Curious on how many other agents across the country are seeing an increase in deals falling apart from overworked and restricted appraisers?
Lender pulls comps and uses the best comps available. They use comps regardless of financing terms. Two of the comps are the same in every respect except that one was a cash deal and one was financed. The cash deal was $10k over our asking price, the financed one was $10k under our asking price, the third is under our asking price as well. The appraiser values the subject under contract price. The lender says the seller has to reduce price in order for the financing to go through. The seller is penalized and eats the difference to get the deal done.
The next appraisal done on some other deal, uses our subject as a good comp, with a deflated value for loan purposes? Now the values are forcing downward.
The first rule of the value of real estate is determined on what a buyer is willing to pay.
An appraisal is simply a tool the lenders use to protect their interest in real estate and verify the collateral is worth it. If the lenders would stop lending money to consumers based upon if they are breathing or not, they would not need to protect their interest. They created the fiasco by predatory lending and corrupting appraisals on high finance loans that should never have been done in any event. Now they are back to their old tricks of forcing value again and effecting the market with third party opinions to protect the lender.
Let the buyers and sellers decide value and if the buyer cannot afford the property, then so be it. Affordable housing for the people without any blood in the game needs to stop.
Take it back to the way it used to be, require 20% down and lose the credit score. Make the lenders do their job and offer loans based upon the people. This will eliminate predatory lending and lender corruption of appraisers. This will eliminate discrepancies in values that are less than the downpayment because the lender will be protected. Simple.
As a listing agent, how do you tell a seller not to take an offer based upon potential future value discrepancies? I don't suppose we would get many referrals from this seller.
The system is still corrupt for fly by night lenders to take money from consumers who are not able to afford real estate in any event.