Tag Archive for: appraisal

Declining Markets Force Banks To Increase Down Payment Requirements; What To Do?

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In January, I blogged about appraisers checking “The Dreaded Declining Markets” box on appraisals. I highly recommend re-reading that blog, as the issue is much more prominent now – particularly with commercial banks offering jumbo loans. Here are some of the key points I made: (1) it is appraisers who make the designation and not […]Read More

What is a Real Estate Appraisal?

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A real estate appraisal is a professional assessment of the value of a property. This assessment is typically conducted by a licensed appraiser, who will consider various factors to determine the property’s fair market value. Real estate appraisals are often used for a variety of purposes, including assessing the value of a property for sale […]Read More

Condo vs. Townhome vs. PUD

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This is another reminder that condos are not distinguishable from PUDs (Planned Unit Development units) by appearance alone. Attached side-by-side two-story units that all touch the ground can be zoned “CONDO” or “PUD.” Complexes with units that “float” (that do not touch the ground) will almost always be zoned condo (PUDs must touch the ground).Read More

Appraisers Can’t Ignore “Bad” Comparable Sales; Agents Shouldn’t Either

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AGENTS WERE LIVID WHEN APPRAISAL CAME IN LOW We recently had an appraisal come in $25,000 under contract price – and the agents were irate! They sent us comps that they insisted the appraiser should correlate to – but: (1) the comps were in another development a few miles away; and (2) the comps were […]Read More

Bedroom Counts And Home Values – A Very Big Deal!

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WHAT CONSTITUTES A BEDROOM? I wrote a blog last year called What Constitutes A Bedroom? in response to an agent who was angry because our appraiser refused to deem a 42 square foot (sf) room “a bedroom.” The appraisal came in low because the house was correctly deemed a two-bedroom instead of a three-bedroom, as […]Read More

Why Appraised Values Have To “Season” After A Purchase

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“I just bought the property for $800,000 but it is worth $1,000,000 now, and I would like to refi using the higher appraised value…” We get emails like the above all the time, and sometimes we can garner the higher appraised value. But often we can’t. This is why. APPRAISERS CORRELATE TO PURCHASE PRICE This […]Read More

Appraisal Reviews = Collateral Reviews = CDAs = DELAYS (Mostly For Jumbo)

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The appraisal review requirement is one of the reasons why jumbo loans take at least a week longer to close than conforming (Fannie/Freddie) loans.Read More

Appraisal Problems – 5 Options When Appraisals Come In Low

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Our Zillow rep told us yesterday that searches for new homes are down 25% from recent months, as buyers appear to be “fatigued” and are putting their searches on hold. Despite that fact, the market remains extraordinarily hot and we continue to see appraisals come in under contract price all too often. This should not […]Read More

Appraisers Can’t Push Values; Must Avoid Reviews/Cuts

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APPRAISAL COMES IN LOW We had an appraisal come in slightly under contract price this week. What made it a surprise was the fact that there seemed to be ample comparable sales to support the value (unusual in this market, to say the least). So, when the appraisal came in low, both agents, the seller […]Read More

Covering Appraisal Shortfalls

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Whenever the market heats up like this, particularly in the springtime, appraisals invariably come in low. This is simply because there are often no closed comparable sales (comps) that even come close to supporting current contract prices, especially when there are bidding wars. REMINDER: Appraisers can only use comps that close prior to the appraiser’s […]Read More

Low Appraisals – 5 Options When Appraisals Come In Low

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Whenever an appraisal comes in under contract price, we work quickly to consider all options with both agents and buyers, and we can usually resolve appraisal issues within a day if everyone is responsive. Below are five of the options available when an appraisal comes in under contract price. 1. Rebut the appraisal. This approach […]Read More

Manufactured Homes – Guidelines, Confusion, Tough Appraisals, Higher Rates

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With truly affordable homes getting harder and harder to find, many buyers (and agents) are looking at manufactured homes as lower-cost alternatives. But, manufactured homes are not as easy to finance as many might hope. Here are just a few considerations. Definition Of A Manufactured Home Per our mortgage bank: “any dwelling unit built on […]Read More

Comparable Sales Appraisers Can’t Use; Appraisal Reviews

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Hot markets foster appraisal issues – every time. This is b/c aggressive buyers in multiple bid situations frequently offer to pay far more for a property than what closed comparable sales can support in an appraisal. If buyers have ample cash, low appraisals are often not an issue, as buyers can simply bring in cash […]Read More

4 Things to Know About VA Home Appraisals

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VA home loans are one of the most common mortgage options among military members in California. The VA loan program offers 100% financing, which means you could buy a home with no down payment. This is a very popular option throughout all of California as we have such a large number of military personal. One […]Read More

When Appraisers Are Right (Which Is Often)

