Wow! I'm diggin' this. By this, I mean the bulletin out today from Freddie Mac to the nation's appraisers -- you must know of what you speak. Or, don't assess home values that you're unfamiliar with in towns you've never been to. Just this past month, three of our solid deals fell apart because appraisers who had no business working in Essex County, NJ, got their hands on the wrong comps and carried through with random -- and often destructive -- assessments, undoing deals that were good to go. In one case, beleaguered sellers who had already forged a deal $68,000 less than the price they paid for the same home a year ago, were forced to further cut another $20,000 when an appraiser from another planet defied logic by choosing terrible comps from the wrong neighborhoods. Our request to the lender, Chase Bank, to rethink the appraisal, was swiftly rejected.
That was just two weeks ago. In today's news, better news: Appraisers "must be familiar with the local market" that they are assessing and must choose "appropriate comparable sales" that they must then certify to be "most similar" to the subject property. Now, isn't that quaint. To be fair to appraisers, it hasn't been easy to do their jobs, let alone to do the right thing. And I know how hard it is to turn down business. When a buyer asks me to show houses two counties over, in places I've never been, I'm not nearly as sure of myself as I am on home ground. So, the best thing is to say no to that business. Too many appraisers have been saying yes. Freddie Mac's bulletin went on to say that
the selection of comparable sales "is crucial to providing an accurate opinion of value." A couple of weeks ago, I put our own little investment property on the market -- a cute, 1-bedroom condo, all redone, spiffy as pie. The first week, we got a great offer, near asking, quick close. And...you guessed it. The appraisal, compliments of the FHA, was $9,000 less than the purchase price. That appraisal, I'm told, is now filed at the FHA, so that any other person who applies for an FHA loan to buy this property -- which, by the way, I did not sell for less -- must use that standing low appraisal and only that appraisal for the next six months.
Perhaps Freddie Mac's bulletin today will alter that situation and free me to sell to a buyer willing to pay the 'right' price, the negotiated price. I was so steamed when the appraisal fiasco intensified that I had a moment when I wanted to drop everything and march on the White House in protest of the legislation that got us into this mess.
Instead, I, like tens of thousands of other licensed Realtors, signed a petition while our representatives at the National Association of Realtors, decended on D.C. to make our case -- that it's hard enough in this contorted economic environment to sell anything without having our deals illogically undercut. It didn't make sense a couple of weeks ago when my clients were forced to snip hard earned eqjuity from their deal. It didn't make sense when I turned down a perfectly good and sane offer for my little condo, either. It still doesn't make sense. We can't go back and undo those crimes, but we can be glad today that somebody up there is trying to set things right.
Love ya, Freddie Mac!
