Appriasers, AVM and airline tickets

It has always been a debate over the years that Agents and Appraisers “might” be inflating the value of homes to make the sale and get the loan from the bank.  That might happen with some folks and it is certainly the exception to the rule.  Lending has gotten tougher with new regulations and policies, since Fannie Mae and Freddie Mac have tightened things up.  Go figure they screwed everything up in the first place and now they are trying to clean up their act.  AT OUR COST.

Short Sales and Foreclosures are a dime a dozen now in some areas of the country.  some areas are actually seeing an increase in sales and decrease in inventory.  But what about the buyer and seller out there buying and selling the normal way?  What kind of trouble are they getting into?  Appraisals and unrealistic banks!

Let me  explain.  a while back our industry was hit with Zillow.  Giving estimates for your home and what it might be worth.  Could be the end of the real estate agent as we know it.  That could be further from the truth.  Relying on the value that these internet savvy websites come up with is simple a figure based on public tax records, square footage (usually wrong) and what has recently sold in the area.  IT HAS NOTHING TO DO WITH WHAT IS INSIDE THE HOUSE AND THE IMPROVEMENTS  or maybe the lack of improvements.

I once was asked how this was going to work and I simple said it won’t.  A house is much more than just buying a seat on a plane, train or bus.  I know that the seat on that plane is the same if I seat in the front row or the back row and the exit row could be a little more.  But a house is not the same.

So why do banks order an appraisal, have the appraiser go out and look at the homes and then reply so much on an AVM?  The appraiser can distinguish between a foreclosure home value and a normal sales in the area and justify that.  But an AVM doesn’t see that logic at all.  But the bank uses the AVM to trump the appraiser.  Why?

I can’t answer that question only to say that if I knew the answer, the lending industry wouldn’t be in the mess we are in now.

I feel for folks that have lost their homes and cannot afford the monthly mortgage payments and need to go short sale.  Heck that could be me one day— but I think I took steps to avoid that a long time ago.  But the folks that are selling their home the old fashion way and have to compete with short sales and foreclosures comps is really not fair.

But then again life is not fair but we try to make the most of it the best way we can.  Regardless.

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