Home appraisers have faced a lot of accusations during the housing meltdown. They have been accused of contributing to the housing crisis through their inflation of home appraisals during the housing boom.
Now they are accused of setting very low home appraisals to protect banks which are concerned about again losing a lot of loans to delinquencies.
They are particularly criticized for the use of short sales and foreclosure sales as comparable sales in their analysis of home values.
If you are a buyer or a seller planning to hire your own home appraiser or preparing for the home appraisal to be conducted by the lender?s appraiser, know how home appraisers are now conducting their appraisals in the midst of a foreclosure-battered housing market so you would know how to choose a good appraiser or how to prepare for an appraisal.
Good home appraisers gather and analyze relevant, current and correct information from reputable sources about the market area where the subject property is located.
The best comparable sales that they use are recently-sold homes most similar to the property being appraised in terms of size, location, condition and features essential to buyers.
Good appraisers also know when to include remodeled features or home improvements and how much of the improvement cost to include in the final home value.
Despite criticisms from sellers and brokers about the use of short sales and foreclosure sales in home appraisals, good appraisers consider these distressed sales if they are representative of the current condition of the market. However, appraisers should investigate further the backgrounds of the transactions and look for atypical factors for the short sales or foreclosure sales.
For instance, a property may have been sold as a short sale because there is a concession made by the buyer or seller to the other party. Some foreclosure homes are also in damaged conditions, so appraisers should make adjustments.
There are legitimate foreclosure properties that can be used as comparable sales. A well-maintained bank-owned property similar in size, location and features to the subject property and sold without irregular considerations is a good material for comparable sales.
Additionally, good appraisers comply with the Uniform Standard of Professional Appraisal Practice, which requires them to be competent in the market and geographic area where the subject property is located.
