House appraisal in insane market

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noraz123
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Location: SF Bay Area

Re: House appraisal in insane market

Post by noraz123 »

8foot7 wrote: Wed Apr 14, 2021 3:39 pm
It's sort of stupid, isn't it? You get a bunch of people literally agreeing to buy nearly identical somethings, mostly right beside each other, for a certain price -- the very definition of market value, as money (deposits at least) changed hands for a good -- and these numbskull appraisers come in and low-ball you because a comp three miles away didn't have a porch and you do...or similar.

We purchased our home in October 2017. We opened an equity line in November 2019 which required an appraisal, which came in $20,000 below what we paid even though new homes in the neighborhood were closing above our purchase price. We refinanced this past January, same appraisal firm came, and we finally received a value for $3,000 less than we paid. Meanwhile our neighbor just sold a very comparable home five doors down for $50,000 over asking price, which was $100,000 more than their purchase price (our purchase prices per sq ft were similar). That purchase closed, money changed hands, the deal was done at that price. But somehow our similar home in a cul-de-sac a few houses away has lost $3,000 from purchase instead of gained $100-150k.
I'd bet that same appraiser would value your house for $100k more if it were your bank / financial institution issuing the mortgage for a new sale.

One of my biggest pet peeves. When it works in their benefit, the appraisals will come in as needed. When it doesn't benefit them, they become surprisingly conservative.
Golf maniac
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Re: House appraisal in insane market

Post by Golf maniac »

8foot7 wrote: Mon May 03, 2021 7:54 am
Golf maniac wrote: Sun May 02, 2021 7:15 pm
8foot7 wrote: Sun May 02, 2021 3:55 pm
Golf maniac wrote: Sun May 02, 2021 3:12 pm
8foot7 wrote: Wed Apr 14, 2021 3:39 pm

It's sort of stupid, isn't it? You get a bunch of people literally agreeing to buy nearly identical somethings, mostly right beside each other, for a certain price -- the very definition of market value, as money (deposits at least) changed hands for a good -- and these numbskull appraisers come in and low-ball you because a comp three miles away didn't have a porch and you do...or similar.

We purchased our home in October 2017. We opened an equity line in November 2019 which required an appraisal, which came in $20,000 below what we paid even though new homes in the neighborhood were closing above our purchase price. We refinanced this past January, same appraisal firm came, and we finally received a value for $3,000 less than we paid. Meanwhile our neighbor just sold a very comparable home five doors down for $50,000 over asking price, which was $100,000 more than their purchase price (our purchase prices per sq ft were similar). That purchase closed, money changed hands, the deal was done at that price. But somehow our similar home in a cul-de-sac a few houses away has lost $3,000 from purchase instead of gained $100-150k.

There is general downward bias to appraisals, I am firmly convinced. Sure, they play a role in making sure your $500,000 mortgage isn't secured by a $50,000 shack. But a corpus of unrelated people agreeing to pay generally the same amount for similar goods in essentially the same spot is by any reasonable definition the market value of that good at that time.
The appraisal is for the lender, not the buyer. It protects them from large sharp upticks in prices that may not be sustainable. If the lender needs to foreclose they need a cushion on the value when they foreclose which could be significantly less than these wild temporary increases in value. We have seen this same craziness before and it turned out really bad for the lenders.
That's what LTV restrictions are for, not appraisals.
The LTV is based on the appraisal…😂😂😂
And as I already said, 😂😂😂, the V is supposed to be the (wait for it) value.
The bank does not order an appraisal and ask the appraiser to please cushion the value in case the market turns.
The bank does not order an appraisal and ask the appraiser to please make sure in the event of a foreclosure they would still have enough meat on the bones.
A cash buyer ordering an appraisal as part of due diligence does not ask for the "#3 conservative bank special, with fries" -- the buyer asks for an appraisal, which is the...value.
Protection the bank feels it needs are captured in their setting of thresholds of LTV based on the L number against the V, NOT the V.
IT's not an LT85ofV figure.
I was in the banking industry for over 30 years so I understand the V. You seem to have a problem with appraisers who set the value for the bank. The bank is not going to believe the seller or the buyer setting up the value. The appraiser protects the bank. Obviously a cash sale a bank is not involved. But if a loan is involved the bank gets to set the value through the appraisal.
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