Hidden Danger of Home Appraisal Process
As the market begins to correct back and appreciating, there’s a hidden danger that lurks in transactions that’s an old fiend that has gotten worse. We forgot about this problem because when the market continues to plummet, appraisals are not a problem. However, the Home Appraisal Process is completely broken. That’s nothing new. The home appraisal process was broken before. In fact, it was so bad that lenders sometimes worked together to make a deal work that was not in the best interest or at the very least, the most honest deal for the client.
Now, the home appraisal process consists of scared appraisers that answer to third parties with no interest in accuracy, they are only interested in keeping this third party happy. In theory this works well. “An uninterested third party” can give you a unbiased opinion… Except when the opinion is completely wrong. The appraiser wants to save face. Unfortunately, this only works when the appraisal is easy and fits nicely into a box. An example of this might be a neighborhood like Hamilton Mill where there are enough sold homes that are similar.
However, should you buy a custom home or one in an area where the turnover rate is low (this is usually a good thing), then expect possibly the worst. So the moral of this post is that as real estate agents, we (or you need to if you don’t have a real estate agent) need to vet the loan companies to see who they are using as appraisers TOO. We also need to prepare the buyers for what may occur if the appraisal is not an easy one. If the appraisal requires any real research, then you may be a victim of the hidden danger of the home appraisal process.
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