You have to click on the link below to see the “Median Error” for Miami-Fort Lauderdale, it is 22.5%. How can this be? Well, Zillow doesn’t take into account property location, upgrades, condition, seller assist, etc.
It is nice to see the view of the area and what your neighbor’s home sold for but that’s about it.
http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm
MillerOnMortgages.com- Staying updated on the current mortgage market in Fort Lauderdale, Miami, and Palm Beach
The new rule that mortgage brokers and others have to order appraisals through a management company is still being argued. Although I don’t have to order my appraisals through a management company, I am also opposed to this new rule because it is hurting our entire industry and real estate market.
So how are they making out with getting this changed? It is hard to say and who knows what will become of it. The article below makes it sound like they are getting somewhere but you never know. If you are unfamiliar with how it is affecting the industry make sure to read this article.
It is causing property values to fall more than they should. “To say a house that needs $200,000 in repairs to make it livable should appraise at the same level as a new house next door is ridiculous,” said Howard. “Right now, using these foreclosures as comparables without adjusting for condition can go unchallenged.”
This is something new that I haven’t seen. “Squeezed by a drop in fees, some appraisers are compensating by driving long distances to handle more assignments. Their wanderings are raising questions about whether they know enough about the neighborhoods to accurately assess the value of homes—which has implications for both home buyers and owners.”
The article below has 5 good things for you to follow when it comes to the appraised value of your home.
Fannie Mae and Freddie Mac are trying to defend their new appraisal rule, HVCC, by saying that appraisers must have experience in those geographical areas. What they leave out is how conservative they are all being, how the comparables don’t take into account the condition of the property like they should, the costs involved, etc.
“The two government-backed mortgage investors told mortgage lenders that appraisers must have experience in the geographic areas where they get assignments. Brokers have complained recently about what they see as a growing number of appraisers traveling outside the areas they know best, resulting in less-accurate appraisals.
Fannie and Freddie also said the code doesn’t bar appraisers from talking with real-estate agents.”
http://online.wsj.com/article/SB124830543450973871.html#mod=todays_us_page_one
That is a tough question. I am not an expert when it comes to this seeing as I can barely change a light bulb but I do have an opinion. If you are making home improvements in South Florida where the bulk of properties that are selling are short sales and foreclosures, I wouldn’t do it if you are trying to sell soon. You won’t get out what you put into it.
The good news is that construction costs have come down so long term it could be good for you.
“The short answer is that you’re probably better off continuing to save as much as you can for retirement over next five years.
That’s not to say that you ought to let your house collapse around you in the meantime. Or that you shouldn’t do anything to make it more appealing before you sell (or, for that matter, more livable while you’re still there).”
Great question and one that I don’t know the answer to but there is a website that will predict it for you.
I am not a hypocrite, okay maybe a little, but an article from The Wall Street Journal does make some valid points on why they went to the new Home Valuation Conduct Code (HVCC). However, it does leave out the ability for clients to take an appraisal to another lender, how much they charge for them, what percentage ownership banks have in them, and the inexperienced appraisers.
“Left unexplained is how Mr. Yun and others can decide which “valuations” are faulty. Of course, it would be far too cynical to suspect that that the Realtors classify as faulty any appraisal that stands in the way of a commission check. Still, the issue is tricky–and all the moaning in the world is unlikely to make much difference.
An appraisal is merely an educated guess about the price a home might fetch. It’s true that an experienced and intelligent appraiser knows tricks of the trade that allow him or her to make a better guess than I could. And regulations such as the national Uniform Standards of Professional Appraisal Practice, or USPAP, provide detailed instructions of how to go about this vital chore. But the appraisal is still at best a good guess, and it’s harder to make such guesses when the national housing market is in a freefall the likes of which no living appraiser has ever seen.”
http://blogs.wsj.com/developments/2009/06/24/whats-with-all-the-moaning-about-home-appraisals/
As I have mentioned before the new appraisal process is creating chaos. Luckily I am with bank in a depreciating market here in South Florida and we have our own list of appraisers that we have had relationships with. Others aren’t as luck since they have to order through the Appraisal Management Companies which I have been told the banks have an ownership interest in 80% of these companies. Again, this is what I am told so take it with a grain of salt however it is probably accurate.
“In the past month, we have suddenly been bombarded with many stories of, at the last moment, transactions falling apart because appraisals are coming in unrealistically low,” said National Association of Realtors Chief Economist Lawrence Yun. “As a result it opens up a new round of negotiations between a buyer and a seller or in many cases the buyer just steps away.”
The banks are helping to bring down property values even more by their strict standards. An appraiser typically needs comparable sales within the past 6 months. The banks are requiring them to be in the last 3 months, an active sale, a pending sale, and you aren’t getting much for having upgrades and a sound property. Put on top of that the new guidelines that they have for ordering appraisals. The article below mentions how a lot of the appraisers are inexperienced. It is funny that they say that because prior to reading this article the appraiser I have used in the past said the exact same thing. They also go onto say that the banks are profiting from this and the appraisers are getting paid much less than what they would have received prior to the change.
Located in South Florida, Justin Miller has established himself as a leader in the mortgage community for his expert advice and understanding of the current real estate climate. Contact him.
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