Underwater houses are heading further down, thanks, surprisingly enough, to a major contributor to the recovery of the housing market: the short sale. The problem for many people trying to get a good value on their home – either for refinancing or for sales purposes – is that for every 30 days that a home is on the market, the housing market can change. These days, those changes usually will include the short sale of at least one home within the local area.
If a comparable area contains a short sale home, an appraiser must include at least one short sale in the appraisal. This can cause the values of everything in the area to plummet abruptly if a homeowner negotiated a “good” deal on the short sale of their home.
Interestingly, according to what Steve Madonna of Weichert Financial told The Philadelphia Inquirer, lenders, buyers, agents and sellers are all accepting this new, sizeable sinker on home values with some resourceful alternatives, like giving buyers credits to help close the gap between the listing price and the appraised values, or just lowering the sales price until it meets the appraised value and then moving smoothly forward to closing.
However, what no one seems to be doing is contesting the numbers. “Most agents are aware that the banks are making the rules,” Madonna said. “There really is no appeal process to the appraiser for a lower value.”
However, you can get another appraisal if a non-requisite type of property has been included. For example, one homeowner trying to refinance discovered that a sheriff’s sale had been used in the appraisal. He contacted other appraisers, who “both came in ‘almost a third higher than the first,’” he said.
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