bushwacked Posted March 26, 2008 Share Posted March 26, 2008 (edited) We are in the process of finalizing our 2nd house purchase. I'm a bit nervous, but after making a substantial profit on selling our first house 1.5 years ago we decided to wait things out. We've decided now is the time to get back into the game. After 2 months of rather intensive house hunting we decided on a house that was below our short term mortgage budget (i.e...not as fancy as some of the houses we were considering). The owners are going through a divorce and the price seemed to be about 30K to 40K lower than what comparable houses were going for. The appraisal came in today at a magical level; one-thousand above our final negotiated price. The appraisal didn't even include an in-house evaluation. Apparently since our FICO scores were so "good," the loaners didn't feel the need to send the appraiser inside. Not that I really care for the time being, but the comparative houses of recently sold properties mainly consist of similar aged lesser square feet and lesser lot size houses that are going for about 20K more than what we are paying. After our first home purchase and sale (which we did by owner), I suspected that the real estate industry is somewhat crooked and that appraisals are hocus pocus. That thought has been re-enforced today. Edited March 26, 2008 by bushwacked Quote Link to comment Share on other sites More sharing options...
Puddy Posted March 26, 2008 Share Posted March 26, 2008 No doubt about it. The entire appraisal process has been under scrutiny recently due to the housing crisis. Charges of appraisers pretty much appraising homes for what the lender is seeking to loan to the buyer or owner looking to refinance. I've heard rumors of regulating the industry due to the lack of independence. Quote Link to comment Share on other sites More sharing options...
Puddy Posted March 26, 2008 Share Posted March 26, 2008 BW - I'm curious. Have you been renting for the last 1.5 years? I am going to list my house soon and am thinking of renting for a year - year and a half as many I've talked to expect the prices to continue to plummet in the Detroit area. Quote Link to comment Share on other sites More sharing options...
Yukon Cornelius Posted March 26, 2008 Share Posted March 26, 2008 (edited) yup scam and scam alert... had to fight at city hall about my taxes with the town appraiser... dick head doesn't even live in our township.. H.R. Puffenstuff he was Edited March 26, 2008 by Yukon Cornelius Quote Link to comment Share on other sites More sharing options...
muck Posted March 26, 2008 Share Posted March 26, 2008 (edited) Another log for the fire... Muckette and I bought our house for $X last June. I spoke to my bank about refinancing it. I told her that I thought we "bought it right and it should appraise for at least 1.15x, probably 1.25X, and maybe as much as 1.4x". I proceeded to describe why our spot on the planet was so great. Without her really knowing any more than that, she said, "You're probably right about the 1.25x - 1.4x valuation. When would you like to schedule an appraisal?"' ...and this was just within the last month or so... Edited March 26, 2008 by muck Quote Link to comment Share on other sites More sharing options...
bushwacked Posted March 26, 2008 Author Share Posted March 26, 2008 BW - I'm curious. Have you been renting for the last 1.5 years? I am going to list my house soon and am thinking of renting for a year - year and a half as many I've talked to expect the prices to continue to plummet in the Detroit area. Yes. We thought about purchasing something up here sight unseen, before we moved up here. We decided against it and rented a house at ~60% of the cost a monthly mortgage would have been. Even though prices up here are reported as stable and not decreasing; sellers have had a big dose of reality since then and lowered asking prices. Housing prices up here have been largely immune to the market adjustment and we made a calculated gamble to buy before the Olympics at Whistler and while our "International" airport is undergoing extensive expansion. We were 2 for 2 in selling and then renting. Hoping to go 3 for 3. Quote Link to comment Share on other sites More sharing options...
SuperBalla Posted March 26, 2008 Share Posted March 26, 2008 (edited) We are in the process of finalizing our 2nd house purchase. I'm a bit nervous, but after making a substantial profit on selling our first house 1.5 years ago we decided to wait things out. We've decided now is the time to get back into the game. After 2 months of rather intensive house hunting we decided on a house that was below our short term mortgage budget (i.e...not as fancy as some of the houses we were considering). The owners are going through a divorce and the price seemed to be about 30K to 40K lower than what comparable houses were going for. The appraisal came in today at a magical level; one-thousand above our final negotiated price. The appraisal didn't even include an in-house evaluation. Apparently since our FICO scores were so "good," the loaners didn't feel the need to send the appraiser inside. Not that I really care for the time being, but the comparative houses of recently sold properties mainly consist of similar aged lesser square feet and lesser lot size houses that are going for about 20K more than what we are paying. After our first home purchase and sale (which we did by owner), I suspected that the real estate industry is somewhat crooked and that appraisals are hocus pocus. That thought has been re-enforced today. We just signed a purchase agreement on house number 2 and are trying to sell our home. I agree...appraisals are a rubber stamp industry. Even Inspectors are partially worthless. I questioned several things I saw after we bought our first home that cost us a new furnace, an outlet, and a broken window and their response... "we must have missed it." :beatshead: Edited March 26, 2008 by SuperBalla Quote Link to comment Share on other sites More sharing options...
