Do house appraisals account for condition of the house?

[jsamuel]

Like, say one house is comparable to yours, but has been trashed, holes in the walls, etc. It sold for way less than your house. Does an appraiser account for this in the appraisal? Just seems like so many people's house values go down for something like this which doesn't really reflect the value of a house that is in great condition.

[Donnachaidh]

1. A good appraiser does account for trashed homes. n/t

[JuniperLea]

2. Yes

And when you sell a battered house, you can usually expect people to negotiate the price down to compensate for what it will cost to repair.

[WatchWhatISay]

3. As a former real estate agent

my opinion is that if the bank thinks the loan applicant looks good, it will appraise for whatever it needs to. If the applicant looks risky, it probably won't. This manipulation of appraisals shares a big part of the responsiblity for the crisis we are in now. Remember who orders and pays for the appraisal. If the house doesn't appraise, the sale, as well as the loan, are likely to fall through and nobody gets paid except the appraiser - not the mortgage company, the Realtor or the Seller.

I have refinanced my house twice and both times the appraisal value came in at just what was needed for an 80 and 70% loan to value ratio. As an agent, in most cases I witnessed appraisals coming in at just exactly the contract sales price and not a penny more. Only rarely did an appraisal come in over the contract sales price, and I believe that is because some times it can cause the the owner to have "sellers remorse" (did I sell too low? should I try to get out of the contract?)

[jsamuel]

5. Thanks, that is interesting.

[John Q. Citizen]

8. I know a house appraisor I met while canvassing for Obama told me when he did

what he believed to be a real and honest appraisal, but it wasn't as much as the excepted offer price, the real estate agent told him he'd never get another one of his sales to appraise. This was back right before the general election, and the guy was pissed about what he saw as corruption in the appraisal process.

[Still Sensible]

4. Yes, but unfortunately that trashed home price will

still get figured in when calculating the average price per square foot in your neighborhood, which is pretty much the most important figure that will impact the appraisal of your house. If it is just one home in your neighborhood that is trashed--and subsequently sold--it won't matter so much, but if it is multiple houses like that it has probably dropped that average.

[Greyhound]

6. Not typically because appraisers generally work for the mortgage

brokers or lenders. The assumption is that an appraisal is an objective assessment, but the reality is that they work for a party with an interest and are biased toward those interests.

[jsamuel]

7. is there any reason why a mortgage company would want an appraisal to be low

so that a refinancing borrower does not have a 80% loan to value ratio?

[John Q. Citizen]

9. Not if they know they can sell the loan. it's in a bunch of people's interests when the appraisal

comes in at or slightly above the contract price.

[WatchWhatISay]

10. Of course there is

because the higher the risk (and every loan looks riskier in this economy) the more equity they want to see the borrower have, in order to lessen the chance of foreclosure and them having a property that is worth less than the loan value. So it makes perfect sense that right now, they want to be very conservative about appraised values.