Just had a nice long conversation with an appraiser who is getting alot of REO and short sale appraisals. Out of frustration, I called him to seek understanding of a recent appraisal that we just got for an REO property. The property is worth 450,000 to 500,000 in repaired condition at best, assuming we used the highest priced sales in the neighborhood. The home is in very bad disrepair. We had 13 inches of rain the two days before the appraiser did his report and the house filled with water from a major roof leak. Enough water that your pant legs would be we up to 4" up. The home needs about 150,000 in repairs and updates minimum to make it worth 450,000 to 500,000 and then 450,000 might be a long shot.
The appraisal came in at $495,000 in as-is condition. No repairs were mentioned and the home was considered to be in average condition.
House has been on the market for 4 weeks, we had two offers come in, both at 250,000 and one countered at 275,500. Bank rejected because they were too far off from appraised price.
When I met with the appraiser, he was very excited to get these appraisal orders. He went on to tell me that the bank tells him which comps to use and what adjustments to make and that he rarely gets to do an appraisal based on the comps that he thinks are closest.
How would the bank benefit from overvaluing a property and letting it sit on the market? Insurance? MI? Anyone care to guess?
Values are way too high now. Not sure what appraisers are doing
One thing I do to combat this is whenever I submit an offer to the bank, I ask the Buyer's agent to submit comps to support our sales price. This becomes part of the offer or is listed as an Addendum to the offer. Of course, I review them or even help the Buyer's agent to come up with which ones to offer. They have to be a true representation of value. If there are repairs, the Buyer's agent can get bids from contractors tot submit with the offer as well. This way, the appraiser's work is partially done....or he has to invalidate our comps. I can't remember a time where this didn't work.
This is only when the offer goes first. If you let Fannie Mae establish value first....then we all know they'll come in WAY high. If you don't already know, this is so that FNMA can write their own paper at their own inflated value. If the Buyer can support the inflated value by qualifying for that value, then FNMA made a killing. And as the FNMA rep said when he appeared here in Las Vegas - "We're in this to make as much money as we can for our clients (meaning FNMA)." But FNMA's another topic. As far as other investors go, I think many feel that "holding" a house will allow it to appreciate to a higher value. (Assuming it's not vandalized too badly first.)
Good luck with this concept Superstars. Hope in helps.
The FMV manipulation has been going on for over a year now... it's a consistent practice by FNMA & FHLMC to influence the market with artificial values... which helps to skew the stats on the recovery nationally... one of the factors why we are seeing double-digit residential home value increases... imagine that...!?!?
This is crazy what has been going on as of late with values. There has to be something going on.
This obviously has hit a nerve. I see frustration and puffing up of "yeah, well YOU fix it" stuff. It seems that going after the BPO agent is like blaming the jobless guy for taking a job at $2/hr and convicting him, like there aren't 1000 people there to take his place. The instigator of the fraud needs to be incarcerated and we know this admin won't dare touch the funds that feed their political campaigns.
So, I thought people really interested in something getting fixed might be interested in what Richmond, CA is doing. They apparently are finding which mortgages were securitized and offering the investors to sell them - or they will buy them with eminent domain. Freddie is threatening to sue Richmond. So, maybe there is hope that someone, somehow will clean up this mess - at least in part. Or make fed bailouts start to be responsible for a portion of their jobs? http://www.reuters.com/article/2013/08/07/us-usa-freddiemac-richmon...
Richmond is tired of bad tax base, bad property evaluations and homeowners stuck way under water. (Well, you know this useless - worst congress ever - and whatever-you-say admin isn't going to fix anything.)