Is an Appraisal Standing Between You and a Sale?

I have heard many real estate agents say they are so happy when they finally snag a buyer who qualifies to purchase, they simply want to roll the red carpet out for them.

Appraisal Apprehension

Appraisal Apprehension

There is no one who will not agree that to find a buyer who is willing, ready and able to purchase today is a feat within itself. But what about an appraisal? I have heard many real estate agents say they are so happy when they finally snag a buyer who qualifies to purchase, they simply want to roll the red carpet out for them. Getting both the buyer and the seller to agree to a purchase price carries a wonderful feeling of accomplishment, for all parties involved.

Next the property itself must qualify. The survey is ordered to ensure there are no encroachments and that the boundaries are correct, as well as the elevations of the property. Then the appraisal is ordered. This is where many deals are falling apart today. Banks are now choosing the appraiser, even though the buyer in most cases is the one paying for it.  He or she has no control over who does the appraisal. In many cases the lender is assigning the appraisal to someone who knows nothing about the local market. The values are coming in low and in many cases do not support the value of the sale. Unless the buyer or the seller has more money to hire another appraiser, and if the lending institution will permit it, they are simply stuck with a low value, and in most cases, no sale.

Banks and appraisers today are both scared and are trying to walk a fine line when it comes to the value of real estate and lending. Appraisers today are following a guideline known simply as HVCC, or the Home Value Code of Conduct. As I understand it this code was not implemented by Congress, the Fed or the Treasury but within the appraising world itself. Sort of an action to police it’s own, a guide line to follow.

My question is this, “Why would you not want to make sure the appraiser was at a minimum familiar with the local market to ensure that the highest and best use of the property was taken into consideration and thus the best value given to it.” I was taught many years ago in real estate school, an appraisal is nothing more then an opinion of value and it is driven by what a seller is willing to sell for and how much the buyer is willing to pay that determines the value of property. If this were not true then we would all still be buying homes for around five thousand dollars, as they were priced in the thirties.

The Real Estate market must be fixed before our economy will rebound. Our system should be doing everything possible to make sure it is being jump started. Having transactions fall apart simply due to a low appraisal by someone who doesn’t know the local market is frankly unacceptable.

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1 Comment

  1. helenotoole

    I had a friend who finally after nineteen months found a buyer, had a contract and the buyer was approved for the loan at the bank, it all fell apart due to an appraisal that was absolutely from another planet. The bank had hired an appraiser from out of town, it was determined that this was the first job he had done in her county. I agree, this is wrong and should never have happened.

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