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Deflation Versus The "anti-bubble"

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Elite Member
Jan 16, 2002
Professional Status
Certified General Appraiser
Speaking of deflation let me tell you guys about my last four appraisals in reverse order:

1. Yesterday I appraised a lot in an upscale suburban subdivision. Owner purchased the lot in 1994, for $25,000. I searched the sale history of all 48 lots in this section. Highest price ever paid was $26,000. Average improved site value with house is $330,000. Only lots developed have a mountain view. LO called this morning. He just talked to the bank VP about the appraisal and the VP told him to pull the old appraisal file and call me and inform me that the owner paid $25,000 in 1994, and I appraised it for that amount then. How can you pay $25,000 for a lot in 1994, and it is still worth $25,000 today in 2003? Answer: Because no lot has ever sold for more than $26,000 in the history of the development. What is an appraisal anyway?
2. Appraised a commercial HVAC’s company office. LO gave me the last appraisal done by another appraiser done in 1992 with all of the maps and stuff. I come up $10,000 higher than the last appraisal done 11-years ago. LO calls and wants to know if I can’t add another $10,000 because they need it to make an equity loan work because the VP mentioned above got a real deal from this HVAC contractor on his new home just completed and owes him a favor.
3. Appraised a duplex. It was damaged by fire in 2001, a man purchased it for $11,500 and reported he would spend $20,000 to remodel and repair the house and I appraised it on that date. Appraised it again last week at the same price. LO calls. You put the same price on it that you put on it two years ago. What the hell is going on here? What will the owner say?

This crap is happening to me 100% of the time recently. You want to know the rest of the story? I had to reach to make appraisal # 1 not look like I just copied the old appraisal amount. Actually the lot in appraisal # 2 is worth less because it does not have a mountain view but I couldn’t say that because no sale data supports it but the development pattern does support a lower value and raises questions about marketability. In the duplex appraisal due to its location, I asked myself how I came up with the last number I put on it in light of what has happened since. This morning I am re-appraising another house that I appraised in 2001.
There is an entire class of people out there that for years have supplemented their income by refinancing the inflated price of their real estate and now the jig has landed as they say and they are going cold turkey. Unfortuntely I made out pretty well myself playing the game as long as it worked, but it ain't working anymore.
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