Appraisals: Reflecting Market or Hindering the Ventura County market?
Low-ball appraisals in Ventura County are hurting home sales, real estate agents and home sellers complain. In recent months, low housing inventories in many markets have sparked bidding wars on Ventura County some homes. The bidding wars have helped push up home prices higher than recent comparable sales, agents say. But a low appraisal then threatens to derail the deal, they add.
Appraisers in Ventura County have faced criticism over their property valuations in recent years, and have been accused of using foreclosures and short sales as comparable sales—without adjustment.
However, Ventura County appraisal firms say the idea that appraisers are suppressing home sales is misguided and unfounded. Appraisers say they’re misunderstood—they don’t set the value; they reflect it.
“We often hear from real estate agents, homebuilders and others that appraisals are ‘killing deals,’ and/or holding back the economic recovery,” Sara Stephens, president of the Appraisal Institute, testified to Congress earlier this year. “These accusations are unfounded and misguided. Appraisals are not meant to simply support contracts—they are obtained to help lenders assess their overall risk. Fundamentally, it does neither the borrower nor lender any good to enter into a mortgage for more than the value of the property.”
I recently represented a buyer couple relocating to Ventura County that were determined to identify a home and get under contract in less than a week. They accomplished that by putting in an offer slightly over list price, but not so far out of line that they were over paying for their Ventura County home. Although I provided my clients with the comparables and suggested a lower offer price than they offered, the extra they offered was worth it to them to know that they secured a place to live. The appraisal came in $15,000 less than offer price and the bank accepted the appraised value. So in this case, the buyers had a win-win outcome. When the Ventura County appraisal comes in substantially less than the contract price, it really is the buyers and buyer’s agent that are to blame. The Ventura County buyer’s agent should be providing comps and allowing the buyers to come up with their own offer price rather than letting them make an offer based on the list price.
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