Understanding why our country’s appraisal system is broken and what borrowers can do to secure the highest value for their home is important for any reverse mortgage borrower. Why it’s important to know what you home appraises for Property appraisals provide an unbiased assessment of what a home is currently worth, but when it comes to comps, appraisals simply follow the market trends. Each new appraisal is based on recent sales activity that occurred in the local area. In other words, nearby home sales are considered by the appraiser to be a baseline value, and only then are unique features of the property considered in adding or subtracting from that initial value. Just a few years ago, home prices were rising quickly and significantly. That meant appraisals were moving higher and higher with each new sale. Bidding wars for properties in some parts of the country drove up the appraised values of all nearby properties, creating a ripple effect throughout the fabric of the nation’s entire housing market. Now, prices have been falling, and the trend is playing out in the other direction. Since each new mortgage requires an appraisal that supports the value of the loan, mortgages have become more difficult to obtain as appraisals have been coming in at lower and lower levels. Many prospective home sales are being cancelled because the appraisals won’t support the mortgage the new buyer needs to complete the deal. In a recent report, the National Association of Realtors estimated that about 16% of potential home purchase contracts fail to close because of low appraisals. What Legacy Reverse Mortgage has to say about falling appraisal values Summing up the problem and the solution in one shot, Jim Cory, CEO of Legacy Reverse Mortgage, has said, â€The new regulations don’t provide for the appraiser’s competency, familiarity with the area, and attention to detail. In short, there is a lack of accountability in the quality of the appraisers and individual appraisals.†And that’s why it’s important to work with the most qualified professionals, he says. Still, it’s these very conditions that led the Wall Street Journal to recently call our country’s appraisal system â€brokenâ€. How Legacy appraises their borrower’s homes It’s obviously tough to find a good Appraisal Management Company (AMC) who is professional, dedicated and fair, but the team at Legacy believes they’ve done just that. The San Diego-based lender uses Landmark Reverse, one of the few AMC that gets the appraisal done right the first time. In the past two months alone, Legacy says they’ve successfully fought three separate appraisals that came in below what both the company and the borrower would have guessed would be fair. By using some overlooked data that Legacy was able to provide to Landmark, Landmark was able to secure an increase in home value for all three, resulting in a more accurate estimation of the home’s value; a good thing for all parties involved.
Please Rate this Article 5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
