The Anna Maria Island Sun Newspaper

Vol. 12 No. 45 - August 22, 2012

REAL ESTATE

Low appraisals a hiccup in the mortgage market

 

We all know that a referee in sports is the final word on whether the ball was in or out and whether the boxers have followed the rules. Buying real estate can be viewed as a sport, a very expensive one, where the referee is the appraiser who can make or break the deal before the finish line.

The housing market is in a slow but steady recovery, spurred on by record low interest rates. However, one of the little hiccups in the mortgage process is low appraisals, preventing buyers from taking advantage of depressed prices before they start to move up.

The majority of real estate buyers, including many investors, are making offers contingent on obtaining a mortgage on that property. In a normal real estate market, which we have not been experiencing in many years, the value of the property being appraised is based on comparable sales in the area.

However, in order for this method to be effective there must be an abundance of market activity and relatively recent sales of properties similar to the subject being appraised. Up until the real estate bubble burst, this system worked just fine, providing both sales and an appreciating market.

Now that more buyers are starting to move into the marketplace to take advantage of affordable prices and advantageous interest rates, low appraisals are becoming an even bigger issue, having a negative effect on the market’s recovery.

Part of the problem is that home prices have gone so far down in some areas flooded with distressed properties it’s almost impossible to find a sale to support any kind of appreciation that may have occurred. Not only is it difficult for appraisers to support values, it’s also a challenge for them to find good comparable sales in a market where sales have been few and far between.

The final blow to the appraisal process is government regulations putting pressure on appraisers not to over inflate valuations, creating a culture of unnecessarily conservative valuation. This is a very real problem handicapping the recovery process with about one-third of transactions impacted by low appraisals.

What can a potential homeowner do? The first thing to do is research sales in the area where you’re thinking about purchasing a property so you know beforehand if you may encounter a financing problem. Although appraisers won’t like it, you can accompany them during the inspection and also provide them with a list of improvements in the property or even your own comparable sales, which they may or may not accept.

If the appraisal does come in low make sure there are no obvious errors in the appraisal – number of baths, bedrooms, square footage, which could have lowered the outcome. You could always get another appraisal, which you will have to pay for, in the hope that a new appraiser will be better informed or find something the first appraiser did not.

The last option is to reevaluate and or renegotiate the agreed upon price with the seller, resulting in a lower sale price and a lower mortgage which will pass the appraisal process.

Unfortunately, it could take several more years of improved sales before an adequate history is established for appraisal purposes. In the meantime, the appraiser is the person of authority with the neutral point of view calling the shots and throwing down the flag slowing down the game.

Real Estate Transactions
Real Estate Transfers from June 1 to June 30, 2012
Sponsored by Alan Galletto Island Real Estate

Sold Date | List Price | Sold Price | Address | Provision | Property Style

Anna Maria

07/31/2012 679,000 679,000 115 Mangrove Ave. # A&B 1968 50x110 6Br/4Ba Inc.
07/10/2012 430,000 427,000 226 Gladiolus St. 1708 87x100 3Br/2Ba SFR

Bradenton Beach

07/13/2012 675,000 625,000 2600 Gulf Dr. N. # 17 1179 2 Br/2 Ba Condo
07/23/2012 115,000 115,000 1603 Gulf Dr. N. # 29 380 1 Br/1 Ba Bank Owned Condo
07/27/2012 285,000 275,000 1001 Gulf Dr. S. # 1 896 2 Br/1 Ba/2 Half Baths Condo
07/10/2012 289,000 260,000 100 12th St. N. 929 2 Br/2 Ba SFR
07/30/2012 325,000 280,000 1431 Gulf Dr. N.# 21 1524 3 Br/2.5 Ba Short Sale Th
07/11/2012 139,900 132,500 2501 Gulf Dr. N. # 102 416 1 Br/1 Ba Com

Cortez

07/16/2012 679,000 565,620 12313 Baypointe Terr. 2535 3 Br/ 3 Ba SFR

Holmes Beach

07/17/2012 425,000 425,000 207 69th St. # A 1948 70x110 4 Br/3 Ba Half Condo
07/03/2012 199,900 187,450 3607 E. Bay Dr. # 110 1040 2 Br/2 Ba Condo
07/08/2012 172,900 171,000 5400 Gulf Dr. # 24 810 1 Br/1 Ba Bank Owned Condo
07/10/2012 399,900 375,000 6006 Gulf Dr. # 112 1154 2 Br/2 Ba Condo
07/16/2012 449,000 425,000 319 64th St. # 8b 2001 3 Br/2.5 Ba
07/17/2012 249,900 249,900 3705 E. Bay Dr. # 206 1146 2Br/2 Ba Condo
07/19/2012 207,000 185,000 6300 Flotilla Dr. # 71 1023 2Br/2 Ba Condo
07/27/2012 350,000 315,000 4200 Gulf Dr. # 204 1008 2Br/2 Ba Short Sale Condo
07/31/2012 319,900 298,000 4255 Gulf Dr. # 122 1254 2Br/2 Ba Condo
07/12/2012 300,000 240,000 213 84th St. 2173 3 Br/2.5 Ba Short Sale SFR
07/20/2012 759,000 692,000 622 Dundee Ln. 2368 95x115 3 Br/2 Ba SFR
07/20/2012 419,000 407,500 303 62nd St. # B 1200 3 Br/2 Ba SFR
07/23/2012 888,000 825,000 6405 Gulf Dr. 2876 66x100 3 Br/2.5 Ba SFR
07/25/2012 569,900 525,000 109 75th St. 1819 3 Br/2.5 Ba SFR
07/27/2012 849,000 800,000 207 70th St. 920 90x102 4 Br/4 Ba SFR
07/20/2012 549,000 529,000 108 77th St. 1839 68x80 3 Br/2 Ba SFR
07/31/2012 310,000 290,000 309 62nd St. 928 75x101 2 Br/1 Ba SFR
07/17/2012 425,000 364,000 3803 E Bay Dr # 3a 2354 5 Br/3 Ba Th
07/13/2012 259,900 237,000 3008 Gulf Dr. 1560 50x105 4 Br/2 Ba Inc
07/05/2012 489,000 415,000 3014 Avenue E 50x100 Vac

Source: Manatee County Property Appraiser’s Office


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