Posts

Computers Replacing Appraisers – Coming Soon? Hopefully Not

APPRAISAL STORIES Story #1 We had a borrower come to us a few weeks ago to refinance b/c she needed cash to repair the inside of her home that had been badly damaged by a burst water pipe and the resulting flood. B/c of the extensive damage, our only option was a 203k (rehab) loan […]Read More

Repairs Prior to Close or Prior to Owning the House

Appraisers often call out condition, health and safety, or repair issues that need to be addressed prior to close. Examples include missing floor coverings or water-heater straps, or peeling paint. If the repairs are minor, there is usually not a problem. Significant repairs present problems, however, because sellers often are unable to do them (REOs, […]Read More

Local Lenders Are Better!

JVM takes care of buyers in California’s hot market The Wall Street Journal featured an article recently that stressed that buyers in a competitive market need a local lender with a stellar reputation, an ability to close quickly, great communication skills, and local appraisers. JVM Lending is a local lender, covering all of California, that […]Read More

Not Enough Appraisers For Current Loan Volume; Thankless Job

Due to the very low rates and recent surge in loan volume, there are simply not enough appraisers to meet the current demand. So, despite the fact that JVM pays a large rush fee (that we eat and do not pass on to borrowers), appraisers are not picking up our orders as fast as usual. […]Read More

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

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

Major Appraisal Issues; Please Read; Not Market Value; Other Issues

As predicted, we are seeing many more appraisal issues surface this year. A few reminders/things to note: 1. Appraised value often does NOT reflect market value. This scenario surfaces all the time: There are ten offers above $900,000, but the appraisal comes in at $850,000 b/c there are simply no “closed” comparable sales available that […]Read More

“Save This Deal, JVM!” Appraisers Can’t Ignore Glaring Issues

We got an email from a Realtor that said: “Save this Deal, JVM.” I point that out b/c we get similar emails every week b/c rookie loan officers at other lenders miss deal killing issues. But alas, we were not able to save this particular deal b/c the repair issue was too obvious. Good appraisers […]Read More

“As Is” Deal? Clean Up MLS, Social Media, Contracts

We had an “as is” transaction blow up last week b/c the appraiser referenced (rightfully so) some very negative inspection reports that were posted and referenced on MLS. The rookie listing agent forgot to clean up the MLS comments after the contract was ratified. We were able to salvage the transaction, but not without significant […]Read More

Appraised Value Often Not Market Value; Happy Thanksgiving!

This is a reminder that appraised values often do not reflect market values. Appraisers are trained to make a concerted effort to correlate to contract price whenever there is a wide range of adjusted values. In addition, appraisers are severely constrained by appraisal and underwriting guidelines. We see extreme examples of this in very hot […]Read More

Interacting With Appraisers; Appraisal Comp Criteria

As a lender, we are never allowed to directly communicate with appraisers before an appraisal is done. Real estate agents can, however, communicate with appraisers and many do with great skill, particularly when they meet appraisers at properties. There a few things to remember when meeting appraisers. First, most are much smarter than people realize. […]Read More

Calling Listing Agents & Touting Appraisers, Pre-Underwrites & Speed

Many of the Realtors we work with have us call listing agents every time they make an offer, and for good reason – b/c it works. When we call listing agents, we tout the fact that we completely pre-underwrite every borrower and have a complete file in-hand (so there will be no surprises). We also […]Read More

Homes In Poor Condition Revisited – Reports & Visible Repair Needs

We currently have an escrow that is stalled b/c the property has significant condition issues that we were not aware of until the appraiser inspected the property. There is conspicuous dry rot, a sagging rear deck, and an adverse pest report that is referenced on MLS. In situations like this, the appraiser has to disclose […]Read More

Delay The Appraisal Inspection If Pendings Closing Soon

Appraisers cannot correlate to any comparable sales that close after the appraisal date (the date of inspection). In “hot markets” this is a very important consideration b/c the necessary comps are often pending. Appraisal inspections should be delayed until after necessary pending sales close. If an appraisal comes in low and a higher priced pending […]Read More

“Site Condos” For Multiple Units When Lot Splits Are Not Allowed

We are seeing “Site Condos” more often than ever lately. This is b/c many cities, like Berkeley, will not allow small lots to be split into multiple parcels, but they will allow multiple units on a single lot. B/c of this many developers opt to convert small lots into “site condos” or condo units that […]Read More

