Appraisal and loan question

C

capocorso_IHB

New member
I am finally seeing some foreclosures selling in north LA county (Valencia area) where I am eventually going to buy. My question is that even after these homes sell there is not a lot of drastic movement by the other properties. Example: FC sold for 610,000, home three doors down and the exact same model is still asking 729,000.

I realize this may be non motivated buyers, but would any appaiser or any bank these days value anything in that area more than 610,000? Isn't it pretty much impossible to find a buyer who is going to buy a home in this market for more than another comp in the area?

I did see one home drop there price from 730,000 to 629,000 overnight after the FC closed....of course it is still not sold. I think the next house in the area will sell for less than 600,000.
 
Just because they are asking more money for a house the appraisel can come in low and you are forced to accept that or use another lender and hope to get more. The appraisers are really under the gun and the good old days of an appraiser in your pocket to get the home appraised at full pop are gone. Between the underwritter looking at the file over and over and getting thier boss to look at it, no one is sticking thier neck out to help otherwise they will loose thier jobs. So no it will not fly and the people should put the pipe down and lower the price of thier home or enjoy having it on the MLS til the market turns in 4 to 5 years...
 
Lose their jobs ? Psssssh. How about <em>arrested</em> !



<a href="http://losangeles.fbi.gov/dojpressrel/pressrel07/la080207usa.htm">Appraisers and Real Estate Agents indicted</a>



and



<a href="http://www.mylot.com/nr/viewframe.aspx?id=330796&url=http://www.mortgagefraud.org/journal/appraiser-indicted-in-pennsylvania-fraud-allegations.html&type=Blog">This guy</a>



continuing...



<a href="http://ny.therealdeal.com/articles/queens-appraiser-indicted">Identity theft appraisal fraud</a>
 
My honest appraiser buddy is scratching his head trying to figure

out how to factor in foreclosures. In days of yore, when they were

few, it wouldn't be fair to use them, if there was one house in the

neighborhood in foreclosure, that really wouldn't affect everyone

else. But now. . .



The foreclosure/REO prices really do seem too low to him. REOs

are really forced sales which are low under normal circumstances.



He seems to be doing a fair number of FHA loans, as those are the

only ones that are being funded.



And sometimes it is hard to find any comps at all, tho he does seem

to manage.



That neighbor really may not be aware yet of the low price, or it

may take a while to sink in. Or, it may mean a short sale, and he

may figure what the heck, I'll leave it as it is.



Are banks there really doing short sales. I hear rumors of them;

a former client called 3 weeks ago, but they don't seem to actually

be happening.
 
<blockquote>Are banks there really doing short sales. I hear rumors of them; a former client called 3 weeks ago, but they don?t seem to actually be happening. </blockquote>


Here in Sacramento I've seen quite a few houses that appeared to be sold via short sale. I'm not certain though because months after they supposedly sold and went off the MLS they've begun popping up again as bank owned. The banks are listing these at rock bottom prices (1st qtr 2001 prices) and they are selling for more than listed. So I understand where appraisers would be hesitant to use these. The problem is that each month I'm seeing more and more of these pop up. Right now the argument could be made that they are anomalies. But that argument isn't going to hold water much longer.



LawyerLiz - I'd love to hear more from your appraiser friend. Why does he think the REO prices he's seeing are too low?
 
<blockquote>Just because they are asking more money for a house the appraisel can come in low and you are forced to accept that or use another lender and hope to get more.</blockquote>


An appraisal is the appraiser's opinion of what the house is worth. Any buyer can pay more than the house appraises for if s/he wishes. The bank, however, will lend only a percentage of what the house is appraised for. In hot markets, of course, people are more willing to pay more than a house is appraised for. In slow markets, buyers are willing to stick it out until a seller becomes realistic.



But in either case, the lender lends on appraised value or purchase price, whichever is lower. A buyer, is s/he really wants the house, is always free to come in with more down payment.
 
<blockquote>Are banks there really doing short sales. I hear rumors of them; a former client called 3 weeks ago, but they don?t seem to actually be happening.</blockquote>


I currently negotiate short sales all over the country. They most definitely are happening.
 
What a difference a couple of weeks makes. Now there are three homes in my target neighborhood that have all dropped their price below the FC of 610. One has dropped all the way to 560. Of course none of them have sold. This is falling apart faster and bigger than I had first thought. I think we are going to wait another year and change our target neighborhood to a little better area.
 
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