Didn't Take High Offer Because Of Mean Old Appraiser

[Terrel L. Shields]

http://www.cnbc.com/2017/07/24/this...es-why-the-owners-didnt-take-the-highest.html

 

[gregb]

"Another issue is simply the availability of appraisers. There are just not enough to handle the current market."

"The appraisal industry is a candle burnt at both ends," said Ken Fears, director of housing, finance and regional economics at the Realtors group, in a recent blog post. "Regulation, an altered appraisal market structure, and compensation issues burden those currently in the industry, while poor incentives make it harder to grow the next generation of appraisers."

Primarily due to Lenders/AMC's driving appraisers out of the market.

 

[Randolph Kinney]

http://www.cnbc.com/2017/07/24/this...es-why-the-owners-didnt-take-the-highest.html

Younger, first-time buyers, are often not only mortgage-dependent but also using low-down-payment loans, which tend to be underwritten more strictly. If the appraisal comes in even slightly under the contract price, the mortgage financing usually falls through.

"The cash buyers always push out the first-time buyers," Yun noted.

Cash is a quick and clean deal not subject to a bank appraisal.

 

[Riick]

Not only is Cash quick & clean....
It's what establishes the new highs...The new price points that appraisers need, to show that the market is indeed inflating.

Without cash buyers, appraisers would keep marketplace stable, since looking backward to prior sales will never show you today's market.

 

[glenn walker]

I hate most appears they are old-grumpy-rude and do nothing to promote the business LOL

 

[residentialguy]

Not only is Cash quick & clean....
It's what establishes the new highs...The new price points that appraisers need, to show that the market is indeed inflating.

Without cash buyers, appraisers would keep marketplace stable, since looking backward to prior sales will never show you today's market.

If that is the case, they aren't appraising correctly. The market value is the most probable sale price it would sell for on the effective date, not prior to that.

 

[hastalavista]

I'm not big fan of Diana Olick. She's been covering the real estate beat for CNBC for a while, so I don't question her bona fides. But, I recall an article/spot she did a number of years ago that highlighted alleged problems with appraisals and new-home construction in large tract developments. The gist (not surprisingly) was that appraisers were not considering the activity within the new developments and using outside development sales in their appraisals.

I sent her a rather long email describing the whys/wherefores of the GSE's guidelines, quoting the sections that stated why the GSEs wanted to see outside the development comparables in support of the opinion of value. I also cited the FNMA directive that required appraisers to confirm (via the HUD-1 or other closing documents) the incentives and upgrades packages associated with developer sales if one is going to use same-development sales. I effectively stopped doing merchant newlly-constructed tract home sales because of the resistance I experienced by the developer's sales' office to provide this information along with their same-project comp data.
I suggested that she explore these requirements and consider that these rules are not appraiser-driven; they are lender/GSE driven. Never heard anything back from her.

I work in California in some relatively hot and high-priced markets. Based on my experience, in a multi-offer scenario, seasoned real estate agents are more likely than not to advise their clients to take the best offer based on its strength, not based on its price-point. It is not unusual to speak with an agent and here there were multiple bids but the buyer took the one that had the strongest financing rather than the weaker ones that relied on maximum financial leverage.

Agents, and well advised sellers understand that high offers based on maximum leverage are dependent on the ability of the data to support that mortgage approval.

A bird in the hand (cash or low LTV offer) is worth two in the bush (a higher offer dependent on maximum financing). This isn't an appraisal issue per se. It is a fact-of-the-market issue. The more one relies on financing, the greater the expectation is that the financing will be supported by market data.
This isn't about bulls-eyes or backward looking (historical) data. It's about the laws of risk and finance (the higher one goes up the leverage ladder, the higher the expectation of support to attain that height).

 

[J Grant]

A good RE agent, as Denis said, will advise to take a solid, well qualified good offer, rather than a shaky finance highest offer.

If 10 people put offers on a house, and highest offer is 300k, next highest was 295k, then 9 people think it's not worth 300k, only one high risk buyer offers the 300k...Something to consider.

 

[Tim The Enchanter]

A good RE agent, as Denis said, will advise to take a solid, well qualified good offer, rather than a shaky finance highest offer.

If 10 people put offers on a house, and highest offer is 300k, next highest was 295k, then 9 people think it's not worth 300k, only one high risk buyer offers the 300k...Something to consider.

Then there's "that guy" seller that will counter $310k. Hey, multiple offers!

 

[J Grant]

If that is the case, they aren't appraising correctly. The market value is the most probable sale price it would sell for on the effective date, not prior to that.

NO!! The language AS OF is not is not the same as ON. The most probable price ( linked to our MVO ) is what the property should transact for AS OF the effective date...as of means the prior sales up to and including the the effective date. The verbiage purposely is "as of", not "on" MV opinin of an appraisal per the MV definition on lending forms s what the subject would sell for on the effective date, the definition of MV is what the property should bring, implicit being a subject consummated sale and passed title (closed) as of the effective date. The subject SOLD on the as of effective date of appraisal, it was not still for sale, getting the highest prices offers up to signature date.

Whether anyone likes it or not, the SCA is based on historic data. . Market condition adjustments (time adjustment) bring the past data sales contact price up to present as of effective date value if market has appreciated or declined.