bushwacked Posted March 26, 2008 Author Share Posted March 26, 2008 (edited) yup scam and scam alert... had to fight at city hall about my taxes with he town appraiser... dick head doesn't even live in our township.. H.R. Puffenstuff he was My dad had to do this to cause the county was counting an awkard shape small parcel on his land as a livable building space after developers cut down the 1000+ acre apple orchard behind his house and turned it into suburbia. It took some effort, a surveyor friend with a stamp, and 2 years of artificially inflated taxes before it was corrected. But I can't cry too many tears for someone who bought a house/land for 100K in 1999 that could sell for around 400K in 2008. Edited March 26, 2008 by bushwacked Quote Link to comment Share on other sites More sharing options...
bushwacked Posted March 26, 2008 Author Share Posted March 26, 2008 We just signed a purchase agreement on house number 2 and are trying to sell our home. I agree...appraisals are a rubber stamp industry. Even Inspectors are partially worthless. I questioned several things I saw after we bought our first home that cost us a new furnace, an outlet, and a broken window and their response... "we must have missed it." :beatshead: Our inspection resulted in servicing of the furnace and 900 dollars less than the original agreed price. I will pay my buddy 20$/hour to fix a few minor things stuff plus materials room and board plus beers at Boundary Bay Brewery. Balla, if you can afford 2 mortgages, even short term, you are doing good. Quote Link to comment Share on other sites More sharing options...
Riffraff Posted March 26, 2008 Share Posted March 26, 2008 (edited) My home inspection / appraisal guy made me some money as a buyer. He found roof tiles that looked great except for some slight curling on the corners of some tiles. Had a roof inspector (chosen by the buyers) agree. House was less than 15 years old. Net result: the sellers footed the bill for a brand new 30 year roof. Instant equity. The appraisal was well above our pay price and was based on the old roof. Edited March 26, 2008 by Riffraff Quote Link to comment Share on other sites More sharing options...
Atlanta Cracker Posted March 26, 2008 Share Posted March 26, 2008 The appraisal came in today at a magical level; one-thousand above our final negotiated price. By definition, the value of a home is what someone is willing to pay for it. If it's worth so much more someone would have paid it. In fact, you getting a deal just lowered what others around you will appraise for in the near future... until homes start selling for the higher values again. Quote Link to comment Share on other sites More sharing options...
Yukon Cornelius Posted March 26, 2008 Share Posted March 26, 2008 By definition, the value of a home is what someone is willing to pay for it. If it's worth so much more someone would have paid it. In fact, you getting a deal just lowered what others around you will appraise for in the near future... until homes start selling for the higher values again. or u could say what they want to tax it at Quote Link to comment Share on other sites More sharing options...
darin3 Posted March 26, 2008 Share Posted March 26, 2008 An ex of mine was a residential appraiser, and I've worked enough in mortgage to know that while they aren't scam artists, they do have too close of ties to the mortgage broker. They know the purchase price and loan amounts going in and need to hit a certain value to make sure the loan is approved. Quote Link to comment Share on other sites More sharing options...
Avernus Posted March 26, 2008 Share Posted March 26, 2008 (edited) An ex of mine was a residential appraiser, and I've worked enough in mortgage to know that while they aren't scam artists, they do have too close of ties to the mortgage broker. They know the purchase price and loan amounts going in and need to hit a certain value to make sure the loan is approved. while appraisers do have close ties to the mortgage broker, there can be some strong repercussions in just fudging the appraisal in order to make sure the estimated value matches the price that is agreed upon... of course there are shady appraisers, and even more-so these days...however the people who can hurt the shady appraiser are other appraisers as other appraisers can randomly check any appraisal to make sure there is nothing crazy.... to sum it up, most shady appraisers have a short career if they persist on being unethical by just putting whatever value they are told to put so the loan will go through... but keep in mind that appraisers are always under heat to try and get the loan put through and can be let go because there's always someone out there willing to be unethical in this process... it's really a double edged sword, but not complete BS... I finished up my appraisal courses before the deadline (Dec. 31st 2007) to where you'll now need a college degree....and while I do know what king of stuff goes on, I am not in the middle of it enough to really paint a better picture of what really goes on.. but I am willing to bet a few of the Real Estate Agents on this site know far more than I do about what is going on right now as they are right in the thick of things and have their fingers on the pulse of this "stock market" type scenario we are witnessing.. Edited March 26, 2008 by Avernus Quote Link to comment Share on other sites More sharing options...
