The Real Estate Bloggers

Appraisers Values Coming in Too Low To Sell

Posted: 19 Jan 2011 03:13 AM PST

Appraiser If you are trying to sell your home or are in the real estate business you know one things is true these days. Finding a buyer is just the first step. Getting an appraisal to work with the offer is often a deal breaker.

According to a report in the Free Press, 40 percent of deals in Detroit are blowing up because the appraisal is coming in too low.

Appraisals, many of them inflated during the market boom, have fallen to Earth. While appraisers argue that guidelines passed in 2009 protect home buyers and lenders by giving them a realistic value for the home, Realtors and homeowners say the appraisals are too conservative.

This further depresses the housing market because most buyers are not able to put up the extra cash if there is a huge gap between what they offer for the house and what it’s appraised for — and sellers don’t want to lower the asking price if the appraisal comes in low. via FreeP

Now don’t blame the appraiser. They are the ones caught in the crossfire.

The story goes back to the mid 2000’s when appraisers were pressured by the real estate agents and the lenders to make the numbers work. If they gave an honest appraisal and blew up a deal, odds are they would not find any work again. The banks wanted to lend on anything and the agents wanted to sell anything.

So what if the homes were overvalued, it really did not matter.

So when it all blew up regulators changed the rules for appraisers.

No longer could the lender hire an appraiser directly, he had to do so through a 3^rd party.

The 3^rd party appraisal companies wanted to make money so they are hiring the lowest cost appraisers who may not know the local market as well as they did before the bubble popped. And they know for a fact if they come in too high they will never get work again from the 3^rd party referral company.

So they are coming in low. They want to work too.

And that is why getting an appraisal is so tricky these days.

We made it that way.

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Appraisers Values Coming in Too Low To Sell

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In 2005 The Fed Knew Housing Prices Were 20 Percent Overvalued

Posted: 18 Jan 2011 06:10 AM PST

Back in 2005 Federal Reserve Chairman Greenspan told us “there was a little froth in the real estate market.” Yet that was not what his economists were telling him at the time. The Federal Reserve has a 5 year moratorium on it’s meeting notes being released so we are now just being told the reality of the situation.

Instead of a little froth his economists were telling him that prices were overvalued by 20% at the time.

During 2005, the Fed raised interest rates a quarter-percentage point at every meeting, unwinding the ultra-loose policy it pursued earlier in the decade to address deflation worries after the 2001 recession. The economy at the time was growing at a healthy pace with few signs of overheating. But with reports across the U.S. indicating a bubble in the housing market, the Federal Open Market Committee spent time assessing the appreciation in home prices and what, if anything, the Fed could do about it. Fed staff economists had found that housing might be overvalued by as much as 20%, based on the historical relationship between prices and rents. via the WSJ

It would have been nice to get a little heads up Alan!

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

In 2005 The Fed Knew Housing Prices Were 20 Percent Overvalued