The Truth About Residential Real Estate Appraisal Values

real estate appraisalsIf you are thinking of listing your Marietta home for sale, it’s important to understand how real estate appraisals work. Low appraisals in the residential real estate market have become more common in recent years, and this can have serious consequences when attempting to sell your home. To understand why appraisals are coming in so low these days, you must first understand the relationship between appraisers and lending institutions.

Mortgage brokers and home appraisals

Since 2009, the Home Valuation Code of Conduct has mandated that all lending institutions use an intermediary to order property appraisals, barring mortgage brokers from ordering an appraisal. Instead, banks must either have someone outside of their lending department order the appraisal, or go through a third party. Most banks opted to use intermediaries for this task, resulting in the proliferation of appraisal management companies (AMCs). These AMCs ended up undercutting experienced home appraisers by half, and causing a mass exodus of experienced appraisers from the industry. So why have real estate appraisers suddenly started turning in such low appraisal values?

Reasons for low appraisal values

Litigious lenders- Appraisers who have stuck around are often victims of litigious lending institutions who file complaints with the Division of Real Estate, alleging that the appraisal is not supported. To combat this, appraisers turn in low appraisals to guard against litigation if the loan goes into default.
Bank and industry guidelines- Appraisal management companies and banks have their own unique guidelines for home appraisals, as do loans sold through FannieMae, and that’s not including the Uniform Standards of Professional Appraisal Practice. Many home appraisers are constrained by these restrictions on what they can and cannot use to evaluate the value of a home.

Having a good real estate agent on your side can make all the difference when selling your home, so contact Barry Wolfert and Lisa Wrenn today! As experienced north Atlanta real estate agents, we have the local market knowledge and industry experience to help you successfully sell your home for top dollar.

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