the reason for some greater baton rouge low appraisals | baton rouge home appraisal

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Home : Blogs : William D. Cobb FHA Home Appraiser: Baton Rouge Real Estate News

William D. Cobb FHA Home

AppraiserBaton Rouge, LA

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ABOUT AVG:

The Reason For Some Greater Baton Rouge Low Appraisals?

http://www.batonrougerealestatetrends.net/ - Are Greater Baton Rouge Home Sales Stalling In The

Under $140K Range? This is a post below I made to the Baton Rouge Real Estate Buzz Facebook Page

Group on April 4, 2011.

I'm noticing a trend in the $100K to $140K range where home sales have slowed, if not stalled. I'm reading

about mortgages drying up for some. I'm looking at a 1004MC or Market Conditions Form right now in 70810

Area 53 where 12 months ago there were 17 sales and 2 months supply and in First Quarter 2011 only 1 sale

in current 3 month quarter and 49 month supply. Of course, Baton Rouge home sales aren't totally stalled for all

price ranges, but for the under $140K range, there certainly has been a slowdown and increase in supply.

Here's the recent examples below.

This 1004MC or Market Conditions Report Based On Sub-Market Solds and Listings For an

overbuilt home in Hermitage Subdivision, but using 1,200sf to 2300sf lowered price homes as comps

in Area 53. From 17 sales 12 months ago to only 1 in current 3 months. Months supply of inventory 12

months ago was 21 months and currently it's 48 months. Median sales price appeared to remain stable. It

actuall increased BUT trend is not called ust based on 1 sale.

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4/5/2011 The Reason For Some Greater Baton Ro

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GREATER BATON ROUGE

PRE-LISTING APPRAISALS

EXPLAINED BY VIDEO:

NEED TO APPEAL YOUR

LOCAL PROPERTY TAX

ASSESSMENT?

EASTERLY LAKES 2010

UPDATE:

$100 DESKTOP HOME

APPRAISALS FOR CREDIT

UNIONS, CPAS NOT FOR

SAME TREND IN DENHAM SPRINGS FOR 2 HOMES. I saw this exact same trend in Denham

Springs last week. A couple purchased a home for $141K in 2007, surely a Post Katrina high price, and it

appraised in low $130s in 2011 due to expected market correction. There was going to be a correction!

1004MC or Market Conditions Data showed 8 sales and 9 month supply 12 months ago and only 2 sales and

36 month supply in current 3 month period. In this case, median sales prices had declined, corrected.

This 1004MC Based On Sub-Market Solds and Listings For a 1,500sf 40 yr old home in SouthWoodcrest Subdivision. From 9 sales 12 months ago to only 1 in current 3 months for past 2 quarters.

Months supply of inventory 12 months ago was only 4 months and currently it's 45 months. Median Sales

Price was $128,450 12 months ago and is now $124,125, a dip of -3.4%. Also, the Median Sold Days

On The Market increased from 76 days 12 months ago to 191 in Q1 2011 .

This 1004MC or Market Conditions Report Based On Sub-Market Solds and Listings For a 1,150sf

40 yr old home in Sara Estate Subdivision. From 9 sales 12 months ago to only 1 in current 3 months for

past 2 quarters. Months supply of inventory 12 months ago was only 4 months and currently it's 45 months.

Median sales price appeared to remain stable.

The Positive In The Market! I do know there is a lot of positive chatter from local Real Estate Agents on

FB on the uptick in home buyer interest....and that's a positive for the market.




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Posted by William D. Cobb FHA

Home Appraiseron 04/05/2011 Comments (0)

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PART OF THE REASON FOR "LOW APPRAISALS". As home appraisers, the Big Banks are really

concerned about Collateral Risk and want to know much more about the markets they lend in from the home

appraisal. This is why today's home appraiser works a couple of hours longer on each report to deliver all of

this extra data, to better understand the markets they operate in and apply market based adjustments, whether

those adjustments support a purchase agreement or not. Stats like I'm reporting here aren't obvious on the

surface when it comes to pricing a home for a listing BUT are made more transparent at appraisal time. Such

stats as 45 months supply, declining median sales prices and average days on the market of 191 days do

influence the final outcome on an appraisal and helps the lender make the decision as to if they are going to take

the risk to lend in a market. Underwriters can choose to "cut" the appraised value.

In my opinion, sometimes a "Low Appraisal" isn't really a low appraisal but more of a reflection on the reality in

that market at that time period. And, that period of time could be months and months after that Agent's sign

went into the ground in front of that home. Markets Change! After all, if the market indicators above in the

1004MC were known to only the Appraiser and not known by the Agent marketing the home, then can you

now see how and why appraisers are armed with more knowledge of market interaction? And, in the case

where median sales prices were declining, can you see how that if this is not known by listing agents the trouble

this causes at appraisal time? This is the newer depth of market analysis we appraisers are seeing in the markets

we operate in AND the market analysis the average real estate agent is not seeing in the same market. Can you

understand now why Fannie Mae, Freddie Mac, FHA, RD, VA and Banks want appraisers looking at these

numbers more closely? I as a home appraiser certainly can.

Sometimes low appraisals happen because the overpriced listing was based on what the seller wanted

versus pricing that home based on market support. Sometimes low appraisals happen because the homewasn't properly measured and may be smaller than stated. Sometimes low appraisals happen because

excessive seller paid concessions were not deducted from the comps used by Agent to establish the listing

price. Fannie Mae instructs appraisers to deduct excessive seller paid concessions and expects Agents to do

the same at listing time. And, when the comps or solds used in the appraisal state seller paid concessions of

$6,000 to $8,000 to $10,000 to $12,000, then those excessive concessions will be deducted from those

comps. If typical is $3,000, then in the example above, -$3000, $-5000, -$7,000 and -$9,000 will be

deducted to bring these comps back down to market normalcy! Fannie Mae, FHA and lenders know that

when there is no "skin-in-the-game" or downpayment, they are more likely to get that home back. And, there

are some P.A.'s written to utilize excessive seller paid concessions to get people into housing. It's as if the

regulations are asking the appraisers to help correct this situation in the market.

A Decrease In Mortgage Lending In These Price Ranges? Is there a decrease in mortgage lending in

these price ranges or just harder to qualify for a mortgage loan....or both?



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