Home Appraisal Did not come in!! Audra Lambert 2024
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- čas přidán 2. 04. 2024
- What you need to know about home appraisals! Don't make this mistake!
This video discusses a real live situation I recently experienced regarding appraisals on home purchases. Several of you reached out asking me a few questions about appraisals...so I created this video. Thanks so much for watching.
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I requested adjustment when it came in low because I KNEW some of the houses they were using for comps. I pointed out they had no updates at all, where I had a new architectural roof and all hardwood floors (no carpeting), and ELFA closets - every single closet in the house. The other minor updates and improvements I didn’t mention. The big things were the floors and the roof. I also mentioned the money we had spent on landscaping, I think. Which was considerable. I objected to one of the houses he used for comps because it was in a subdivision (next door to mine) that has a problem they can’t fix - a pumping station the owners have to pay for - that drives their HOA fees up MUCH higher than the one in my neighbourhood. He also used a comp from a neighbourhood with much lower quality houses - vinyl siding as opposed to all brick as in my neighbourhood. He did adjust the appraisal. I thought he did an incomplete job on the appraisal.
My husband is an appraiser, and is incredibly diligent. He finds it very important to do a thorough job and provide an accurate value.
There's really no question that lenders need to know the "true" market value of a home they are lending on (and might end up with). But it's so clear that appraisals as they are done now seem to be wildly untethered to any concept of true value. I don't doubt there are a lot of honest, smart and hardworking appraisers, but when appraisals routinely come in at exactly the offered price, you have to question what is going on.
We are selling a home, appraisal is the next step. Our realtor told us that the appraisers “bid” for the job and one appraiser notoriously comes in low and she also buys and flips properties:(
Sounds like a conflict of interest to me.
I really don't like the sounds of this...sounds rigged.
The appraiser selection system should work like tow truck dispatch to car crashes. There is a list, and the next one on the list gets the job.
I lived in a small town the appraiser was the only one in town. That woman seriously kept the value of the entire county down while she bought up everything she could. B.s.
Cheap never beats experience/quality.
Yup...agreed!! Thanks for watching..again:)
There's a saying I heard recently that seems to be true: "Cheap work is usually not good and good work is usually not cheap"
Again, Audra, ALWAYS value in your videos....yes, many injustices in this world...sadly
Hi Flo...thanks for comment. It is sad the injustices.
YES, I was able to negotiate a $35K INCREASE in the Appraisal Report for my personal property by pointed out that the Appraiser MISSED A 2nd Fireplace in the Den and an Additional Shower in the Master Bedroom (Both Permitted). Pays to READ The Entire Appraisal report from start to finish.
Thank you for this video. I’ve thought this for years but never spoke up.
You are so very welcome. Really appreciate your support.
You are right on so many different aspects. AMCs have convinced lenders to use them and pay their fees, fees that should be going to the appraiser. I could go on and on about appraisers since I am an appraiser for over 40 years. I know a lot because I have seen a lot.
The rebuttal you mentioned is actually a 'reconsideration of value.' The fees we are being paid here in the Chicago area are as low as 200 which works out to about $25 per hour which hardly covers expenses.
Things can't continue like this.
This is gold!! Thank you, Audra, for your superlative tips, and your honesty about your client's appraisal woes.
Glad it was helpful! Really appreciate your comment:)
Thank you for being real, your content and advice is top notch! :)
Glad you think so! Really appreciate your comment!!
This is exactly Trump's arguement, in that it doesn't matter what HE values properties at, ultimately, it is the BANK that determines the value. He basically did what half the Realtors do, and most of the tax assessors also.
Can't disagree with this statement. Ultimately, its the appraisers and the BANKs who verify value of a property.
The bank in question even said they’d do business with Trump again. It’s obviously a partisan witch-hunt.
In his case it's more about tax fraud on the commercial properties, paying no taxes or in some cases getting refunds based on fraudulent accounting.
Nice, insightful presentation. Home value should be based on the actual building cost of that structure plus the cost of the lot and utility improvements to the lot. Good refernce point is Home owners insurance; they will not insure a house for more than what it costs to rebuild. Builders can provide good estimates of building costs; used to be: basic construction $100/sqft; moderate upgrades $125/sqft; executive upgrades $150/sqft We need to get away from the attitude "what the market will bear" ; realtors, lenders play a key role in preventing the buyer from paying too much, and in controlling prices sellers ask. The whims of "what the market will bear" comes and goes; the actual price to rebuild the structure will be constant and present a more realistic value.
