Do Foreclosures, Short Sales and AMC’s make it difficult to determine value?
I saw this story online today and wanted to share it. It involves the new appraisal standards and how many banks are now using AMC’s, or Appraisal Management Companies, to handle their appraisals, instead of contacting and using local appraisers that they know and are familiar with. Oftentimes, this involves the AMC sending out the cheapest appraiser that they can find, irregardless of the appraisers knowledge of the local area. What caught my eye was the opening line to the story.
“Where’s the bridge to Bald Head Island?” asked the appraiser.
The answer?
There isn’t one. You travel to Bald Head Island by ferry.
Do you think that maybe this appraiser was out of touch with the local market? I’d say absolutely.
This is a demanding market where home prices have changed dramatically, and where a realistic home value that is spot-on is more important than ever. Foreclosures and Short Sales, plus lack of sales, have made this process much harder, and more than ever, we need qualified appraisers with a STRONG local knowledge of the areas where they perform appraisals. Home values vary on a neighborhood by neighborhood, and street by street basis. A local appraiser has a stronger knowledge of individual areas located in a town or city, and probably has access to MLS data that can also improve the precision of the appraisal.
I almost lost a recent sale because of an out of town appraiser. He appraised the property at a fair market price, but checked that the area was a “declining” market, and thus the bank would not approve the loan to value ratio that my Buyer needed. Fortunately we were able to make things work and found another loan that would work my Buyer. However, the original appraisal was bogus and was not based on accurate market data.
Read the article and please share your thoughts. I think we all want an accurate value of appraisal, and it is in ALL of our interests that appraisals are like the story of Goldilocks and the Three Bears, not too low, not too high….but juuust right!
If you have an interest in Leland NC real estate or foreclosures, contact me TODAY!
