- Dogs that talk: Researchers seek $10K for ‘No More Woof’ technology
- 1,000 firefighters called to battle stubborn Big Sur wildfire
- Black Friday brouhaha: Millions of Target shoppers hit by credit card theft
- Britain orders airplane to rescue citizens from violent South Sudan
- Mega Millions winner emerges as Georgia mom, in ‘disbelief’
- ‘Duck Dynasty’ Phil Robertson suspended ‘indefinitely’ for gay comments
- John Podesta eats crow: ‘I apologize to Speaker Boehner’
- U.S., China race to finish line on ‘invisibility cloak’
- Obama ‘cavalier’ in hiding foreign aid order, judge rules
- Prince Charles: Muslims are driving Christians from Mideast through persecution
Mortgage Q&A: Making the right call on appraisal
Question of the Day
Several weeks ago, I wrote a column about the Home Value Code of Conduct, which is recent legislation designed to put a wall between mortgage originators and appraisers in hopes of preventing undue pressure on the appraiser to “hit a number” in order to get the deal done.
I attacked the legislation, saying it is akin to “curing dandruff by decapitation.” Appraisers are not only licensed, but the opinion of value in their reports must be supported by the data and be accepted by the underwriter, who is the gatekeeper of mortgage loan approval.
I questioned why some appraisers appear not to take into consideration the notion that the best determinant of value is what a qualified third party is willing to pay for the property. After I wrote that column, an appraiser from Delaware emailed me, clobbering me on my “ignorance” of the appraisal process, and what indicators are used to come up with a value.
I don’t pretend to be an appraiser and admit that I am not qualified to appraise a property. But let’s not overthink this issue. Whatever the appraisal guidelines are, it seems to me that common sense dictates that a property is worth what someone is prepared to pay.
I recently had a purchase fall apart because the appraisal report came in at $250,000, $18,000 less than the purchase price. The real estate agents involved are professionals with decades of experience.
The appraisal report used comparable sales that included inferior properties that recently sold for $215,000 to $235,000. The appraiser used one comparable that was very similar to the subject (an end-unit town home with the same square footage) that sold for $280,000. He omitted two homes that recently sold for $245,000 and $260,000.
Even with my uneducated eye, it was obvious that this report was overly conservative. I don’t blame appraisers for being conservative. They have been a target of criticism for inflating values and causing the real estate bubble. On the other hand, however, shouldn’t an appraiser take into consideration a perfectly qualified buyer’s opinion of value?
This is exactly why our real estate slump is not going to improve anytime soon. The seller in my transaction cannot lower his sales price because his mortgage balance is too high. He would have to write a huge check at settlement to sell his home. The buyer would be perfectly happy to pay the original purchase price, but because the appraisal report came in too low, the maximum allowed loan amount drops significantly, and he simply doesn’t have the cash for the increased down payment. The fellow is a first-time home buyer, has excellent credit and a great job.
I guess the seller is stuck in his home for several more years and my qualified buyer will be forced to rent for a few more years.
The government keeps blabbering about taking steps to improve the real estate market, but with this kind of nonsense, it ain’t gonna happen anytime soon.
* Send email to email@example.com.
By Andrew P. Napolitano
Fourth Amendment says Obama is not at liberty to collect metadata
- U.S. Army mulls wiping out memory of Robert E. Lee, 'Stonewall' Jackson
- Half of America strips religion from Christmas
- Gov't wasted $30 billion on 'pillownauts,' crystal goblets -- buying human urine!
- Duck Dynasty Phil Robertson suspended indefinitely for gay comments
- Obama's own panel rips NSA spying on phone calls of Americans
- BOLTON: Nero in the White House
- Armed response, not restrictive gun laws, brought swift end to school shooting
- Pa. police pull people over for random DNA tests for feds
- President gets budget win -- but only by staying out of negotiations
- 'Duck Dynasty' star Phil Robertson: Gays 'wont inherit the kingdom of God'
Independent voices from the The Washington Times Communities
Right-brain investing in a left-brain world. You can do it. I can help.
News and views on the Civil War.
Top 10 handguns in the U.S.
Extraordinary day at Redskins Park
White House pets gone wild!
Let it snow