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WSJ Article front page 12-10-02

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Frank Bertrand

Junior Member
Joined
Aug 21, 2002
Professional Status
Certified General Appraiser
State
Pennsylvania
I see the Neameath (sp?) no downpayment plans are in the news again. THe front page article details the concessions buiders and others have to do to make the sale go. Interesting that some studies point out that the default rate for those with no down payment of their own is higher than traditional buyers. But that kind of makes sense, now doesn't it?

Seems that appraisers are going to do more digging about real selling price. Now I have read that enhancements for upper end homes include trips to disney world, frequent flier miles, free vacations, child care, etc are now being offered as inducements to buy.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
An they say they don need us :roll:

Who ya gonna call?

BS PRICE Busters :p
 

Steve Owen

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Missouri
One little error I noticed in the article. It said that when the Niehmiah (sp) sale became part of the record it had a tendency to push values as appraisers used these sales for comps. In other words, the builder gives the program the downpayment amount, which the program gives to the borrower, the builder increases the price and that becomes record, which is then used by appraisers.

If you use one of these sales, you should take an above the grid adjustment for financing, thereby lowering the price before adjustment for physical considerations. Logic: they didn't really pay that much for it, they were given the down payment. Therefore, if appraisers do their job right, the program sales will not cause the overall market to increase as a result of the buyers being given their down payments.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
There are city and county-sponsored bond programs that work similar to Nieahmiah (sp). Home was listed for $95,000, sold for $106,000, with $11K in roll-ins. Found it doing a revew. Appraiser had to be aware something was wrong but made no comment or adjustment. Home being appraised was overvalued by 10% as he hung his hat on this sale.

Roger
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
It does beg the question, "Do we need a new definition
of Market Value?" Seems to me 'market value' has
to include up to 6% of sales concession paid by the
seller in buyer's closing cost or down payment.

FNMA essentially inflated the market by 6% by
changing THEIR rules, in their self interest, to
increase their market by more than 6%.

Such a change will at least make us honest in what
we do.

elliott
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Elliott:

You have a VERY valid point, with which I wrestle every time I come up against a neighborhood where there are mixed MLS/Realtor facilitated sales and FSBO's....

Exactly HOW do you determine and define the 'market' and 'probable price'?

In a heavily MLS dominated market I have no huge problem calling the sale price (less any extraordinary seller participation) the 'most probable price' and ignoring the finer points of 'in terms of cash or its equivalent'.... as the contract price is what folks THINK they are buying!

However when the 'market' gets skewed by hidden participations such as the city funded or Nehemiah-type programs it becomes a real issue.

I was recently skewered on that point and lost a customer as a result... Another appriaser played the game and won a client. I have a hard time even going to the State Board with a complaint as it is a real grey area!
 
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