I did have an instance where an appraisal was low, but the house was at an mls junction. In fact it was small subdivisions addition, part of which was in one of the other “zones”. The appraiser redid the appraisal with the new information, it squeezed by. It was a new build in an old area. Fortunately, the house I wanted was a smallerish house!
Oh wow...good for you. So glad it worked out for you!!
Thank You for the great information! Appreciate your channel!
My pleasure! So glad you are getting value.
I have been disappointed with more than one appraisal in recent years, because the subject properties were custom homes with no real comparables. One had a lazy river in the backyard. And making matters worse, none of the comps were sold within 6-months of mine. So, they did not reflect the higher home prices. Talk about frustrating!
Ugh...sorry to hear that Tammy...its truly not a fair process.
I’m a certified appraiser in Arizona. I stopped doing lender work some time ago due to many of the AMC issues you cited. In addition, the typical form appraisals are specifically for lending purposes and not for pre listing work. This is typically better done in a general purpose form or a better option is a narrative report using something known as evidence based valuation aka a form of statistical modeling(George Dell Valumetrics) Another thing you could do is tell your buyers realtor that you had a recent appraisal. That buyers realtor could contact the amc who could possibly use the appraiser if said appraiser is on their panel. That saves turn time and might result in a fee discount. It’s also more likely to result in a congruent value. Lastly, be very specific about what the purpose, use and user of the report will be. That can make an enormous difference in the results, even on the same property.
Wow..Todd thanks so much for your insight. Great tips...really appreciate you commenting!!
Great information. Thanks for sharing your knowledge.
My pleasure! So glad you got some value!
What do appraisers do when they are no comps? Seriously; wait until you read the rest of the story...
When I went to price my house in 2022, my agent couldn't find comps (due to lot size and house size; neighboring houses were more square footage and all had garages, even on same-size lots). Being an "as-is" sale to begin with, I skipped an appraisal (knowing without comps it was just wasting money), and I cobbled together a price from checking multiple automated value estimators (throwing out the lowest and highest AMVs), and the property tax estimated market value. I wound up with the sole offer just $3,000 less than my asking price. That offer survived the buyer's home inspection, the termite inspection, etc. but I had to exercise my new home contingency and cancel the sale (nothing I wanted, let alone could afford, any place I wanted to move to).
I totally believe that if someone is willing to pay the asking price, and can qualify for the loan, then THAT IS WHAT THE PROPERTY IS WORTH>>> PERIOD. How does an appraiser cherry pick some comps and throw others away ? It's THEIR opinion. There always will be properties that lowball to sell faster for multiple reasons and others who sell higher because they are willing to wait longer. The market should decide.
@@ThisIsTheMajor But where is the collusion? The buyer takes out the loan, puts 20% down in good faith and is qualified by the bank. If they are willing to pay x amount then that is what its worth. The banks only risk is the borrower not paying it back. You really can't mitigate the risk of a bubble popping. She is right, the system is broken.
@@blazersaint144 Can't disagree that the system is broker. My only point is that there must be mechanisms in place to have objective opinions of property values. Buyers & sellers have their opinions for specific properties. Appraisers/lenders have theirs to maintain some semblance of balance within large neighborhoods/communities.
No, because people can be wrong. People do overpay. People commit fraud. Imagine that a home next to a family member is for sale. Would another family member be willing to pay a premium for it? What if Grandma can watch the kids? What if it's the only home on the market within 1 mile of the prospective buyer's job or their kids' school? They might pay extra where the typical buyer would not. Back in the 00's, there were some unscrupluous developers using unscrupulous appraisers to inflate values, and people were able to get lending for those homes, because of all the mortgage fraud going on. You'd sell a block of new construction, get the comps set up, and then just keep inflating them. That's how the housing bubble happened. Entire markets were overvalue by 50% and sometimes more.
Properties that take forever to sell are either overpriced, or unique in some way where most buyers don't want it. But an appraisal for lending purposes is never for the "right buyer". It's for the typical buyer to buy that house within a defined time period. The bank wants to know what it'll sell for given the average marketing time, because they need to unload it from their books if it comes back to them. The value is explicitly defined as the average marketing time, not waiting for someone who thinks it's sitting on Jed Clampett's oil well, and not someone willing to pay a premium because it's closer to a family member or a specific job site, or getting a loan they really shouldn't qualify for.
In my experience as an appraiser, most of the time the sale price is the market price, and if my numbers come in at within say, 5%, that's a very strong indicator that the sales price is reliable. But there are times where it's off by 10% or more, and sometimes there's no way to rationalize it let alone prove it. Then you have to come in where the data shows.
