Beginning this week, Fannie Mae and Freddie Mac are changing the way that lenders order appraisals. Rather than calling trusted, experienced local appraisers, most lenders will now be required to submit their requests through a third-party entity that will indiscriminately assign the job to the next appraiser in line.

The new rules also eliminate the ability of agents and lenders to assist an appraiserwith comps or other meaningful market data.

While artificially inflated values were a part of the “irrational exuberance” that lead to the bubble in the real estate market, an over-correction of the process will do more harm than good.I’m already seeing willing and able buyers making strong offers on quality homes here in Brentwood, CA for example, then fighting a conservative appraisal who uses the most run-down, beat-up, least-desirable REO properties as comparable sales.

The ability of agents to work with appraisers to justify a sales price has always been an important part of the selling process. If a buyer is never allowed to pay a price higher than the last comparable sale as a result of market dynamics, we will never see prices move upward again.

And that’s what the new appraisal ordering and submission rules are designed to do - to eliminate any influence that the agents or lenders in a transaction might have on an appraiser (An appraiser who, in this system, may have no local knowledge or limited experience, and who’s fee is being reduced by the new rules).

As with most bureaucratic decisions, the motive here is pure. But this system is not going to work like it is intended, and transactions that are already difficult, are about to have an extra layer of complexity injected.

No related posts.

Brentwood, CA Real Esate - Homes Under Contract March 2009

We can debate whether or not we’ve reached the bottom of the housing market out here in East Contra Costa County, but as far as buyers of Brentwood homes are concerned, now is the time to act!

Maybe it’s historically low interest rates that are driving sales, maybe it’s prices that are less than half of what we saw at the peak of the market. But either way, these numbers don’t lie. 172 buyers pulled the trigger on Brentwood homes for sale last month, 64% more than did so last March and considerably more than in any single month during the past year.

Anecdotal analysis of the market would say the same thing - plenty of willing and able buyers, and not enough homes to go around. It seems that with choices limited to the properties that the banks were able to push through the foreclosure process in spite of California’s moratoriums, buyers looking to take advantage of these seemingly rock-bottom prices and ultra-cheap money aren’t going to wait for the summer buying season - they’re ready to go now!

Related posts:

1. New Appraisal Rules Won’t Help Markets