Home Pride Properties, Inc. 770 444-3844

The Home Appraiser: One Ugly BFF Breakup!

In real estate, the appraiser is supposed to be the fair and impartial judge of property value.  Banks use the appraiser's valuation to avoid making a loan for more than a house is worth.

But during the Bubble, banks (and mortgage brokers) mostly just wanted to make lots of loans. And, real estate agents wanted to sell lots of homes.  And, buyers wanted to buy everything in sight.

So back then, appraisers were strongly encouraged to be "generous" with their valuations so that more (and larger) sales could close. Which was pretty easy, since prices were soaring.  And everyone was pretty happy.  Best Friends Forever!

Then came the Meltdown.  Homeowners started defaulting on loans, banks started foreclosing on owners, and home prices started plunging.  Some blame fell on the appraisers and their cozy relationship with the agents and mortgage brokers they worked with.

And that's when our government jumped in to save the day.  So you know things were about to get worse.

Meet Bill: "Underwater" Seller Searches for a Lifesaver

The Situation

Bill (not his real name) has owned his home for nearly two decades.  He and his wife Amanda have made many memories, raised a family, and built a life in that home.  Like many homeowners, he refinanced his mortgage to cover a few major expenses, including college costs for their daughter Lydia.

Now his monthly payment is too high for him to handle.  Even worse, Bill owes $170,000 on a home that wouldn’t appraise for more than $100,000. That's $70K in negative equity (yikes!).

Bill contacted his mortgage company about accepting a short sale, but was denied because his payments are “too current.”  Bill played by the rules and paid his mortgage and bills on time – even during the lean years when Lori lost her job.  To Bill, it doesn’t seem quite fair that loan modification help and short sale approvals are going most often to those who didn’t pay when promised.

Why the %#*@! Hasn't My House Sold?

So your listing just expired and your house is still unsold.  When asked why, your agent simply says “It’s the market.”  But what they really want to say is "Your sales price is too %#*@! high."

Right this minute -- somewhere in your neighborhood -- houses are selling.  Sure, this is not the seller’s market of two or three years ago.  But houses are still selling because people will always value a nice place to call their own.

Don't believe us?  Then ask your agent to go into MLS and pull a sales report for the last 6 months.  Were there any sales within 5 miles in your price range? You bet there were.  So, why wasn’t your house one of them?

What is a Short Sale?

Imagine you have a $230,000 mortgage on your house.  You need to sell, but the best offer you've received has been for $210,000.  If you wanted to sell at this price, you'd need to bring $20K to the closing, which you can't do.  But...

If you could convince your lender to accept $210,000 instead of $230,000 to pay off your mortgage, you could then sell your home for $210K without having to bring money to the closing.  That’s called a short sale: When a lender accepts less than what is owed as a mortgage payoff so that you can sell your house for today’s value.

Lenders are approving short sales every day.  Why? It’s not benevolence.  It’s because banks have determined it’s in their best interest – it just so happens that you benefit when they do. 

Here’s how the lender sees it: Taking a relatively small loss now is better than the real possibility of taking a huge loss later.  If you gave up on selling your house and let it go to foreclosure, for instance, the lender could lose far more.