I completely agree!!!
So the bank is also in effect the Buyer
Great info again. Thank you.
Ah...thanks so much. Glad you got some value.
I love your videos -I've learned so much
I'm so glad! Thanks so much for watching!!
Hi again Audra. I commented on your last video. When we applied for
a loan on the Stone Colonial, the bank sent out an appraiser who was
not familiar with NW Philadelphia. The large homes here are really one
of a kind thus it is difficult to comp them. Well, his appraisal came in
at 250k less than the house was worth!! Being an appraiser of Antiques
I wrote to the President of the bank as to why the appraisal was wrong.
He actually came out, looked at my comps and agreed with me!! This was
in 1990, so long ago, different times!!
Love your experience!! I am thrilled to hear you fought back. Its refreshing you got somewhere with an inaccurate appraisal. "Things" are a bit different now-a-day...much more regulated. Thanks so much for sharing.
What I see that is awful is the requirements of buyers to give up all contingencies to get into contract for a home. It should be unlawful to make someone do that for what is often the most expensive purchase they will ever make .. as for appraisals. It is the banks money and it is their risk. If the buyers want to pay more - that isn’t the fault of the appraisers. As the realtor - be ready to show the appraiser how you came up with the price and the comps you used to support it. And yes - price per square feet won’t cut it.
Well said. I'm an appraiser and they can bark and holler all they want, but you are right. It's a collateral risk decision by the bank.
Oh good an appraiser! I get that most believe its the decision of the "bank" regarding risk.Remember, its not the bank making the decision, its the underwriter's decision who often times kicks back appraisals because they disagree with your evaluation. Since when are they the experts? That's just nuts. Do you really think your industry is accurate? How can 10 different appraiser have 10 different values on the same property? In the last 3 years there were countless appraisals that did not come in at value because the market was appreciating at such a rapid pace. The buyers who had additional money could purchase the house making up the difference between the purchase price and the appraisal. Those are the buyers who are sitting pretty right now because they didn't baulk at the appraisal that came in under value. The appraisal was wrong. It goes the other way too. If the market corrects, the appraisers are wrong again because they are using past comps that are higher. Please tell me you do see there is problem. Furthermore, the bank's restrictions of qualifying homebuyers is so ridged that there is very little risk for the banks. Just saying.
Well, I always come prepared to all my appraisal appointments because I never know what appraiser is going to show up and if they know what comps to use. Truly! Some appraisers are good and are familiar with the local area...some are not. The appraiser who recently did not come in at value on a property I had under contract lived 117 miles, in a different county, and did not use like kind properties. Truly unbelievable. Trust me, the banks are under such strict guidelines as it relates to qualifying buyers, there is no way a buyer is going to default on their loan. Regarding contingencies, I understand your concern...but if you were selling a house you may understand the stress the seller is going through. Why should they move out of their house before closing day unless their are some reassurances. The buyer can always back out of escrow, the question is how much is it going to cost them? Always a good idea to get inspections on a property early. Buying a house is a big decision...and there are risks involved.
In East Texas I start w County tax app.then r.e.listing(comps), then like u said a reputable prof.apprasial,then I listed ..
Great plan...that's the way to do it!!
Great video! What happen if there hasn't been that many comparable homes in your area over the past year? Our inventory has been extremely limited.
Good question! Some appraisers will do their best to use the comps in the area even if they are limited (this usually does not turn out well). Some appraisers have said they cant complete their report because there aren't enough comps in the area. This is really a problem due to low inventories.
When we bought our current house, the owner had had an appraisal for a second mortgage basically for a bridge. I made an offer that was lower than asking but not severely. I offered exactly what that second mortgage appraisal was! Although I’d been looking for a while, I wasn’t that familiar with this area. Turned out the credit union was using specific companies for appraisal and the appraiser was on the list! We were allowed to use that appraisal and simply paid the transfer fee of about $50-$60. Do I think that might ever happen again? Of course not!
Well, that's a great point. If the AMC your bank uses has an appraisal completed by one of their appraisers, then sometimes the appraisal can transfer. Its a shot in the dark...but it can happen. So glad it worked out for you.
At this time , I live in NH and people are buying houses sight unseen , no inspections , multiple bidders !
It is a s…t show
Wow..that's amazing. I bet the buyers out there run into appraisal issues. There are still a lot of cash buyers. In Southern California, our housing market is till hot. Not a lot of. inventory for us out here. Thanks for the comment.
It’s similar in Rhode Island, there are not many properties available so there are more bidding wars.
