“Bidding Wars Create Appraisal Problems”
I have seen this part of the real estate cycle many times, but it is worse this time around. With all appraisals now going through appraisal management companies, I am seeing some pretty poor appraisal work.
Comparables that are being used are often older and lower in price than the new property for sale. Appraisals aren’t catching up the new values, let alone a property that was involved with a bidding war.
Last week, three appraisals came in lower than the sales price. One in Hampton Beach, NH, the agreed upon price was $259,500, the appraisal came in at $245,000. The listing price was $282,000, this made the seller and two Realtors very unhappy. Another was a condo Rocky Hill, CT, sale price $89,000, the appraisal came in at $80,000. Again everyone in sight was upset with us. Why us? Another is Deep River, CT, sale price $312,500, the appraisal came in at $280,000. Everyone is pissed off, especially the buyer, who was happy with the price.
Is anyone else seeing appraisals coming in below the sales price???
I do not see things getting better with appraisals anytime soon. There is something really wrong with the existing system. It started out with HVCC, which should never have become law and now is incorporated into Dodd-Frank. This is all supposed to be for the protection of the consumer. OH, Really? The sooner Dodd-Frank gets repealed the sooner real estate values will take their natural course, when it comes to value.
(Wall Street Journal) — A new development is catching home buyers off guard as the spring sales season gets under way: Bidding wars are back.
From California to Florida, many buyers are increasingly competing for the same house. Unlike the bidding wars that typified the go-go years and largely reflected surging sales, today’s are a result of supply shortages.
“It’s a little surprising because we thought bidding wars were done with,” said Andy Aley, who is looking to buy his first home in Seattle’s Beacon Hill neighborhood. The 31-year-old attorney was outbid this year when he offered up to $23,000 above the $357,000 listing price and agreed to waive inspections and other closing conditions.
Competitive bidding in the current environment isn’t producing huge price increases or leaving sellers with hefty profits, as occurred during the housing boom. Still, the bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump.
An index that measures the number of contracts signed to purchase previously owned homes rose in March to its highest level in nearly two years, up 12.8% from a year ago and 4.1% from February, the National Association of Realtors reported on Thursday.
“We very much believe we’ve hit bottom,” said Ivy Zelman, chief executive of a research firm, who was among the first to warn of a downturn seven years ago. Earlier this week, she raised her home-price forecast for the year, calling for a 1% annual gain, up from a 1% decline.
Joe Petrowsky, NMLS #6869
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