How important are appraisers in todays real estate? Without an adequate appraisal, your chances of obtaining a loan and buying that home are greatly diminished. Since the recent downturn in real estate that began in 2006, more homes have been lost to insufficient appraisals than ever before. During the boom, it was common for an appraiser to drive by and justify values without even viewing the interior. Homes that were being bid up by five or ten percent had no problem when it came to estimating the value. Those were the days, we thought they’d never end. Lenders were lax with their lending practices during the boom and they wanted the same from the appraisers they chose.
As the housing market tumbled, lenders were given a whole new set of stringent guidelines to follow. One of the most substantial changes were not being able to hand pick their own preferred appraiser. In the heyday, appraisers had no clout and were considered nothing more than a formality. As a matter of fact, if they accidentally came back with anything less than a full price appraisal, they could be out of work for a while. Appraisers are now chosen for the lenders and this has created its own set of problems.
Home appraisals have become an obstacle now because the subject property and appraisers might be in different towns. The familiarity and knowledge of the local market could be foreign for that appraiser to the subject property. Most realtors are now meeting the appraiser at the property with comparable sales to help substantiate the price paid for the home. Appraisers are not being penalized by the lenders for not legitimizing the value and therefore can give their honest opinion on the value, regardless of how unreasonable everyone else involved feels that appraisal might be.
When an appraiser has rendered their verdict on the value, it seems easier winning the lottery than changing their minds. Lenders will not increase the loan amount after a failed appraisal and buyers will normally not pay a higher amount than the appraised estimate. If the seller lowers their expectations and agrees to the lower price, the deal between seller and buyer continues. If the seller reneges on the adjustment, the buyer is out looking for another home and the seller is searching for another buyer. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home and easy access to view local area homes for sale in Davis, California and the surrounding communities.