Since the appraisal system is so biased it sounds like it's best to avoid them.
Great information ❤
Glad you think so!
It sounds like regardless of getting an appraisal done the buyers will still need to get their own thru the bank unless cash buyers.
Hello from Texas Ms. Audra 🇨🇱
Thank you so much for another great discussion, and Amen to the appraisal system being broken and archaic \o/
What formula do the realtors use to land at the list price and what happens if the seller wants to ask more than the realtor thinks the home will bring?
Hello there...you were my inspiration for the appraisal video:). To be fair, I have never sold "LAND"...we don't have a lot of it out here..lol. It always comes back to the comps. If a seller wants to list their house higher than the realtor thinks is reasonable, well the agent can deny working with the seller and/or can list the property at the higher price and hope it sells. If i have an unrealistic seller, I will tell them if they want their price, then they get to pay for all the marketing, photos, video, etc. At the close of the transaction, I will credit the seller back for their expenses (but they have to use my contacts). Your price=your plan=I am not paying for it. I sell homes, not list. homes. Unrealistic sellers usually don't like what I tell them. They either come around to a reasonable price or hire an agent willing to waste their time. Not for me. If the price is slightly high and the seller has a good motivation, then I would take the risk.
Makes sense and sounds fair.
Many thanks for the reply Ms. Audra !
we are under contract as buyers and our lender asked us to sign an "appraisal waiver." but they also already sent us a preliminary appraisal result that was adequate ($15,000 over agreed upon sale price). So what is an appraisal waiver and why did we need to sign it?
I Hear ya,poke th grumpy bear,but turn it into positive biz,luv ya vids,Bobby
Thanks Bobby...I just don't like it when "things" feel wrong:)
You want your seller to show my appraiser THEIR appraisal? No way, lady! As a buyer, I’m not paying my appraiser to come in the house and be greeted by the seller with their papers in hand! I want the appraiser to make a decision based on the comps he/she finds and the walk through on the home I want to buy! No way am I paying over appraisal, either! 🙄
You will already have put an offer for the home - and if it was accepted the house will get appraised by your bank - if the appraisal comes in low, you could always walk if you put that contingency in the contract. As a seller, I would not accept a contract contingent on appraisal - do not want to be tied up for a few months. I think it depends on the market as well, if it's a hot market and I really love the home, I would pay over appraisal. In a slow market, probably not, I'd be looking for a deal.
Okay...well, I am ALWAYS present during the appraisals if I am the listing agent. If I have a trusted appraiser give an honest value, I am going to share it with the buyer's appraiser. Heck, a lot of appraisers don't even measure the square footage right. I had one appraiser give a property an adjustment for a pool...and there was no pool on site. A lot of the appraisers out there are not familiar with the area or the homes values in the area. I am getting compensated to close a deal. I am not trying to pull the wool over the appraisers eyes...trust me! If the appraisal system is so solid, then why can you get 10 different values from 10 different appraisers? It really isn't rocket science..you should know approximately the value a home you are purchasing. Furthermore, there are so few homes that are selling due to low constrained inventories that appraisers aren't pulling the correct comps. The appraisal system is broken.
@@AudraLambert If the appraisal system is so solid, then why can you get 10 different values from 10 different appraisers? Because an appraisal is an opinion, the one statement you have correct is it's not science, so not everyone will have the same opinion.
Audra, I went through an appraiser problem several years ago. The home was listed at my agent’s price. Two offers came-in on the second day after listing, one at asking price, which we accepted. The buyer’s mortgage company appraiser came in $10k lower. My agent found that the appraiser used comps from a town 70-miles away. It took a couple of days of discussion and a third appraisal before our price was accepted. A good agent is a godsend!
Thanks so much for this comment. So glad it got resolved. A lot of consumers don't see the works of amazing agents. So glad you had a great experience. Sorry to hear about the appraisal issue. Good grief.
Audra. You are right again!
Ahh...thanks!!
So then is it best, as the seller, to get an appraisal before setting a sales price?
Well, that's what I do for my sellers. Always good to know what an appraiser is going to value your property.
Hi Audra. I'm a seller. My realtor suggested to use similar comp in my neighborhood to decide on the value of my home without an appraisal to price my home. I do worry whether my listing price will be underprice. Would there be anything I can do at that time if that were the case or vice versa?
Well, if your house is underpriced, you should get multiple offers driving the price up to fair market value. It may make sense to get an appraisal completed on your property...I'd even ask the realtor if they'd be willing to cover the cost for you..can't hurt.