No Value to Un-Permitted Space Unless Comps Have Similar Space

We were asked about an Oakland property today with three bedrooms and one bath upstairs (permitted), and three bedrooms and one bath downstairs (un-permitted). The issue is this: The Oakland market gives tremendous value to un-permitted space, but appraisers are usually not allowed to. So getting the property to appraise will be difficult. Appraisers have […]Read More

Cannot Give Value to Un-Permitted Space, In Most Cases

Most lenders allow space built without permits, as long as it was constructed properly and there are no health or safety issues, such as the presence of a stove. Appraisers can tell when there is un-permitted space either by appearance (garage conversion) or when the measured gross living area does not match the county records. […]Read More

Unpermitted Kitchens Need to Become Wet Bars (Yank Out Stove)

We have a purchase involving a full un-permitted kitchen in a basement area. We instructed the Realtor to simply remove the stove before the appraiser arrives and call the area a “really nice wet bar” with a refrigerator, lots of cabinetry, large counters, and a big gap where the stove used to be. I am […]Read More

FHA Properties Don’t Need to Be In Better Condition Than Conventional

A borrower in need of FHA financing called this week to ask about a property she wanted to buy. She was concerned that the property’s sloping floor and potential foundation issues would prevent her from getting FHA financing. We pointed out that the sloping floor and foundation issues, if clearly visible, will prevent her from […]Read More

Value Is Clear But Comps Are Not; Defense of Appraisers

We recently had a refi client whose house was unequivocally worth over $800,000. We knew this b/c his neighbor’s near-model-match home was “pending” at $805,000, after being on the market for less than a day. Our refi client needed a $750,000 appraisal to obtain the ARM financing he desired, but we could not come close […]Read More

What Realtors Can Say To Appraiser – Anything; Comp Guidelines

We, as a lender, are never allowed to communicate with appraisers in any manner. We can only order appraisals via a management company or some other independent “go-between.” Realtors, however, can communicate with appraisers and we highly recommend it. Realtors often ask us what they are “allowed to say.” Our answer is: “anything, as long […]Read More

Repairs Prior to Close or Prior to Owning the House

Appraisers often call out condition, health and safety, or repair issues that need to be addressed prior to close. Examples include missing floor coverings or water-heater straps, or peeling paint. If the repairs are minor, there is usually not a problem. Significant repairs present problems, however, because sellers often are unable to do them (REOs, […]Read More

Plug-in Carbon Monoxide Detectors

Appraisers look for Carbon Monoxide (CO) detectors on every floor of every dwelling now, as CO detectors are required by law. If an appraiser does not find a CO detector, he “calls out” its absence. A CO detector then has to be installed, and the appraiser has to re-inspect, causing additional charges and delays. We […]Read More

Price Per Square Foot Fallacy; Appraisers Adjust $55 to $100 PSF

We have a buyer who was very upset because his appraisal came in at $605,000, even though his purchase price was $650,000. His frustration was justified because the house is probably worth $650,000 in this very hot market; he could resell the home tomorrow for $650,000 if he had too. Unfortunately, appraised values and market […]Read More

In Defense of Appraisers

Everyone has horror stories about appraisers missing or ignoring obvious comparable sales, correlating to the absolutely lowest end of the market, or calling out ridiculously insignificant condition issues. We have had hundreds of transactions blown up by incompetent appraisers. With that said, we are going to defend the many excellent appraisers still working in the […]Read More

Rates Up because of Fiscal Cliff Deal; Leaky Roofs – Options?

If a property has a leaky roof, there are several options and considerations. First, if the buyer and seller do not want to get the roof repaired or replaced prior to close, the best hope is to make sure the roof leak and water damage do not show. They must also ensure all references to […]Read More

Appraisal Horror Story – If Appraisers Only Knew the Damage Caused

We had an appraisal come in at $559,000 yesterday, a mere $2,000 below the purchase price of $561,000. It was the “2nd appraisal” for a transaction requiring two appraisals. We were confident about value, so we drew loan documents based on the first appraisal. In addition, the borrower had signed and we were ready to […]Read More

“Appraised Value” Often NOT “Market Value”; Low Appraisals

We often have buyers bidding for houses in very competitive markets because of the lack of inventory. In these situations, appraisals often come in under contract price. This frightens buyers because they think they are paying too much for the property. But, we explain to buyers that the “appraised value” often does not come close […]Read More

Appraiser Calls Out Repairs – Often Not That Serious

Appraisers frequently call out repairs of all kinds, and for some reason it has been happening more often lately. Examples include: (1) a rickety outside stairway that was a “health and safety” concern; (2) un-strapped water heaters; (3) peeling paint; (4) broken windows; (5) excess debris around the house; (6) broken roof tiles; (7) broken […]Read More