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Posts Tagged ‘appraised value’

Reasons Your Oakland County MI Appraisal May Come In Low

Low appraisals are probably the biggest killer of sales of non distressed homes in the North Oakland County area. There are many reasons for a low appraised value that have absolutely nothing to do with the actual value of the house being appraised. Below is a short list of reasons why a house may appraise low:

  • Lack of comparable sales
  • Out of the area appraiser
  • Bad appraiser
  • The amount of distressed sales in the area
  • Restrictions on adjustments

The problem with the list above is there isn’t much that can be done to change those scenarios.

Things to keep in mind if your appraisal comes in low:

  • The seller DOES NOT have to reduce their price to match the appraised value
  • Appraised value is just an opinion and does not necessarily reflect the true value of the house
  • The appraiser DOES NOT work for you
  • Your loan officer doesn’t really work for you. He/she has a duty to the lender/investor they sell the loan to
  • Appraised value and market value can be two totally different dollar amounts
  • Since about 20% of area sales are cash, market value will more than likely trump appraised value

Using the Appraisal Contingency as a Negotiating Tool

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Financing Your Next Home

Clarkston MI Homes for Sale

Lake Orion MI Homes for Sale

Jackie Hawley
ReMax Encore, Clarkston MI

(248) 736-6407

Jackie@JackieHawley.com

www.JHawleyAndAssociates.com

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If the appraisal is low the seller should come down? So if the appraisal is high the buyer should come up in price?

I recently had an appraisal come in low – way low- on a transaction where I represent the buyer. Way low translates into $74K low. The seller was asking $429,900. We negotiated a price of $404,000 and the appraisal came in at $330,000.

There are various reasons the first appraisal came in low but just trust me that the value was there and the buyers were getting a terrific deal. But the reasons for the low appraisal are not the subject of this post.

So my mom was at the bookstore during all this and was telling the lady there about the low appraisal and the book store lady immediately said “Of course the seller is coming down…”

But when someone brags that their new house appraised above the sale price nobody ever exclaims “So you increased your offer, right?”

Why is it assumed that a seller should give up thousands of dollars based on the opinion of one stranger?

What if the appraisal is low?

How the appraisal contingency can be used as a negotiating tool

Financing

How do the property taxes affect my purchasing power?

Who pays for the well and septic inspection?

Who is John Galt?

Buying a home in Southeast Michigan?

Jackie Hawley, Realtor
ReMax Encore, Clarkston MI
Cell: (248)736-6407

Jackie@JackieHawley.com

www.JHawleyAndAssociates.com

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Here in Southeast Michigan– specifically North Oakland County Michigan– home prices have been creeping back up and inventory is much lower than this time last year. In fact in many areas we are looking at a 4-6 month supply of active listings.

This week we had yet another appraisal come in low. And again the appraiser states twice in the appraisal that the subject property is in a declining market and actually subtracted value off the comparable sales due to closing dates.

The facts are:

Subject property is in Springfield Township

Median sales price in Springfield Township in 2009 was $145,500. Median sales price so far in Springfieldwhat are the appraisers drinking Township this year is $166,000. UP 12.3% from last year. Springfield Township has been averaging 12.4 sales per month and there are currently 82 homes on the market or a 6 1/2 month supply.

Since Springfield Township is not heavily populated I decided to check the surrounding townships. In fact, WITHOUT EXCEPTION, prices were UP in every township in North Oakland County I checked.

So what are these appraisers drinking? The Kool Aid the media is handing out? Are they spending their time at the bar drowning in their sorrows because they have to give up a portion of their fees to the appraisal management companies? Maybe they need to spend a bit more time learning their market. For North Oakland County the facts are as follows:

Independence Twp/Clarkston:
2009 median sale price: $150,000
2010 median sale price: $163,000
5.1 month supply of active listings

Waterford and Keego Harbor:
2009 median sale price: $70,000
2010 median sale price: $72,000
6.2 month supply of active listings

Brandon Twp/Ortonville:
2009 median sale price: $110,000
2010 median sale price: $129,750
6 month supply of active listings

Orion Twp/Lake Orion:
2009 median sale price: $150,000
2010 median sale price: $153,950
4.2 month supply of active listings

Oxford:
2009 median sale price: $140,000
2010 median sale price: $158,000
4.3 month supply of active listings

And the same trend for Rochester, Rochester Hills, Oakland Township, Addison Township and Leonard.

Some may just look at this as appraisers being conservative. Buyers look at this as often times not being able to get the house they want. Often times these buyers have looked a many were in a multiple offer situation on the house that didn’t appraise and know the value is there.

Sellersmay be able and willing to come down and don’t understand why, since there were 3 other people willing to pay more than the appraised value. Or the sale may just die– hopefully the low appraisal wasn’t an FHA appraisal that will stick to the house for the next 6 months.

If it does close at the lower value the neighbors just got told to grab their ankles since the value of their homes were just reduced because of a “cautious” or “conservative” appraisal.

The government needs to remove the shackles from the appraisers so they can do their jobs properly. In the meantime, more appraisers need to do their job and learn their market. A declining market in 2009 does not mean a declining market in 2010.

The numbers above include all sales- short sales, bank owned homes as well as regular sales. I also found the trend to be the same in specific neighborhoods and subdivisions. The links below will take you to more detailed market data.

community values

Lake Orion

Oxford

Clarkston

The Preserve, Lake Orion MI

Round Tree, Lake Orion MI

Rolling Meadows, Lake Orion MI

Lake Lapeer lakefront sales

Lake Orion lakefront sales

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