You always look great! No need to say you only dress up on bad days.😉🥰😊🌺
Oh thank you! Much appreciated:)
1. Why would two appraisals be ordered? Because the GSEs require this in high value properties.
2. AMCs are not required, at all. Lenders chose to offload their requirements to a middleman. Passing the cost on to everyone else.
3. 5 comps? Um, no.
4. First three are weighted? No.
5. “Bracketing comp” - not a term, but the principle applies.
6. Within a mile - This hasn’t been the case in 10 years.
You must not be in California. yes, we need 5 comps, first 3 are weighted more heavily...bracketing comp is a term most appraisers use readily out there. There is no way an appraiser would consider a comp outside the 1 mile radius unless there are no comps...however, I do live in a densely populated area. I have had some lenders order 3 appraisals...they go with the lowest one.
@@AudraLambert These are lender driven assignment requirements; not requirements initiated. Many appraisers do place the most relevant comparable on the first comp page; most that I've talked to do so because 'no one actually reads the whole report and they're more likely to look at the first page of comps."
"Bracketing", while not required to properly complete an appraisal, is still frequently required by lenders (and/or their AMCs) and it used to be a Fannie/Freddie requirement. It is no longer a Fannie/Freddie requirement, but it is the simplest way to demonstrate the market's willingness to pay for whatever feature is being "bracketed" and everyone in the real estate industry understands what it means, so many appraisers still use the term (much to my chagrin).
I have an attached garage with heat and electricity and i have a laundry room next to garage with heat and electricity....would both of them be considered "livable space"?
Well, if the sole purpose of the garage is to be a garage...and not a living space, then more than likely the garage would be considered a garage.
@@AudraLambert It could easily be either. When we were kids it was our playroom and had a couch and tv. It has "Sanitess" which is like wallpaper on the walls, plus closets and cabinets. I no longer have a couch and tv in it just some additional shelving for storage. The only thing that makes it a garage is the garage door but that was there even when it was used as our playroom. What would be the best to make it into for an appraisal? A livable room with a garage door or just a garage. Which would benefit me, the seller more?
@@smiles36njcp You need to remove the garage door and finish the entire area with same quality as the rest of the home, drywall, same exterior finishes, same flooring, same heat -A/C source. Then also consider you're losing the value of the garage. Then ask yourself, is it worth it?
I havent read all the above comments butnif you pay for an appraisal as the seller, isnt that "illegal"?
Oh, if only I had a buyer...I have a gorgeous home, offered 2K extra to the buyer's agent, and a home inspection for free.... where are the buyers??? .
Rates are starting to tick up. Buyers are very sensitive to rate changes. In my area, the next three weeks is spring fever...let's hope you get more activity. Putting out the good vibes.
property buying is with the feeling of emotion U come in U love it and its worth it for You appraisers come in with the "diagram of comparison " and do their calculation mostly using AI and that is what kills it ( the ugly house with view may be worth more than nice one without it, or the other way around) all depends on inside emotion it brings on particular person ,haha if that make sense
Arthur, you make a very good point. Appraisers aren't emotional and may not give a property the same weight the buyer does. Its really all subjective. Thanks for watching my video and appreciate the comment.
Years back in 2010 I re-fied for home improvements. They required an appraisal which I paid for. A random appraiser was used. She came to my home and inspected the property and arrived at an amount which worked for my purposes. The lender set that appraisal aside and then hired another who never left their home office. He lowered the appraisal using comps out of my neighborhood in lesser areas. The lender used that number instead of the one I paid for. The first appraiser then rebutted that appraisal, but to no avail. So why did in pay for an appraisal in the first place ? The lender just disregarded it and provided their own.. I felt ripped off, and couldn't do all the improvements I had planned.
Oh wow...that sounds awful. I have no idea why that occurred. Lenders are required to hire a non-biased appraisal from the Appraisal Management Company. (AMC). If your original appraisal was not from their approved AMC then they may have been required to use an appraiser from the AMC. Sounds really fishy though...why would the two appraisals be so different? So sorry!!
As the borrower, you NEVER get to engage the appraiser. A lender will not accept an appraisal from an appraiser that they do not have some form of relationship with, either directly or through an AMC. Someone did you a disservice by allowing you to hire the first appraiser if you hired her directly. I'm an appraiser that turns down work regularly when I find out someone intends to use it for borrowing and they are trying to hire me directly. The appraisal I would produce might be the best appraisal report ever written, but it will not be useful. The first appraiser (if she was engaged directly by you) should not have accepted the assignment. She should have known it would not be useful to you for its intended purpose.
How far in advance should I get an appraisal prior to listing?
