Market Comparison of December 2006 vs. December 2007 by Neighborhood
It is definitely winter. The high tomorrow is expected to be 18°. And although I would love to have a few assignments to help me reach my goal of 200, I can wait until the temp warms up a few more degrees.
Understandably there are few assignments this time of years. Most of our work is from mortgage brokers and they are not very active around Christmas or New Years. But soon people will be worried about paying Christmas bills or income taxes and refinancing will an option.
FHA is certainly more attractive to individuals wishing to refinance. But many people don’t understand the differences between FHA and Conventional financing. And they don’t need to. Mortgage brokers are more than willing to deal with the paperwork for the opportunity at their percentage. What I dislike most of all is when we appear for our routine appraisal inspection and the homeowner has not been informed of the guidelines for the loan they are applying for.
In many homeowners’ mind they have the amount they paid for the home plus the amount of renovations/improvements made plus a couple of thousand dollars for appreciation and they see no problem in their home appraising for this amount. The mortgage broker apparently doesn’t explain the process to the homeowner either. That is left up to the appraiser.
I show up and find a home which has been well maintained for the most part. But the bathroom ceiling is peeling. Or the kitchen ceiling is peeling. And to the homeowner there’s not a problem because they understand the ceiling is not peeling because of water damage. It’s because of previous water damage; the roof is now fixed; they just haven’t repaired that one spot. Or steam from the shower causes the ceiling to peel; the original paint was applied improperly. But I can’t take the homeowner’s word for it. If it was a conventional loan I would be able to place a statement in the report that the peeling paint on the ceiling was minor, make a cost adjustment for it and put in the homeowner’s statement, attributed to the homeowner, of course.
But this is FHA. And FHA does not like peeling paint. Not any kind of peeling paint. No matter when the home was built.
So I have to inform the mortgage broker it’s not going to work until the peeling ceiling has been repaired. And I have to make another appointment to take pictures of the ceiling after it has been repaired.
When I show up for the appointment the homeowner wants to know why her formula (the amount they paid for the home plus the amount of renovations/improvements made plus a couple of thousand dollars for appreciation) was more than the value I arrived at. Actually the value I arrived at was not more than the house originally appraised for two years ago. And she took the time to compare my appraisal report with the appraisal report from two years ago and noticed we used different neighborhoods. The appraisal report from two years ago went into a superior neighborhood, more than two miles, to locate comparables. Red Flag!
I tried to explain, without criticizing the other appraiser, that leaving a neighborhood to obtain a specific number was not acceptable. I even tried using school systems to explain the difference. But the homeowner’s mind was firmly set and I wasn’t about to change it. I really wanted to explain the appraiser who valued her home so highly was not doing her any favors and if I was seeking her approval and followed the same line of thought I would just be perpetuating a crime against her. And against the lending institution by misleading them into thinking if the home was foreclosed on today they would be able to sell it for more than they actually could reasonably expect. That’s if the underwriter let it go through.
And with the slow real estate market underwriters and review appraisers have much more time on their hands.
Real Estate Appraiser 