FHA Appraisers Baton Rouge

http://www.fhaappraisersbatonrouge.com/ – Appraisal Update Request By Lender With An Expectation Of 10% Increase In Value Since My 2007 Appraisal…..Huh?….in 2009?

Here was my reply to this lender:

Please find attached 3 SMART Appraiser MLS graphs showing both Median Sales Price and Median Listing Price Declines for the subject’s “Sub -Market”. These are the solds and listings actually comparable to the subject home since 6/1/2006 and there are only 24 of them. So, this is not a big, broad general opinion of subject’s MLS Areas.

Since 12/2007, SMART shows a -11.4% Decline in Median Sales Prices of competing solds

Since 04/2008, SMART shows a -15.8% Decline in Median Sales Prices of competing solds

Since 04/2008, SMART shows a -13.8% Decline in Median Listing Prices of competing Listings

So, this market is Declining, sales generally take over 6 months to sell and you’re at a 95% Listing To Sales Price Ratio – All of these not being positive indicators for your refinance.

So, it would have been totally unrealistic in this market to have expected an increase in value of any sort. Within this housing market, home values have either been stable or declining (not majorly), not generally increasing since the last appraisal in 2007. Based on the SMART Median Sales Price Chart from 4/08 to Present, the appraiser would apply “declining markets adjustments” to the comps used and deduct -2% to -15% from their sold price, depending on how recent the sold comps took place. The more recent the sold comp, the less adjustment. The older a sold comp’s date of sale, say in 2008, the more adjustment applied. This new requirement would possibly blow any chance of this home appraising for what it did in 2007, $###,###. Plus, the Listing-To-Sales Price Ratio currently is only running at 95% of listing price. This means that buyers are only willing to pay 95% of the average listing price, meaning sellers are more motivated to sell. The new requirement is to use 2-3 listings in appraisals and I would have to deduct -5% from each listing price.

As you can see, Fannie and Freddie Mac have totally re-engineered the appraisal process, requiring much deeper market analysis and much more stringent market supported adjustments. This is where the “media-driven” terms “Low Appraisals” are originating. And, how did the media catch this “Low Appraisals” ball and run with it as they are doing? Are they being paid to do so? And, mortgage underwriting has changed drastically – they want sold comps within 90 days and no more than a 1 mile distance from subject……and this can be totally unrealistic on their part. There have been far fewer sales taking place in all markets in this price range.

No, the XXXXX XXXXXX Meadow Ave 6/2009 sale won’t help. This home is 752sf smaller in living area size than subject’s X,XXXsf. If this sale were used as a comp, it would mean a gross living area line adjustment of over 10% to 20% and underwriting tolerance total for the gross/net differences in sold comps is 10% to 15%. If this comp were used as a sale, any underwriter or appraiser would not weigh it heavily because of the huge difference in living area size and the resulting gross/net adjustments that would exceed underwriting guidelines.

I do appreciate the opportunity to have appraised this home in 2007, Sincerely! However, with the new appraisal guidelines, the lack of sold comps supporting a higher value, the lack of current listings supporting a higher value and the attached SMART charts showing significant market declines, the market itself can’t help your client achieve a higher appraisal than in 2007.

Thank you,
Bill Cobb, Appraiser