Avernus Posted March 26, 2008 Share Posted March 26, 2008 By definition, the value of a home is what someone is willing to pay for it. If it's worth so much more someone would have paid it. In fact, you getting a deal just lowered what others around you will appraise for in the near future... until homes start selling for the higher values again. +1 Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted March 26, 2008 Share Posted March 26, 2008 Had a house appraised years ago and the appraiser reported that the roof was bearing three times the weight it was designed for and the walls were already beginning to bulge slightly. Naturally I didn't buy it. Now that was money well spent. Quote Link to comment Share on other sites More sharing options...
yo mama Posted March 26, 2008 Share Posted March 26, 2008 The appraisal came in today at a magical level; one-thousand above our final negotiated price. The appraisal didn't even include an in-house evaluation. Many appraisers are "MAI" certified. The old joke is that stands for "made as instructed." Quote Link to comment Share on other sites More sharing options...
Puddy Posted March 26, 2008 Share Posted March 26, 2008 Had a house appraised years ago and the appraiser reported that the roof was bearing three times the weight it was designed for and the walls were already beginning to bulge slightly. Naturally I didn't buy it. Now that was money well spent. Was that an appraisal or inspection? I don't think the point is that all appraisals are BS, but when you are trying to purchase or refi and the mortgage company is hiring them, things can tend to get a little dicey. Quote Link to comment Share on other sites More sharing options...
Missoula Griz Posted March 26, 2008 Share Posted March 26, 2008 They are getting pretty phony. I have a big project I am doing for a client. He is building a very large house on some beautiful river acerage. I told my appraiser I needed XX Million as value. She had to pull comps from as far as 75 miles away. I recevied the appraisal today. It came in at exactly XX Million. Going forward, the industry is considering having appraisals ordered online with the appraisal being randomly assigned. This could curtail some obvious problems. Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted March 26, 2008 Share Posted March 26, 2008 Was that an appraisal or inspection? I don't think the point is that all appraisals are BS, but when you are trying to purchase or refi and the mortgage company is hiring them, things can tend to get a little dicey. Inspection. Quote Link to comment Share on other sites More sharing options...
Chief Dick Posted March 26, 2008 Share Posted March 26, 2008 Had a house appraised years ago and the appraiser reported that the roof was bearing three times the weight it was designed for and the walls were already beginning to bulge slightly. Naturally I didn't buy it. Now that was money well spent. This is actually possible. If over the years people re-roofed by going over the existing roof, then it is possible they have too many layers for the house to support. I've seen a couple of houses like this. Quote Link to comment Share on other sites More sharing options...
Avernus Posted March 28, 2008 Share Posted March 28, 2008 They are getting pretty phony. I have a big project I am doing for a client. He is building a very large house on some beautiful river acerage. I told my appraiser I needed XX Million as value. She had to pull comps from as far as 75 miles away. I recevied the appraisal today. It came in at exactly XX Million. Going forward, the industry is considering having appraisals ordered online with the appraisal being randomly assigned. This could curtail some obvious problems. are you talking about an AVM? (automated value model)...these are computerized appraisals.... I'm not sure if you are or not...but there are more flaws in allowing computers to calculate the value of a property over a person who actually physically walks in the property.... Quote Link to comment Share on other sites More sharing options...
Outshined Posted March 28, 2008 Share Posted March 28, 2008 By definition, the value of a home is what someone is willing to pay for it. If it's worth so much more someone would have paid it. In fact, you getting a deal just lowered what others around you will appraise for in the near future... until homes start selling for the higher values again. Ding Ding...Some people cannot refinance their homes that they bought 2 years ago because the appraisal is coming in less than what they owe on it. It is all about market value and what people pay for the homes. You can't lie about that. Quote Link to comment Share on other sites More sharing options...
Missoula Griz Posted March 31, 2008 Share Posted March 31, 2008 are you talking about an AVM? (automated value model)...these are computerized appraisals.... I'm not sure if you are or not...but there are more flaws in allowing computers to calculate the value of a property over a person who actually physically walks in the property.... No I was not. The new system would be similar to ordering a current VA appraisal. The system randomly assigns the request to an appraiser on their approved list. You have very little if any contact with the assigned appraiser. Quote Link to comment Share on other sites More sharing options...
chiefjay Posted March 31, 2008 Share Posted March 31, 2008 I need a bonus appraisal so I can get rid of my PMI. Quote Link to comment Share on other sites More sharing options...
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