FHA Appraisal: No Value given for Inground Pool

[Joyce Potts]

As much as you may want to buy this property, that appraiser may have very well done a thorough a conscientious job and saved you from a costly mistake.

 

[Webbed Feet]

<....snip.....>
To the OP the reason I asked about contract price was because $6,000 difference in appraised value on a $50,000 home is different than on a $250,000 house.

It is my opinion that the appraiser is pretty arrogant in deciding he/she is good enough to be accurate to 2.4%.

Appraisers need to remember that the buyer is also a market participant and the offer should be considered part of the market.

Appraisers do not know all of the motivations of a buyer and what they think contributes to value.

It is my opinion that the appraiser is playing god assuming he had a copy of the purchase contract.

Ouch! I am forced to respond.. ...

If we assume the appraiser is arrogant over that, then that makes all the other involved real estate professionals equally arrogant over the same thing.

Appraisers need to remember that Seller financing concessions, built into sale contract agreements, do NOT represent the market value for the real estate unless they occur literally in 100% of ALL similar transactions! ... What it does represent is financing trickery, not real estate value. Being the case, this would support your thought that the appraiser should "consider" the offer, and all of it's elements, in the analyses. And that appears to be exactly what the appraiser did! You appear to be unhappy with an appraiser for considering an element of something that does not represent the real estate market for the subject, but represents a financing needs market instead for the loan.

And in my opinion, it has been in part this pressure for real estate appraisers to appraise the transactions, instead of apprasing the real estate, that has contributed to tens of thousands of people now having their homes foreclosed on and the American People paying for a trillion dollar banking bailout. Don't you agree it is time we all stop being asked to red stamp the transactions, versus appraise the real estate?

 

[Webbed Feet]

The issue is inherently caused by the lenders, not the appraisers.

Thank you for all of the replies. I'm sorry if my question annoyed some of you but I truly am a first time home buyer and don't know much about the appraisal process. The house is located in Montville, CT on a quiet cul de sac. It was listed for 257,775. The house was on the market for 10 days and after we saw it we made an offer of 261,000 with the seller paying 6,000 towards closing costs. The appraisal came in at 255,000. Our real estate agent(29 yrs experience) and the listing agent were floored, as were the owners. The house is 20 yrs old and extremely well maintained. It is 1880 sq ft. It also has 1 acre of beautifully landscaped property. Even the home inspector said that the house was exceptional. I just find it hard to believe that the appraiser couldn't come up with an additional 6,000 in value. Thank you, again, for all of your time and consideration.

I completely appreciate you are not a real estate pro and a first timer to boot at that! I only want to point out how the improper use of jargon, by other real estate professionals assumedly, tends to incorrectly shape the thinking of all involved. And it can begin to wear down those in the trade the jargon is causing issues for. So you know and appreciate. Appraisers do not "come in" at anything at all, because it's not a race. Real estate appraisal reports represent the culmination of the research performed, and finally, the opinion of the appraiser. As such, the final outcome is not a fact, it is one person's opinion. It is not the fault of our trade that the banking system uses those opinions the way the banking system uses them. The appraisal trades do not demand a single "most probable" point values like that, your banker and the secondary mortgage market does!

Next, I agree with what Norton was saying. No appraiser "comes up with" value! ... It is buyers and sellers that come up with value. What you really don't understand is, as long as any appraiser does a credible job per our trade standards, that it was the other buyers and sellers in that real estate market that did not "come up" with any additional value. We are reflecting them, not us. The "opinion" is what we believe the data from all the other buyers and sellers of similar property is telling us.

The secondary mortgage market, and/or your banker, could be asking the appraisal trades to provide a range of values instead, and not be basing your loan on just a "most probable" single point value like that. But they don't. If there is no wiggle room left for borrowers to obtain loans due to that, it is the fault of the lending world. It is not the fault of the appraisal trade. The lending world could ask it's underwriters to do their jobs and base lending choices more on the ability of a specific borrower to repay a loan by taking strong borrowers to the upper end of an appraised value range, and the weak ones to the lower end of that range. But it is lending that will not take that responsibility. Hence, they demand a one single point value and blame that for their determination to loan or not loan. Completely ignoring that appraising is not a science, but only the opinion of one person supposedly trained to provide the best opinion in an extremely difficult area to be arriving at one certain number for.

It would be very nice if the public finally understood all of this, and knew not to join in with the blame game of it all being the appraiser(s) causing these issues.

 

[ackiej25]

Again, thank you all. Our agent has provided 4 additional comps to the appraiser which may or may not make a difference. Don't you think that things may have played out differently had the appraiser not had a copy of the purchase agreement? It seems pretty ironic that the appraised value was exactly 6,000 less. Either way, we will buy the house!

 

[ZZGAMAZZ]

As an individual learns the profession, he or she subconsciously believes that the selling price, or the "necessary value," or whatever number is described in the appraisal assignment, is at least reasonably accurate, and tends to feel guilty if the opinion of value differs.

Veteran appraisers are inherently jaundiced and come to question their personal judgement if the opinion of value equals the "predetermined" amount.

Go figure...

 

[Howard Klahr]

It seems pretty ironic that the appraised value was exactly 6,000 less. Either way, we will buy the house!

It seems pretty ironic that your offer to purchase this property is exactly $6,000 less as well ($261,000 - $6,000 = $255,000). If the property was worth more, then you would likely have offered more. What is it about the property that makes you believe it is worth more than you offered?

The part about the transaction that you are unwilling to acknowledge is that the $6,000 in seller concessions is not real estate value but rather a negotiation of who is responsible for transaction costs. You need to ask yourself how much would you have offered if you as the buyer had to pay the $6,000 in transaction costs.

 

[Delta85]

My experience in CT. seems to indicate that all things being equal an in ground pool usually adds to the value of a home so I always adjust for in ground pools.

 

[NORTON]

My experience in CT. seems to indicate that all things being equal an in ground pool usually adds to the value of a home so I always adjust for in ground pools.

it seems like this is what the entire thread comes down....I'm willing to say that this is usually the thought the majority of us always have.

 

[TC]

As much as you may want to buy this property, that appraiser may have very well done a thorough a conscientious job and saved you from a costly mistake.

Just like a woman, logical.

 

[residentialguy]

It seems pretty ironic that your offer to purchase this property is exactly $6,000 less as well ($261,000 - $6,000 = $255,000). If the property was worth more, then you would likely have offered more. What is it about the property that makes you believe it is worth more than you offered?

The part about the transaction that you are unwilling to acknowledge is that the $6,000 in seller concessions is not real estate value but rather a negotiation of who is responsible for transaction costs. You need to ask yourself how much would you have offered if you as the buyer had to pay the $6,000 in transaction costs.

The above quote is worth repeating. Also, why did the seller list it for $257,775 and not $261,000? Usless a home has to sell quickly, usually people try to sell their home for as much as they can.