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We have an excellent pool of hand-picked appraisers that I tout often as a competitive edge. I tout them often b/c we used to get burned all the time when we were forced to use giant Appraisal Management Companies (before setting up our own appraiser pool). Several months ago, one of our appraisers came in […]Read More

Appraisal Relief’s Here, But Limited; Purchase Appraisals Going Well; Interest Rate Updates

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Fannie and Freddie released “Appraisal Relief” guidelines yesterday that consisted primarily of waiving interior inspection requirements. They agreed to accept “exterior inspection” and/or “desktop appraisals” in lieu of full, traditional appraisals. But, the relief is turning out to be more limited than we hoped. LIMITATIONS Appraisal relief is only available for conforming (Fannie and Freddie) […]Read More

What Constitutes a “Bedroom?” Ceiling Height? Closet? County Records Wrong!

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My wife Heejin spoke in front of a brokerage recently and an agent approached her afterward to complain about a transaction we closed over three years ago. The agent was still upset b/c the appraisal came in low. We researched the transaction and found out that the county records and the MLS had the bedroom […]Read More

Top Five Options For Low Appraisals

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Whenever an appraisal comes in under contract price, we work quickly to consider all options with both agents and buyers.  We can usually resolve appraisal issues within one business day if everyone is responsive.  Below are five of the options available when an appraisal comes in under contract price. 1. Rebut the appraisal. This approach […]Read More

Internal Appraisal Panel; Why We Left the Broker Channel; Never Pushing Values

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APPRAISER WHO LIVED 100 MILES FROM SUBJECT PROPERTY In October, I shared an appraisal horror story about a huge Appraisal Management Company hiring an appraiser who lived 100 miles away from our subject property. The appraiser crossed a major freeway to find comparable sales in a vastly inferior neighborhood, and came in $200,000 under contract […]Read More

Appraisal Condition/Health & Safety Issues to Watch For!

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Realtors are often frustrated about “condition” and “health & safety” issues that get called out by appraisers, and they come to us for guidance. They obviously want to avoid getting conditions called out by appraisers that will either cost too much to repair, delay closings, or kill deals altogether. Our Appraisal Manager, Jennifer Muzzall, provided […]Read More

Curb Appeal for Marketability and “Appraisability”

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BAD LANDSCAPING COSTS SELLERS $200,000 I live near a home that was on the market for nearly three months before it finally ended up selling for over $200,000 less than its original list price. In contrast, I live near another home that is the same size as the home I just referenced, and it recently […]Read More

Why Underwriters Request Inspections; Handyman Before Appraiser

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We recently had an “as is” transaction blow up because the appraiser called out significant wall cracks and dry rot. Appraisers can turn a blind eye to minor deferred maintenance, but they have to call out major (visible) items or they will lose their license. When our underwriter saw our appraiser’s photos, she asked for […]Read More

Importance Of Own Appraisal Panel! Why We Left The Broker Channel

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We used to navigate the broker channel with amazing efficiency b/c we knew every lender’s guidelines and systems so well, and our volume and reputation allowed us to curry many favors. Reminder: The “broker channel” is one where loan officers do not work for a specific mortgage bank but instead submit their loans to multiple […]Read More

Rent Backs; Gift of Equity; Appraisal Seasoning; 3% Down vs FHA

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Here are a few “Mortgage Minders.” Rent Backs. Most lenders allow sellers to “rent back” the home they just sold for as long as 60 days. If the term exceeds 60 days, however, “owner occupancy” comes into question for the buyers. Gift of Equity. Down payments can be a “gift of equity” alone (with no […]Read More

Danger! Dry Rot! This Deck Will Kill You! (Condition Flags)

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We recently had an appraiser visit a condo for an “as is” purchase appraisal, and there was a large sign stapled to the deck that said: “Danger. Dry Rot. Do NOT Stand On Deck!” Needless to say, the “as is” deal came to a screeching halt until the issue could be addressed. This was a […]Read More

Appraisal Issues and Fannie Mae’s Collateral Underwriter; The Dreaded CU Score

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High “CU Scores” are causing appraisal issues more than ever, and creating a lot of confusion. But what is this Collateral Underwriter? This Collateral Underwriter is a property appraisal review tool that was created by Fannie Mae to provide an automated collateral risk assessment to mortgage lenders as a part of their underwriting process.Read More

Paying More Than Appraised Value? Why? Appraisal Not Market Value

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Several realtors have asked why borrowers are willing to pay over appraised value. There are several reasons that we have observed: (1) the buyer is a 27 year old social media employee with $11 million in stock options, and money is not a significant concern; (2) the buyer is getting a massive gift from relatives, […]Read More

