Appraisals the next real estate challenge

When you are purchasing a home or refinancing your lender will hire an appraiser to estimate the value of the property before they lend on it. But what if the only homes that have sold in neighborhood are short sales (preforeclosures) or bank owned property. The condition isn’t as good as yours but they are now your new comparable sales. Lenders in an effort to protect themselves want the most conservative estimate of value. Many economist and lenders believe housing prices will fall further. In an effort to make sure they don’t lose any more money they are encouraging below market appraisals.  In effect this helps drive housing prices down further.  Banks will only lend on the appraisal amount, any difference between the sales price and the appraisal price would have to paid by the buyer. The buyer isn’t going to pay it, so the sale doesn’t close and the home goes back on the market.  Lenders kept the boom going and now are causing an even further downside to the market.

Liz DeAmbrose, Broker-Associate Coldwell Banker   813-956-6487