Wednesday, August 22, 2007

Finally, Honest appraisals.

Redfin has some nice new blogs about L.A., as y'all know. Here's an excerpt from a recent post by Ron DeGenova that I found particularly interesting. Ron is an appraiser who refused to green-light a deal:

"Today, a tragic thing happened when I was appraising a townhome for a purchase... I was assigned to appraise a 2000 sq/ft. 3 bedrooms, 2.5 bath townhome in Newhall, in the city of Santa Clarita. The subject property was built in 1978 and about a year ago, these townhomes were going for about $470,000. Today, I am seeing comparables at $420,000 and $435,000. The seller purchased the subject in March 2007 for $404,000. Per the listing agent, it was a fixer. I was told that the current owner put about $25,000 in up-grades and listed it on the MLS this June for $474,900. A buyer has come along and offered $470,000.

"YIKES! Put on the breaks! The bank has to fund the loan yet. At this point, I am asked to step in and supply to the bank an appraisal report, to verify if the value is there. I am sad to report that comparables in the area do not support the value. I am then provided a Fee Appraisal report ( an appraisal done independently of the bank). I notice that in order to achieve the value of $470,000, the Fee Appraiser used comps in an adjacent townhouse tract that was built in the year 2001and made only a $10,000 adjustment for age and condition. By definition, a comparable is a property that shares similar characteristics to the subject. A townhouse built in 2001 is not a comp for a property built in 1978. My value for the subject is $435,000. So now the seller and buyer will have to work out how they plan to carry out this deal. The buyer may end up walking from the purchase."

Read the whole thing here.


J said...

Did you have an article in LA Times LALand last week? Saw you had linked to our redfin blog and your site looks very familiar.

Kate said...

Yes, for the last couple of months I have done guest posts on L.A. Land.