Hello there...a few weeks before listing. You want the most recent "comps"...also you want the appraisal as current as possible. Best of luck!!
It was an off market sale. Just because one person is willing to pay the price does not dictate what the market value is. Most buyers are borrowing hundreds of thousands of dollars so tough if the bank doesn't want to take the risk because of a credible appraisal that came in below contract.
Its a broken process, that's for sure. The bank has the house as collateral. Good grief...what homeowner is going to walk away with a ton of equity in the bank. The whole thing angers me. The government bails the banks out anyway...not the homeowner...something to think about.
@@AudraLambert The bank does have the house a collateral, but if the transaction price is higher than the market will bear, the bank could be underwater depending on how much skin in the game the buyer has. That's why the lender, and any subsequent investor in the loan, want's an unbiased opinion of value from someone that has no interest in the transaction; you know...an appraisal.
Half of the cardboard stick hovels that pass for housing in this country should have any appraisal it gets cut in half at the outset. People are insane. Where I live in Florida you have people selling shacks that look like pig pen lived in them for 40 years - that have never been updated since the 60's, 1200sf for 750k... cracked foundations, rotted wood under all those new roof shingles... Slab foundation with rusted out iron piping...garages that flood when it rains and buyers are agreeing to NO INSPECTIONS! Cause their realtor said so...
The funny thing is most of these reprobates think the house is worth that amount, not that the dollar has lost almost all of it's value. Hence it takes 10x more dollar "units" for a purchase.
PS You look lovely when you're irritated. That color really suits you. Stunning.
Oh wow..that sounds terrible. I would never recommend ANY buyer purchase a home without a thorough home inspection. That's another great point, the appraisal process doesn't consider the condition of the home or know about any of the issues the property is being burdened with...UGH. Thanks so much for the compliment..means a lot!!
Can the seller disagree with appraisal? If so, what can they do?
A seller can disagree with the appraisal...but usually little can be done. You'll have to rebuttal the appraiser's comps. I have never had an appraiser adjust the value of any appraisal. You can ask the mortgage company to reorder an appraisal...but the buyer may not want to pay for it or proceed. It's a messed up system.
@@AudraLambert Yes it is. Thank you very much.
As the seller, the only thing you can do is hold your ground and be prepared to change buyers.
So what happens to the last appraisal of the last property that your appraiser did? Did your seller present it to the buyer? If not, did the buyer get a new appraisal later that agrees with being 250k more?
All formal reports are required to be given to the buyer. The property in question had multiple offers and drove the price up over the original asking price. The buyer was cash on the property.
@@AudraLambert considering the possibility of seller’s appraisal coming in lower than what the house could sell for, would you still recommend seller doing appraisal?
What if you own your home and you don’t need a loan?
I did an appraisal for my folks house. It let me know how much the house was worth. I accepted the cash offer near the appraisal and not the higher offer needing a mortgage. There were no correct comps, a larger lot with stream and pond on the property line. The appraisal was much more than the low ball offers I was getting.
Well, you only need to be concerned if you go to sell your home. The appraisal is very important to your buyer if they are getting a loan. It a good idea to get an appraisal on your property if you are going to sell your home so you know what the appraised value is. It helps you and your buyer. Realtor's aren't experts in home values...just an FYI.
🙏🏽 Thank you
When I asked my selling agent if I should order an appraisal she said…. “Every seller is welcome to get and pay for an independent appraisal. Most don’t because what I do is similar to an appraiser, they are estimators just like us. The final price is put on a property by a ready willing and able buyer wanting to buy in the current market and price is then agreed by the seller.” Do you think that is okay? Anything I should be Leary of? She is seasoned and usually sells over 30 houses a year. Thanks! Love your channel!
Most agents don't want to offer an appraisal because its expensive. Its not something most agents offer in their services. Remember, realtors are not experts in evaluating value on a property...appraisers are (although, you know my thoughts on that). The reason I like paying for an appraisal for my clients (from an appraiser in the area) is because it helps with negotiations with the buyer and also helps me with my clients establish market value. I am sure your agent will sell your house. If she isn't used to working with an appraisal, she may not know how to negotiate it for you with the buyer's agent. If you have a lot of closes sales in the area, your agent should be able to give you an estimated value for your property. I wouldn't be too worried about it UNLESS you house is going to be the highest priced home in the area (historically speaking). Best of luck to you!!
@@AudraLambert Thank you.
