Appraisals in Fresno - Challenging Times
Posted by Harold Penner on Friday, July 16th, 2010 at 3:55pm.August 2009 --
Appraisal
Update
In May 2009, the “Home Valuation Code of Conduct” was
adopted by all Freddie Mac and Fannie Mae backed loans (which accounts
for over half of the loans in the United States). These regulations
were created out of a concern that a lender who directly hires the
appraiser for a property could unduly influence or pressure the
appraiser to adjust the price. So, the government backed a new policy
that appraisals must now be ordered through a third-party company in
order to limit communication between the appraiser and the lender or
realtor.
The act has had some negative consequences. Local
lenders were previously able to choose their appraisers based on
quality, knowledge and experience. Now the decision of who completes an
appraisal is left to a national or regional appraisal company who often
assigns the job to the lowest bidder regardless of experience and
expertise. Additionally, many independent appraisers with years of
experience in the local market now must join a third party company in
order to continue to do business.
Here are some recent news
stories covering this issue:
Daily
Herald - Utah
Daily
Press - Virginia
Detroit
Free Press - Michigan
Fresno Market Conditions:
These
regulations come at a time of change in Fresno/Clovis real estate which
makes accurate appraisals all the more critical. In the past 3 months,
the average price of sold homes, the speed of selling the home and the
number of homes selling above the asking price have all inched up. One
reason for this is that there are less homes available today than there
were 3 months ago due to a decrease in the number of foreclosures. The
other reason is qualified buyers taking advantage of current tax
credits (only available until November 30, 2009) and low prices.
Here
are the latest statistics for residential homes sold in Fresno and
Madera Counties:
Average Selling Price
– All Homes
- $167,346 (July 2009) vs. $155,875 (April 2009)
– Foreclosures Only
- $130,899 (July 2009) vs. $123,477 (April 2009)
Days on
Market
- All Homes - 50% sold in 1-30 Days (July 2009) vs. 30%
(April 2009)
- Foreclosures Only - 61% sold 1-30 Days (July 2009) vs.
40% (April 2009)
Listing Price vs. Selling Price –
-
All Homes – 101% over asking price (July 2009) vs. 99% (April 2009)
-
Foreclosures - 105% over asking price (July 2009) vs. 100% (April 2009)
So,
in other words, the majority of houses listed in Fresno and Madera
counties are currently selling above asking price. This is
especially true in north Fresno and Clovis as well as homes priced under
$200,000.
Consequently, the latest challenge in Fresno real
estate is not finding a buyer for a home but instead having the house
appraise for the sold price. I have seen more and more cases of buyers
involved in a bidding war for a house and then the sale being cancelled
because a seller cannot afford to lower the purchase price to the
appraised value. Or there have been more cases of sellers choosing to
sell to a cash buyer for a lower price instead of a buyer with a
conventional loan to avoid any appraisal concerns. This makes qualified
appraisers all the more important.
JULY 2009 MARKET STATISTICS* - Fresno and Madera Counties
* Unless otherwise indicated, all stats
are based on residential sales in Fresno and Madera counties. |
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