appraisal Can Change Your Interest Rate

by Justin Miller on August 16, 2011 in Appraised Values, Interest Rates with No comments

I have talked about this before and how the interest rate isn’t the most important part of the mortgage and how important the appraisal is.   This is especially true in a housing market like Fort Lauderdale and the rest of South Florida due to having so many foreclosures and short sales. 

Jack Guttentag who writes a lot of real estate related articles agrees with me in his latest article “Appraisal Can Trip Up The Mortgage Quote.”  I highly recommend reading this article.

“Changes in property value may affect the price by shifting the ratio of loan amount to property value (called the “LTV”) into a higher or lower band. These bands are 65.01 to 70, 70.01 to 75, 75.01 to 80, 80.01 to 85, 85.01 to 90, and 90.01 to 95. Borrowers who take a loan amount that places them at the top of an LTV band are highly vulnerable to a price increase resulting from even a small reduction in value.”

Fort Lauderdale Appraisals

by Justin Miller on August 13, 2011 in Appraised Values with No comments

If you think the most important part of your mortgage is your interest rate you better think again.  If the property doesn’t appraise it changes everything.  Appraisals are a big issue right now due to the change in the appraisal standards and the banks and brokers being required to use an Appraisal Management Company (AMC).

When your appraisal is ordered through an AMC you never know who the appraiser is going to be, if they know the area, how long they have been in the business, if they are conservative, etc, etc.  And the banks have ownership interests in the AMC.

You need to deal with a Mortgage Bank that picks their appraisers but has them rotated so that they are still compliant with the HVCC Appraisal Standards.  I will never work for a company that doesn’t do this that is how large of a role this plays.

Make sure to check out The Wall Street Journal article, “Judgment Call: Appraisals Weigh Down Housing Sales.”

How To Contest A Low Appraisal

by Justin Miller on May 10, 2010 in Appraised Values with No comments

You first need to make sure that you understand that you, your real estate, and mortgage professional are not appraisers.  Remember, we are all biased and of course we want it to appraise for what you are offering to buy it for. 

The article does give you some good information about checking for certain mistakes.  Also, it goes on to say “Don’t be ashamed to ask questions,” Straw said. “It is an opinion of value, and I underscore ‘opinion.’ What you are getting is a report of an appraiser’s compilation of data and interpretation of data.”  

The bottom line is that it is not easy to appeal an appraisal.  I personally think that the real estate agent on the transaction should meet the appraiser at the property, provide them with any relevant information, etc. 

“Be proactive, rather than reactive,” Sellers said. “If you are aware of a foreclosure down the street that is similar to yours, or a divorce case that would cause a sale to be low for high-pressure reasons… make [the appraiser] aware of that.”

http://www.marketwatch.com/story/how-to-fight-back-against-a-low-home-appraisal-2010-05-10?siteid=rss&rss=1

Appraisal Management Companies Conflict of Interest

by Justin Miller on January 29, 2010 in Appraised Values with No comments

This was not written by me but by Rob Chrisman who is a director of Capital Markets.  I found it very interesting since we have all own that the big banks have interests in the appraisal companies just like Countrywide did with Landsafe which the owned.  

“How far can an appraisal management company go toward originating mortgages? We may find out shortly. It is well know that many large companies such as Wells and BofA have interests in AVM’s but recently a story has made the press about an appraisal company getting involved in mortgage banking. Is it a possible conflict of interest? Stay tuned.”

http://www.prweb.com/releases/appraisal_management/hvcc_compliance/prweb3494924.htm 

Appraisals Continue To Devalue Devalued Properties

by Justin Miller on December 30, 2009 in Appraised Values with No comments

This Q&A from MarketWatch talks about changing appraisal standards and using short sales and foreclosures as comparables.  This is a big issue and the title of this post is exactly what has been happening. 

I see this day in and day out since most of my business is in the Fort Lauderdale, Florida area and we have been hit so hard by the housing bubble.  Appraisers just aren’t able to give the adjustments that are deserved for the condition of the property.  It’s not because of the appraiser and you could even argue it’s not the banks doing but it is due to the secondary market.  I really don’t care who is to blame but they need to change it especially since if you are a normal seller, not a distressed sale, you won’t get what you should for your property. 

http://www.marketwatch.com/story/is-it-time-to-change-home-appraisal-practices-2009-12-30?siteid=rss&rss=1 

Renovations Aren’t Paying Off

by Justin Miller on December 18, 2009 in Appraised Values with No comments

Like they used to according to the article below from CNNMoney.  I would have to agree based on what I see with appraisals.  Appraisers just aren’t able to give the adjustments that a property should receive for upgrades and renovations.  But then again I am in the Fort Lauderdale and South Florida market where your comparable sales are foreclosures and short sales. 

I am not a real estate agent but I am sure it helps you to sell your home faster so depending on how much faster it enables you, you might just recoup the costs.  For example, if a renovated home sells 2 months faster the seller saves 2 months worth of taxes and insurance. 

“The most financially successful jobs are smaller-scale, lower-cost renovations that improve the exterior appearance of homes. In this down real estate market, curb appeal is king.”

http://money.cnn.com/2009/12/18/real_estate/return_on_renovations/index.htm?section=money_realestate&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_realestate+%28Real+Estate%29

Home Pricing Calculator

by Justin Miller on December 4, 2009 in Appraised Values with No comments

This is from the Federal Housing Finance Agency’s website.  Although nothing is right on the money, it is fun to play with. 

Here is their disclaimer just as I mentioned about Zillow.com.  “When using the House Price Calculator, please note that it does not project the actual value of any particular house. Rather, it projects what a given house purchased at a point in time would be worth today if it appreciated at the average appreciation rate of all homes in the area. The actual value of any house will depend on the local real estate market, house condition and age, home improvements made and needed, and many other factors. Consult a qualified real estate appraiser in your area to obtain a professional estimate of the current value of your home…….”

 http://www.fhfa.gov/Default.aspx?Page=86 

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