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Houston Realtors - Current Market Appraisal Issues

1,175 Views | 16 Replies | Last: 1 day ago by Sazerac
E
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AG
Any other realtors running into appraisal problems?

I had a home last month where it took 3 weeks to get appraisal, caused the closing to move back a couple days.

Another just had an appraisal come back $35K (8%) under sell price. The original appraisal came at the sell price of $435, but someone on their team had the appraiser add in two comps that were significantly lower then the others it dropped it to $400K. I sent them actual comps and proof that the two added are jokes of a comp, but they didn't budge. This essentially kills the deal because the gap is too large for a seller to want to come own that much and my buyers can't front the extra costs.
Rustys-Beef-o-Reeno
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AG
Welcome to the world of ****ty appraisals and appraisers in general

Good comps would require actual thought and work instead of using whatever the computer spits out at them.
South Platte
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E said:

Any other realtors running into appraisal problems?

I had a home last month where it took 3 weeks to get appraisal, caused the closing to move back a couple days.

Another just had an appraisal come back $35K (8%) under sell price. The original appraisal came at the sell price of $435, but someone on their team had the appraiser add in two comps that were significantly lower then the others it dropped it to $400K. I sent them actual comps and proof that the two added are jokes of a comp, but they didn't budge. This essentially kills the deal because the gap is too large for a seller to want to come own that much and my buyers can't front the extra costs.
I barely avoided that in Houston 5 years ago. Appraisal took forever, then was $22,000 low. Fortunately the seller came off 1/3 and I was barely able to scrape up some cash to close.

My realtor was terrible as well. If I had listened to him before my offer the difference would have been $29,000.

The whole process is atrocious.
SteveBott
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AG
Appraisals are coming low all over the state except Dallas-Fort worth. And all are slow period. Refis are overwhelming the industry from start to finish
Red Pear Realty
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AG
Appraisers are going to be replaced by algorithms and as a profession they earned it. There are great appraisers out there but the bad ones outnumber them and the system rewards the good ones and bad ones the same. Dodd Frank needs to be repealed.

We've done 39 deals this year so far and I think we had one house that didn't hit value on the buy side. Bigger issue has been delays like you mentioned, but that is because the appraisers are just getting hammered on volume. Nobody did a deal in the month of April and all that pent up demand is showing up now. And because schools are delaying opening back up its looking like the typical summer sale season is extending into September.
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Red Pear Realty
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AG
Oh yeah, and refis too.
Sponsor Message: Up to 2% Buyers Commission Rebates / $1,200 Full Service For Sale Listings / $500 For Lease Listings with Red Pear Realty. Also, contributor at Houstoning.
SteveBott
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AG
Agreed. Btw Jamie earned his money today on his Waco deal.
Bob_Ag
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Volume is high. Banks and Title companies are just as backed up as appraisers.
SteveBott
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Bob all my deals are locked on 60 day pricing. Never done this and some need more days.
Sazerac
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Sold two houses recently. Neither appraised, and it wasn't close. The second we were able to fix their awful comps (not even in the same ISD).

It's a joke of a system
inoffensive username
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AG
Red Pear Realty said:

Appraisers are going to be replaced by algorithms and as a profession they earned it. There are great appraisers out there but the bad ones outnumber them and the system rewards the good ones and bad ones the same. Dodd Frank needs to be repealed.

We've done 39 deals this year so far and I think we had one house that didn't hit value on the buy side. Bigger issue has been delays like you mentioned, but that is because the appraisers are just getting hammered on volume. Nobody did a deal in the month of April and all that pent up demand is showing up now. And because schools are delaying opening back up its looking like the typical summer sale season is extending into September.


Appraisals already are algorithms. Some appraisers just suck at doing them properly.
jja79
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AG
We're starting to see increasing numbers of appraisal waivers on agency loans. That's very good for everyone involved in the transaction.
aggie appraiser
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jja79 said:

We're starting to see increasing numbers of appraisal waivers on agency loans. That's very good for everyone involved in the transaction.

Maybe except for the guy with the money, but who cares about that guy.
jja79
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AG
I assume you're talking about lenders. I think appraisal waivers on agency loans are good for borrowers and lenders.
Bob_Ag
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AG
Red Pear Realty said:

Appraisers are going to be replaced by algorithms and as a profession they earned it. There are great appraisers out there but the bad ones outnumber them and the system rewards the good ones and bad ones the same. Dodd Frank needs to be repealed.

We've done 39 deals this year so far and I think we had one house that didn't hit value on the buy side. Bigger issue has been delays like you mentioned, but that is because the appraisers are just getting hammered on volume. Nobody did a deal in the month of April and all that pent up demand is showing up now. And because schools are delaying opening back up its looking like the typical summer sale season is extending into September.
This is why I disagree about your first sentence and this is also why I think some of you should be careful about what you ask for.

I had a revision request for an assignment. This is an easy peasy appraisal for a purchase with plenty of good and recent sales available, all in close proximity. The revision states their computer generated comparable selections picked three properties that I did not use and they wanted to know why. The first comparable is a dated sale from September of 2019. The second had an in ground pool in a neighborhood with very few and would have required a large adjustment (the subject did not have a pool). The third was one I considered and did an exterior inspection, but the home was an odd design, built into the side of a hill and was on market for 3x the median days on market for the area. Had I used these comparables, the subject would not have appraised and this is as simple of an appraisal as it gets. In other words, the computer would have selected probably the three worst comparables in the area.

Moreover, they asked why I didn't make a lot size adjustment for one of the comps. Well, that comparable was on a heavily sloping lot with retaining walls on both sides. Basically, the usable portion of the lot that was level was similar to the subjects which had a level lot.

The point is, the automated systems are going to only look at square footage, bedroom and bathroom count, and proximity. They are not going to be able to discern anomalous data and by definition, have no ability to apply logic and reasoning which is a condition of reconciling the value. They have also been empirically shown to be inaccurate. Do they have some utility, yes, which is why they have been used for going on two decades now. Are they capable or replacing the appraisal industry as it stands today, not a chance.
Red Pear Realty
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AG
Ok, so I finally got a breather to post this. Back in February I refinanced three investment properties in Rice Miltary. These are 3/2 bungalows, all the same square footage and floor plans. 3/2. Two beds and a bath downstairs, and 1 bed and a bath upstairs. All were built this way and all are on HCAD as 3/2's. Easy, right? The first two appraisers nailed it. Did a great job. The third appraiser drove up, and says, "This is a 2/1, right?". No...its a 3/2. That's what HCAD says, that is what my previous HAR listing says, and that is what you will see when we walk through it together. Ok, cool. Three days before I'm supposed to close, I still don't have my report. Its been at least 2 weeks, and I think longer but can't remember for sure, and this is February when they aren't slammed. I get the report, and the appraiser wrote the DAMN REPORT that the house is a 2/1, used all 2/1 comps, and set the value 5% less than the other two houses appraised at, which cost me money. And the best part is that he has images of all three beds and two baths in his report. Was he willing to count to 3, change his analysis, admit he was wrong, and adjust his report? Nope. Neat!
Sponsor Message: Up to 2% Buyers Commission Rebates / $1,200 Full Service For Sale Listings / $500 For Lease Listings with Red Pear Realty. Also, contributor at Houstoning.
Sazerac
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