Options When Appraisal Comes in Low

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We have a highly skilled & fair appraisal panel, but in today’s hot housing market, sale prices are sometimes above the value an appraiser can fairly attribute to a home. Here are a buyer’s options when an appraisal comes in lower than the purchase price: 1. Renegotiate a price reduction with the seller. This option […]Read More

High Loan-To-Value Financing for Well-Healed Borrowers In Hot Markets

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We often discuss high loan-to-value (LTV) financing (90% to 96.5%) with borrowers who would otherwise put down 20% or more. This is b/c they are making offers in very hot markets where there are simply not enough comparable sales to support the expected contract price. High LTV financing allows borrowers to put less money down […]Read More

Appraisal Issues and Reviews More Prevalent in 2016

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We are seeing appraisal issues surface much more frequently lately. These include many more underwriter requests for 2nd appraisals or formal appraisal reviews, as well as low appraisals. A major reason for this is Fannie Mae’s increased scrutiny of appraisals in areas with a lot of appreciation. Fannie’s automated underwriter (DU) now calls for an […]Read More

Condition: Old, Tired, Worn Is OK; Health/Safety/Structural Not OK

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We recently had a Realtor call us about a property that was formerly used for the “production of medicine” (aka a pot farm). He asked whether the appraiser would call out the holes in the floor (for ventilation and grow lights) and the damage caused by the angry guard dog. The answer is yes, so […]Read More

Smart Appraisers Essential; Using Local Companies/Appraisers

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“The unique nature of the subject property necessitates going outside of the typical market area of influence to garner adequate comparable sales data.” In 1994, a really smart appraiser taught me to say that in appraisals whenever it was necessary to go outside of the neighborhood or a 1 mile radius to get comps to […]Read More

Collateral Underwriter & Appraisal Reviews; Bad News/Good News

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Last winter when Fannie Mae’s Collateral Underwriter surfaced, there was panic (and yes, it was panic) in the industry about what it would do to appraisals and closing-times in general. The panic of course turned out to be overblown and unjustified. The situation was much like TRID is now. Our industry seems to face many […]Read More

Two Appraisals Instead of Appraisal Review; Rush Fees Too

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We spend as much as $15,000 per month on extra appraisal fees that we as a company absorb and do not pass on to borrowers. One of these costs is “Rush Fees.” We order all appraisals as “rushes” and we absorb the extra cost, for several reasons: (1) we think we get better quality work […]Read More

Price Per Square Foot Analysis? Why Appraisers Don’t Use It

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Realtors and buyers often rely on a “Price Per Square Foot” analysis, but appraisers often cannot for a variety of reasons. This is a message we repeat from time to time. If comparable sales involve similar-sized homes, of similar age, on similar lots, then a “price per square foot analysis” works. But, if a 1,200 […]Read More

Strict Appraisal Rules For Comparable Sales

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Realtors often provide us with comparable sales that we (when doing rebuttals) or appraisers cannot use b/c they do not comply with appraisal guidelines. Here are some basic Comparable Sale Guidelines that we re-post periodically. a. Size: Comps need to be within 20% of the size of the subject property. For example, we usually cannot […]Read More

Lenders ALWAYS Correlate to Lower of Contract Price or Appraisal

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One of our borrowers has been in contract to purchase new construction in Oakland for almost 9 months. His plan was to put down 10%. Now that the property is ready, however, the property could easily be appraised for $100,000 over the contract price. The buyer and his agent were ecstatic b/c he now has […]Read More

Unpermitted Space is OK – No Value; No Health and Safety Issues

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One of our Realtors asked us about a house in Oakland with 1,800 square feet and 4 bedrooms and 2 baths (per MLS). The problem is that the county records indicate that the house has 1,100 square feet with 3 bedrooms and 1 bath. The house’s lower unit (1 bedroom and 1 bath) was built […]Read More

Appraisal Comes In Low? Options

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“Remember all those smart folks who said rates were going higher this year? Well, so far they’re dead wrong”This quote is from Rob Chrisman’s mortgage blog: “Remember all those smart folks who said rates were going higher this year? Well, so far they’re dead wrong” Here are a buyer’s options when an appraisal comes in […]Read More

Appraised Value Higher than Contract Price? Irrelevant

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We are financing a condo purchase in Newport Beach and the appraisal came in $13,000 over the contract price. This was a big surprise, given the strength of the current market. The buyer, of course, wanted to know if he could use the higher appraised value to push his loan-to-value ratio down to 75% and […]Read More

Waiving Appraisal Contingency? More Down or Switch to FHA

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Appraisal Contingency Appraisals are used to estimate a property’s value. Appraisers use the property’s location, condition, and the current market to determine its appraised value. The Appraisal Contingency allows the buyer to walk away from the purchase contract if the property’s appraisal comes in lower than the contract price and the seller is unwilling to come down […]Read More