With foreclosures a large share of property sales in some areas, appraisers continue to factor in the sale price of foreclosed properties when setting values of regular properties. Appraisers are aware the practice isn’t ideal, but in some markets they’re left with little choice because of the large number of foreclosed properties.
Bill Geiger Jr., an appraiser in Cocoa Beach, Fla., told a local magazine that when he has to use a distressed property while doing an appraisal, he contacts the real estate practitioners involved in the sale and reviews computerized listings for the property to find out as much as he can about the condition of the home when it sold. He adjusts the appraisal value accordingly.
There are other factors at work in holding down valuations. Rob Johnson, vice president of lending at San Diego Funding, says lenders demand greater scrutiny of a property if the buyer has a credit score on the low end or a high debt level relative to income. That extra scrutiny can impact whether the lender decides whether to make a loan at the originally appraised value
A third factor is the fluctuation of the market, with some sellers reluctant to let go of their previous expectations.
Industry professionals had hoped that repeal of unpopular appraisal standards would help address concerns with low valuations, but repeal by itself doesn’t change the conditions appraisers face. The repeal of the standards, called the home valuation code of conduct, was enacted into law as part of the big Wall Street reform bill passed a few months ago.
Source: UPI, Steve Cook (09/28/2010)
When Pricing a home for sale, keeping or listing the home on the low side is best for Successful sale. The challenge here is overcoming the endowment effect from the home seller.
The Big Question comes in, Do you want to SELL your HOME, of just LIST your HOME? Home sellers must keep their big picture in mind of moving on to their new home and life.