Appraisals and Road Blocks

It’s Still All About The Real Estate Appraising

Recently there’s been a lot of hubbub about the effects of the new Housing Valuation Code of Conduct – HVCC. The HVCC was intended to create a system to eliminate inflated values by either bad or novice appraisers or by predatory lenders. The resulting unintended consequences have produced a severe pendulum swing in the opposite direction of what the program was intended to accomplish.

For the buyers that have to obtain a mortgage a home appraising at or above the contracted price is key. No matter how much anyone loves or needs a home if that appraisal is below the contracted purchase price things can get sticky fast.

There’s no doubt that novels can be written about real estate that hasn’t appraised since the Code was enacted in May of 2009. Purchase price adjustments are the common concession when seller really wants to sell. While buyers always have the opportunity to bring cash to closing to make up the difference they usually find attractive housing opportunities elsewhere instead of laying out cash when an appraisal comes in low.

With the implementation of the HVCC some properties have sold at bargain prices due to the resulting low appraisals. There’s a bit of seller disbelief or denial with the disparity of what a home was thought to be worth and what the most probable current value is. discouraged sellers, with their home languishing on the market, opt for an appraisal or a CMA - comparative market analysis just to make sure they’re priced accurately.

While the seller’s appraisal is a great tool to make sure they’ll not be leaving cash on the table by reducing their listing price too much, it’s important for sellers to know that the appraisal has a limited shelf life. How old does an appraisal have to be to make it old or out of date? It could be as little as hours, days or a few short weeks.

Those appraisals are based on closed sales of like kind properties and the real estate market is continuously changing. Depending upon the price range and popularity with buyers there could be closings within days that render the appraisal price obsolete.

Sellers struggle to understand that only a few short weeks ago they had an appraisal completed, priced their home appropriately and it is now currently above market value due to more recent closings. It literally can happen that fast, especially in production build communities where the biggest variable between homes is whether it has a pool or not.

An appraisal or a CMA is no more than a snapshot of value at a specific time. It’s imperative to closely follow the market after the home’s value is estimated. The homes that were pending sale at the time of the appraisal will close sale, maybe even the next day. They’re the new April fresh comparables used for appraisals and valuation whether the appraisal is a month or a week old.

The busy winter season is just around the corner. If you’ve had your home for sale on cruise control over the summer it’s time to see at what’s recently closed sale and make sure your home is priced to not only sell but to appraise for the sale price.


Real Life in Bonita Springs is a project by Chris Griffith dedicated to writing useful blog posts for consumers about the Bonita Springs, Florida area.  Find out what it is really like to live in Bonita Springs, Florida by reading about our fair city. You’ll get the latest in local real estate information, Bonita Springs real estate market reports and a little bit of humor.  If you have topic ideas, feel free to request a story about the idea, after all, this site is just for you.

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