The recent news of the failings of the subprime lenders has resulting in finger pointing the blame to many areas of the lending industry. You should be aware that there has been an abundance of Lending Institutions during the last three – five years pressuring appraisers to a certain value conclusion. In fact, you may not be aware of this but some lenders will fax out a "comp search" to 10 or more appraisers to see who will provide a "sight unseen" value conclusion (which is legally an appraisal) of a property. Mann & Associates will not and has not participated in such activities. Now, we will typically pull the appropriate subject and market data required for any analysis – and if we see a large variance between what the owner thinks their property is worth versus what we are observing in the marketplace – we will make a courtesy call to our client. In most cases, when loan to value ratios are extremely tight, we will not be able to accurately develop a conclusion of market value until we have inspected and analyzed the property under appraisal. Many factors are involved in the valuation of a residential property, and the external influences are just as important as the internal or onsite influences of value contributors.
You may have heard or said the phrase "the property did not appraise"...the correct terminology is actually – ALL properties will appraise at a figure – it just may not be the number that someone wanted.
Fear not – we are going through a cycle where we anticipate the slight increase of mortgage rates after nearly 5 years of nearly all time lows. Many of us remember 18% and 13%-14% rates when we purchased our own homes in the 1980’s. The current cycle is actually a cleansing cycle. Thanks to the subprime market financing, we had an all time surge of first time homebuyers for a long time (yes, 5 years is a long time). The increased demand for housing has resulted in the increase of prices (the Principle of Supply and Demand). For a while we had a shortage of active listings which resulted in a bidding war – prices increased at an alarming rate resulting in "auction value" versus "market value". Appraisers could not use the term "auction value" therefore, our reports were interpreted as market value. Anyone studying economics can confirm that no commodity continues to increase perpetually, therefore, an astute observer of the marketplace must also recognize that there must be a period of correction. The increase of foreclosure sales may soften prices of real estate, however, the overall economy does not appear to demonstrate that a "bubble" has burst – maybe a slow leak for awhile. Again, this is not abonormal market behavior – so hang onto your hat and don’t do anything rash – you will be fine as long as you continue to make your mortgage payments. The real estate market will recover and rebound in the future – when is that future now? Don’t know that answer.
We have spent a career taking the time necessary to provide you with a fair and trustworthy value conclusion. Sometimes it takes a little longer and it may cost a little more – but if you want or need a reliable conclusion of market value then Mann & Associates would be an excellent choice to work with.
Contact Mann & Associates for fast action on residential appraisal services. Our expert appraisers know the territory and can be relied upon for prompt, thorough service.
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We serve the California Counties of Alameda, Contra Costa, Santa Clara, San Joaquin, San Mateo and Santa Cruz.
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