Appraisals Are Causing Traffic Jams on the Closing Highway. The real estate industry is paying the price for past sins in the mortgage loan side of the business. We all now realize credit was too easy to get and buyers who had no business buying a home were given the opportunity to purchase over priced homes using mortgage loans that could never be paid off.
So, the big fix was put in place by UNCLE SAM and now we have the not surprising result of too much government intervention in the mortgage loan process.
POINT IN CASE: A Tale fo Two Listings in Tucker Georgia
Two very similar homes in the same subdivision went under contract within a few weeks of each other. House number one was a short sale. House number two was a plain vanilla listing where the owner wanted to sell his present home and purchase a larger one.
On my short sale listing I submitted all the necessary documents to the lender and immediately started to follow up. I am a Certified Distressed Property Expert (CDPE) and have a good bit of experience with short sales. Everything on the short sale was proceeding as smoothly as one could hope. The coop Agent was with a really sharp Realtor, Becky Vinson, who had her buyers prepped and ready to purchase a short sale listing.
On the plain vanilla listing we had a bit of back and forth with the buyers on the inspection amendment but in the end we worked out things pretty much to every ones satisfaction. The buyers were well qualified and all systems were on go.
The sale price of both homes was comparable. The homes were within a couple hundred feet of each other on the same street in the same subdivision.
PLAIN VANILLA HOUSE DOES NOT APPRAISE . On the plain vanilla house listing, the appraisal came in $10,000 below the contracted sale price. When we finally got access to the appraisal we learned the appraiser had used comparables that were in another subdivision in a different school district! I repeat, the comparables were not in the subject subdivision. The comparables were also in a completely different school district! That is a HUGE difference here in the Atlanta market. My seller was not willing to give up $10,000 and the deal tanked.
SHORT SALE LISTING SAILS THROUGH APPRAISAL PROCESS. Within a week the short sale listing, which is just a few doors down from the plain vanilla listing, CLOSED. The appraisal came in fine using comparables from within the subject subdivision.
NO ONE IN THE TRANSACTION HAS ACCESS TO THE APPRAISER. So, it seems obvious that we just mention to the appraiser that “hey, you used comparables in a different subdivision and in a different school district.” That seems like a pretty easy situation to correct. Why not use comparables within the subject subdivision! After all, it is a large subdivision with 120 plus homes so there is enough activity to determine a comparable value. But no, we can’t access the appraiser. We ARE NOT ALLOWED to have any input in the appraisal process because we could put pressure on the appraiser to do something fraudulent.
COMMON SENSE IS NO LONGER PART OF THE APPRAISAL PROCESS. So even if we have some words of wisdom to share with the appraiser, can’t do it! No way no how! UNCLE SAM has determined that the appraiser must work in a sound poof chamber and make decisions independent of everyone else in the transaction.
PLAIN VANILLA LISTING HITS A TRAFFIC JAM ON THE CLOSING HIGHWAY. So my seller who has the plain vanilla listing is back on the market because appraisals are causing traffic jams on the closing highway. Think about how many sales transactions this will affect down the road. My seller was going to buy another home here in Atlanta. A move up seller somewhere in Atlanta missed the opportunity to sell and close their home before Christmas. It is a chain reaction. The failure to close this one transaction may have prevented the sale of 4 or 5 additional houses here in Atlanta. We are never going to remove our excess inventory in the Atlanta market if appraisers are not going to use common sense.