Have you ever had a house appraised as a manufactured house but it was a modular? They redid the appraisal but price stayed the same. Wondering if you have ever had that happen to one of your clients? Would you think they would appraise the same? From what I have seen/heard, manufactured is usually cheaper/ sq foot and our realtor sucks... we are waiting for that contract to expire and will incorporate your 'interview at least 3 agent' rule (she is ex-family)
No, I have never had that happen. Heck I am learning everyday from this channel. Sounds fishy to me. Please do interview 3 agents. Who you work with is important.
Banks have regulations in place with real estate appraisals. Period. The bank is not going to take any risk, and that goes for taking loans against your property also.
That can not be true , Trump defrauded banks for decades.
All Banks take risks...but they want to limit their risks. Unfortunately, the appraisal process is inaccurate. If a buyer can qualify for the loan, an have great FICO scores, great job, and are putting a great deal down, the banks have less risk. The appraisal process is broken and caters to the rich. Just saying.
@@AudraLambert Ok, I see how your making this political.
@@AudraLambert Lending... Home buying... just plain-old buying anything caters to the rich. I'm not sure the appraisal process adds to on it, but it certainly does reveal it. And yeah, AMCs (and the lenders that use them) do not appear to care about the level of competence held by the appraisers they engage; or it's prioritized far below keeping the fee low and getting a report back ASAP.
The laugh cracks me up!
Breaking news, an appraisal came in around 5% less (assuming a $2million sale) in CA, where sometimes buyers get stupid and bid WAY over asking. Where such sales can ultimately trigger a much needed market correction. So the pros who appraise for a living choose to be somewhat conservative to avoid liability. Why are you surprised?
Well, I am surprised that you can have multiple appraisers come to the property and give multiple different values. Doesn't that concern you? Consumers are at the mercy of the appraisals coming in at value if they want to use a mortgage. We know the appraisal system is broken because there in no accurate measure out there to assess true value. Even appraisers agree with this statement. The homes I am selling in Orange County are still hitting record highs with multiple offers...at the high end as well. What liability does an appraiser have exactly? Does the bank sue them for coming in at the wrong value? I think not. If a buyer is putting 20% down, are they really going to walk away from a house? Probably not. Here's the deal, when the market is appreciating and inventories are tight, buyers will pay a premium for scarce products...the law of supply and demand. There have been countless appraisals that did not come in at value over the last three years because of rapid appreciation the housing market experienced. Multiple offers were the norm and most consumers would thing that the buyers were paying way over price. Well, I can promise you most the buyers who did not hop in the market in the last 3 years probably regret it. To be fair, I have never seen the housing market skyrocket like it has in the last few years. The bottom line: the market will bear what the market will bear. There are no adjustments on the appraisal form to give these types of variances in market appreciation. Appraisals don't "protect" the consumer...no way. They are there to minimize the risk for the bank...which is a whole other can of worms. Its a messed up process where only the affluent can purchase homes where the appraisal doesn't come in at value because they have the reserves to do so. I promise you, the people who purchased homes in the last three years where the appraisal didn't come in at value, have made thousands, hundred of thousands, even millions by not weighing the appraisal values heavily. Even in a housing market that is trending down, the appraisers still get it wrong because they are using past comps with higher values. Its messed up. I am not surprised...I am annoyed that a broken system takes away hard working American's dreams. Not cool.
@@AudraLambert A 5% fluctuation in value doesn't concern me. I would expect that. What concerns me is situations like the Austins, an African American family in Marin City, CA who got two different appraisals for the same house, one for $995k after moving in (when it appraised for $1.45M less than a year earlier before buying it) and a 2nd appraisal after 'whitewashing' the home for $1.4825M. And the fact that according to a 2021 Freddie Mac study confirming that blacks and latinos are twice as likely as whites to get low appraisals.
You make it sound as if the appraisal process is in place to help people buy houses. With all your experience you must know that the appraisal process exists to ensure the public trust against possible inflated prices ALSO to protect the lenders investment. After all it is the bank’s money that is at risk, not the buyers and certainly not the real estate agent. You are way way off base here.
No no...I am not way off base. I think you misunderstood my perspective. First off, doesn't the government protect the banks anyway? (okay...not trying to get political). My point is the appraisal process is broken. In the example I gave in the video, the appraiser who performed the valuation lived 117 miles away, in a different county, and was using comps that were not like kind properties for their evaluation. The appraisal that did come in at value liked 2 miles away and understood the area. Hmmm...who do you think was more accurate with their evaluation. Please tell me how an inaccurate appraisal protects the banks?...especially when a buyer is putting 20% down. Give me a break..is a buyer really going to walk way with 20% equity in a property, ruin their credit? I don't think so. The correction in 2008 was because unqualified buyers purchased homes with little to no money down. That's not the case here. I am not disagreeing with you that prices continue to rise. If someone can qualify for the property and the comps support the price, then so be it. Now, something to think about...what if the market corrects again, do those appraisals protect the bank? NO, because the appraisers are using past comps with higher values...this does not protect the banks at all. How can 10 different appraiser come to the same house and give 10 different values. The system is broken. Just my opinion.
