Refinance

3 Myths of Real Estate Appraisals





Explore 3 myths of real estate appraisals that each individual home owner, potential household buyer and real estate investor need to know!

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27 comments

  1. Great videos. Thank you so much.

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  2. This is good shit.

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  3. Phil, you are giving all of us so much useful information. Thank you for what you do!

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  4. Good info as usual. Thanks for sharing!

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  5. What is a bigger scam than the Stock Market, and a car salesman, and a typical broker? The Housing market. haha Quants do the same thing on CDO's . Market ratings are subjective

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  6. Phil is back !

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  7. Phil 😑 not true. I can send you emails and screenshot of myself and partners being able to move fha Apprasial report to another lender /loan officer. You give out rich information most times however occasionally you give wrong information

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  8. I am an appraiser for 35 years. 1. The federal lending guidelines mandate that the appraisal is the property of the client. For a conventional transaction if a buyer decides to switch lenders, the second lender should order what's called a 'new assignment' from the original appraiser. The cost of that depends on the timing. If the report was just done and the lender is ok with the original effective date and the appraiser who developed the report, the fee can be quite low. Some lenders will not accept an appraisal from an appraiser they have not vetted. They will want to order a new one. It makes it difficult and more expensive for the borrower. It seems unfair but talk to the feds about it. If it is an FHA transaction, the appraisal follows the HOUSE for 6 months. If the borrowers move on to another property and a new borrower steps in, the original appraisal can be used no matter what lender the new borrower picks. The new borrower shouldn't have to pay for the FHA appraisal that is currently in effect for that property. 2. I don't use the sale price to bias the results of a report and neither do any of the other appraisers I associate with. We don't search for data by price until we have the probable price range of the product determined by looking at the macro data and working it down to the micro. We don't opine a value based on the sale price on an agreement of sale. Appraisers who do, are playing a numbers game and are not doing their jobs. Ask the agents in your area how many of them have lost deals because a sale price in an agreement of sale could not be supported with current sold, pending and active comps. According to them, it's epidemic. There are many borrowers who are grateful that they were given the opportunity to renegotiate a sales price once they better understand the market forces. 3. Again, I couldn't care less what you are paying for a house. The market is the market and the market value opinion has nothing to do with your objective. Condition is considered by the appraiser as seriously as a buyer would, regardless of the reason for the appraisal. If the house needs updating, it needs updating, and this will be reflected in the report; if it doesn't have granite counters and the market favors them, there should be an adjustment. And any appraiser who relies solely on price per square foot is not doing their job. Economy of scale, location, land values, condition, size, amenities all factor into that figure and it is not to be used as an indication of value. That's something we see others do (engineers, commercial appraisers doing residential, etc.) but not something any credible residential appraiser should be doing. Thank you for your video.

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  9. . 😊

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  10. Thank you…

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  11. As an appraiser, it would be stupid to cancel a sale with a market value 3k under the selling price!!!

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  12. I've always thought that the appraiser knowing the "strike" price of a sale was a serious biasing factor in a loan-fueled transaction. The biggest source of bias, IMO, is the desire of the appraiser to get more and more appraisal orders (eg; continuing business) from the ordering bank. This is from my grand experience of 2 RE deals, LOL, one of which was owner financed and she knocked $100K off the $400K-425K price she had been asking….to the point where it was completely impossible to stand by and not buy it. Even though it took every cent I had. The worst RE mistake I ever made was selling that building. I left 2x the amount of money on the table than what it cost to buy the building. Horrible!

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  13. Value is always subjective. I don't care who appraises it, what matters is what someone is willing to pay for it.

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  14. Thank you for your knowledge. I've been owner financings(rent to own)my remodels with a one year warranty, 30 years at 7% with as much down as i can get. BUT… none of my customers have ever asked for an appraisal. Should I be providing one upfront anyway???

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  15. There is a MYTH #4 . The appraised value that the appraiser put in the report is final!!!! Answer : NOTTTTTT . You can always ask for a second appraisal. and usually if between the first appraiser and second it is a discrepancy of more than 10% Variance it is time for a 3rd one . The rule of thumb is if values between 2 reports is under 10% discrepancy (as closer as better) you got there a pretty good chance for a good report. If not, get a another one. Will you agree Phil??!?!

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  16. Always great stuff Phil. Watch often but don't comment. I'm learning too much. A couple of points.
    The consumer is legally entitled to a copy of the appraisal. They must be sent out within 3 days of receipt. However, most lenders won't accept a copy done for another so you may end up paying for another one anyway.
    You nailed it on the bias of a purchase appraisal. How can the appraiser ignore the sales price listed right on the contract they are required to have a copy of and also when they check the MLS listing. An appraiser friend of mine once told me just what you said. The true value of a property is what buyer and seller come to agreement on. Very important however, that it is an "arms length transaction". The parties don't know each other. On a refinance however they are flying blind. Which is so why so many refinance transactions crash and burn when equity is tight. Appraisers will go conservative as they don't really have to answer to anyone on their "opinion of value". (That could be a whole other conversation).
    One reason purchase appraisals come in so close to purchase contract, hopefully just above, is that if the appraiser finds easy comps to justify the contract price, they won't go out of their way looking for more comps to see just how high the value may truly be. Their only obligation is to insure to the lender that it is at least worth what the buyer is paying for it.
    My biggest issue with appraisals is actually two fold. First, the appraiser is signing their name to it stating it is their opinion of value. BS. Their opinion is shoved down their throat by the comps available. That same appraiser friend also once said, if my professional opinion of value on a house is $xxx, but I don't have the comps currently available to back it up, my opinion is worthless to the lender. The other issue is why lenders are so micro focused on today's one day snapshot in time value. i.e. a purchase contract for $250k and an appraisal at $248k. The deal crashes and the parties have to redo the contract. How about CLOSE ENOUGH! Last month or next month the comps could have that value at $255k or $245k. What the lender should really focus on is what will it be worth down the road if they need to foreclose on it? That's when the value really matters. The entire lending industry, of which i'm a part, is completely a smoke and mirrors house of cards. From FICO scores to appraised values to monthly debt ratios.

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  17. Would asking for a copy of the appraisel be a problem? or asking the bank who they would approve of doing the appraisel and pay them like that?

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  18. Rule number 3 is what I see as a big roadblock for folks trying to BRRRR. The only way around it is if you have a huge down payment

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  19. Great video Phil,, Keep up the great work.

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  20. The lender gave me a copy of the appraisal, can i hand that over if iI ever change?

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  21. Dude, I love this guy- so generous with your knowledge, I hope it’s all returned back to you with interest

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  22. The value of real estate is a function of the cost and structure of the financing available at purchase or refinance.

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  23. Hi Phil, I have a question. My older client approached him and asked him if he wants to purchase their house. It’s located in Tacoma,WA it’s a 3 bedrooms 2 bathrooms. I did a comp on it and it shows $183 but she said wants to sell to my brother for $155,000. Do you think it’s a good deal? She said price is still negotiable. Property has new roofing, new water heater,needs cosmetic and probably new windows. My brother wants to buy the property but his bank told him that he’s not qualified because his salary doesn’t qualify him. I told him perhaps he should wholesale the property but I don’t know how to do the wholesale deal let alone put it under contracts. Can you advise on this please? Thank you so much sir.

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  24. Make more videos Phill!

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  25. Big Phil keepin’ it poppin’

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  26. I'm #100 thumb up!!

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  27. Oh man it was exciting to see a new Phil vid pop up on the home page 👌👌

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