Spring has Sprung

Hello again from your friendly neighborhood appraiser. Although based on some of the nightmare stories I’m hearing from agents and loan officers, maybe you folks can’t imagine friendly and appraiser in the same sentence.

Let me reiterate what I touch on in my appraiser presentations. Seller’s assists are immediate red flags for underwriters. They could care less that they’re common for the neighborhood, they’re interested in one thing: if the property is foreclosed on what can they sell it for. And, in this current market they are especially nervous. My first recommendation is do not write or accept an offer over asking with a seller assist. Unless of course you are willing to deal with a value issue after the fact, which isn’t always the worst thing. Do yourselves a favor and carefully examine the comps. Underwriters expect appraisers to back out the comps’ seller’s assists. So if you have three sales on the block that all sold for $100,000 and all have $5,000 assists, guess what, in the underwriter’s view, they all sold for $95,000. Happy yet? There’s more.

Many major lenders are requiring two settled sales in the last three months and at least one listing or pending sale. This little ditty is a real headache for me, because last time I checked, historically, there are not a lot of settled sales in January, February, and March. But it also affects you. The lender rationale for this requirement is to help them identify if the property is in a declining market. If the more recent comps indicate that the subject may be in a declining market, the lender will then adjust the LTV by 5% in the wrong direction. Anyone who is not aware of what I’m referencing should immediately get the skinny from their preferred loan officer. Now don’t go and panic, at present, most of the markets you service are not declining. However, I wouldn’t be surprised if by end of 2008 many of our local neighborhoods are classified as declining. Time will tell.

Remember, the lending industry is changing on a daily basis. Programs are being slashed and underwriting criteria tightened. Your buyer’s pre-approval from a month ago may no longer be good. Stay on top of your buyers and their borrowing eligibility. For those tough to sell listings, get a listing appraisal. I’m seeing plenty of priced-right houses selling in less than three weeks. Any questions, feel free to contact me. I would also like to thank everyone who has referred me for estate and divorce appraisal work. Thank you.

In conclusion, follow these tips, they will help you sell faster, work more efficient, and cut down on back-side aggravation. Back-side as in after executing the contract, not your derriere.