@@AudraLambert The process of selecting and engaging the appraiser IS broken. I've been appraising since 2006 (not a ridiculously long time, but long enough). Most of my work up until the past couple of years has been lending work; now it's maybe 20% of my practice and I'm likely to shrink it down to an even lower percentage. The lowest price/fastest turn-time is your biggest problem (now it's only a small problem for me). There's no excuse for an appraiser to be traveling 100+ miles to appraise all but the very most unusual properties that might require specialized expertise in an area as densely populated as Orange County. I'm not taking much lending work because many want me to work for half price and rush a report out as quickly as possible. I do a little work for the few lenders that are OK with paying properly.
Apprasers do not fully consider the problem of flood zones. I don't want to live in any of the riskier flood zones. To me, a home NOT in a flood zone is worth about $30,000 more than one in a flood zone. But idiot home buyers still pay top dollar for homes that are very likely to flood in the next 30 years. A home value should be based on the value of the construction and the availability of features, not a price that home sellers set. Home sellers are driving prices up, up, up, waaaaayyyy above what salaries in the area can bear. (And even people with $$$ don't want to overpay for a property that they are not able to sell later.)
Hello there...yes, I am not a big fan of flood zones. You are right that appraisers don't consider flood zones or any other hazards around the area. They only go off comps. That is why you ,as the buyer, need to inspect everything you can possible think of on a property you are considering buying. Your agent should be assisting with this as well. Thanks for commenting. Very good points.
If the subject property in not in a flood zone and the and the appraiser has used comparable sales that are in a flood zone without providing an analysis addressing that difference, the appraisal is defective in my opinion. Ideally, one wouldn't mix flood zone with non-flood zone properties, but that isn't always possible.
Audra, another very informative video! Could that home seller offer $100k of owner financing to help the buyer make the deal? Like with a 7 year balloon? I wonder if that would make the deal happen.
Surely, seller would be taking on a grave risk of the buyer defaulting, and would have to initiate foreclosure proceedings?
Hello there! It may have worked but the seller didn't want to take the risk. The buyers were barely qualifying...but I like the way you think!!
Agreed...too much risk for the seller.
@@lanialost1320 Every investment has some degree of risk, no? My first home, the seller held a 3 year balloon that I paid off on time. He had tremendous risk (I could have trashed the house) but I was a grateful buyer. If Audra's buyer had the income to pay but the assessment was causing the bank to lower their loan amt., I would feel comfortable lending the 100.
@@AudraLambert I don't mean to sound flippant, but the lender wasn't interested in taking on the same $100k risk your seller wasn't willing to take especially when "The buyers were barely qualifying".
lol!!!!! So what you are saying is you are ripping off the buyer
What? Did you listen to the video? Trust me, buyers want the appraisal to come in at value too. They are spending a lot of money on home inspections, their time, and the appraisal itself is expensive. They don't want some out of area appraiser who can't read comps or make the appropriate adjustments on the appraisal. Most buyers know what the value of the property is (give or take). Their agent also should know what the house is worth. By the way, the house is worth what someone is able to pay for it/qualify for it. How is it possible that we could have 5 appraiser out to a property and they would all have different values? Its a broken system. Unfortunately, its the buyers who are effected the most. Very sad.
Buyer should walk away
Laughing...hey a buyer can always walk...but they may have passed up on a great property/investment due to an appraisal that is inaccurate. In an declining market, appraisals aren't that big of deal as far as coming into value (which is actually more risk for the banks..counter intuitive)...but if the housing marketing is appreciating, there are no adjustments for that on appraisal.
That's nothing for million dollar homes. There is at least 300k up or down on each transaction.
That lender should be able to make an exception for a .25-point hit. The current market is trending up, not down.
Couldn't agree more...its unbelievable!!!
I started to like some of your videos, but you just showed your ignorance! Contract prices are not appraisal targets! You may not like what the appraisal shows the property is worth to the typical buyer, but if you have found some patsy that will pay more, that's on you! Appraisals are based on available data, try making sure the data you provide, either to the Appraiser or the MLS is accurate!! Quit whining!