Appraisal Question in Current Market

I

irvinemonkey

New member
There is something I don't get and I'm hoping someone can answer this question for me...

In today's "hot" market where sellers are listing their homes for well above what other homes sold for in the past few months, how do they anticipate to sell these if these homes don't appraise for the contract value or does the sudden lack of inventory influence the home prices that much to where appraisers recognize this and adjust their appraisals?

How do appraisers use short sale and foreclosure/REO sales in their appraisals?

I doubt many people are buying homes without the appraisal contingency. Have any of the agents out there sold a home during this "hot" period and how did the home appraise?
 
I wonder about this too... a friend of mine was trying to refi and the appraisal came out 10% lower than the one he got a year ago... so how are these homes that are going for above comps getting through appraisal unless they are all-cash purchases.
 
Just one data point but I'm in the process of a yet another refi (YAR?) and was surprised that the appraisal came back a little higher than the last one about 8 months ago.
 
In dealing with foreclosure lawsuits, most appraisers I see now use a combination of comps and market trend.

REO/Short sales are used as comps but with an asterisk.
 
a low appraisal just means that you have to bring more to closing.  sure the buyer then realizes he is "overpaying" but with lack of inventory, it is what it is. 
 
Appraisals have a number of factors that go into them.

Parts of an appraisal make note of the market and
1. Identifies trend (are prices locally going up, staying flat, or going down)
2. Assesses inventory (as a ratio of active to sold homes).
3. Uses the best available comparables and makes adjustments for differences in each.
4. Weight may be differentially applied for a "better" comp vs. a "lesser" comp.

Anecdotally, of the last 5 appraisals I've been involved with here in IR/TUS/NTUS/SA/ORG, 4 have noted that inventory is down and prices are trending up. 1 has noted flat inventory and continued dropping prices. 

My clients that were purchasing got a sizeable price reduction from the sellers for that low appraisal :)
Your mileage may vary.

-IR2
 
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