Lack of Comparable Sales Affects Appraisal Value
The recent market has seen a number of short sale and foreclosure homes in quite a few neighborhoods. The rebounding economy is clearing those homes off the books, a benefit for lenders and buyers. But what about a homeowner that has kept the home pristine and welcoming? When it is time to sell, appraisal values may be less than actual value because of lower selling prices in the area.
Appraisers frequently look at the sales price without realizing the reason for significantly lower amounts than the asking price of well-cared for homes. Lacking familiarity with the neighborhood, comparable sales prices are estimated on square footage and the type of home, rather than an empty damaged foreclosure as opposed to an elegant home with custom drapes and hardwood floors.
It is natural for a homeowner to complain if an appraisal is less than expected, but Realtors are also raising their voices in dismay. Upgrading the method of determining an appraisal amount is needed to avoid the harm being caused to home sales. Bidding wars have resulted because of the low inventory of for sale homes on the market. Yet, when a price is reached, the appraisal comes in at a lower amount because it is based on the unfair comparison to distressed property sales, affecting the sale of the current quality home.
Like other areas across the nation, homes in Tampa Fla. are involved in bidding wars due to the low inventory of homes for sale. When a contract is cancelled, delayed or renegotiated because of a significantly lower appraisal, recovery in the housing market is adversely affected. Protests by Realtors are being answered by appraisers. Testimony before Congress indicated their task is protecting the public trust by providing the lender an idea of value and that appraisers are the only party with no vested interest in the appraisal.
This is a situation that will continue to be addressed, as each side has valid concerns about appraisals in untested waters. In the meantime, prices of distressed properties are rising. That will help boost the results of newer appraisals as they are done.