Appraisals: Are You Getting Your Home’s True Value?
The new appraisal regulations that went into effect earlier this year were designed to protect consumers from inflated appraised values on homes because lenders would no longer be able to ’push’ appraisers to give them a higher value. When the market was hot, a lender would ’suggest’ the value the home should appraise for to ensure that the deal would fit the lender’s program. Also, prior to the guidelines changes, many appraisers worked directly for the lenders and were, therefore, more incline to follow the lender’s suggestions. After the bust, many homeowners discovered their home could not reasonably be valued for the price they paid and were, at times, upside down in their mortgage, meaning they owed more than the home’s value. While other factors contributed to lower values in many of the nation’s markets, inflated appraisals were a factor for many homeowners.
The new guidelines, designed to protect the consumer, are now having just the opposite effect. With the significant drop in interest rates this year and a very tight economy, many homeowners, wanting to refinance to save money, discovered that the new appraisal guidelines are working against them again.
Appraisals have to be ordered through a third-party, which often results in an appraisal being assigned to whoever can get the appraisal done the fastest. The changes in the forms and guidelines have also resulted in a significant increase in the cost of the appraisal. While there are many professional appraisers with a strong sense of integrity, there are still a lot of appraisers that are simply sloppy and fail to be conscientious about their final report. Again, if the appraiser ‘assigned’ doesn’t know the area, isn’t familiar with the market and doesn’t look for appropriate comparables, the homeowner is the one that suffers the consequences.
Next, Steps you can take to make sure you get a fair appraisal!