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Market shift and low appraisals LONG VERSION Summer 2022

The uh, I think they call it ANSI, Appraisal National Standards Institute. So it’s really hard for an appraiser to make a mistake, ’cause the appraisers are trained, their work is reviewed when they turn it to us, and then our underwriter underwrites it. Certainly, if you think something is egregious, it’s worth talking about. But for the most part, there isn’t much missed. To challenge an appraisal, it really takes new comparables, preferably three. Don’t just send one. It might help, but really preferably three is the rule. If you can show three new comps, and I’m hoping there’ll be more and more comps because it seems like some more inventory is coming on the market, maybe it’s easier to find more comps that the appraiser didn’t already use, and argue, “Why not use this one? This one’s in the same neighborhood. Square footage is the same.” You really need to take a close look, don’t just do a zip code search or a neighborhood search and blizzard your loan officer with a dozen comps and think you’re good. I’ve seen that way too many times. You almost need to do an appraisal, you need to look at square footage, overall square footage, bedroom count, bathroom count. Uh, if it’s a home with a, with a lot, it’s a detached home with a lot, look at the lot size, look at the topography of the lot.

0:05:17.3 Speaker 1: Look at the curb appeal, look at has the home been renovated or not, and how do the comps stack up to that fact? You really have to go in and almost do an appraisal and say, “Look, here’s three comps we think are better or that you should have added, and here’s why.” And then you start to talk about bedrooms and bathrooms and finish, and lot, and, and parking and garage and off-street park… Whatever it is, you really have to substantiate, there should be a narrative with each new comp about why you’re using it. So that’s just a little bit about how I see the market going forward this year. We’ll see what happens going forward, I’ll touch… I’ll touch base more with more updates going into the, the year and next year. But I think we’re okay, I think we’re on sound footing. That’s what I tell my buyers. If you wanna buy a house, go buy a house. If, if you’re gonna wait, you’re just gonna pay more rent. Or if the house stays in the same value that it was today and you get it next year, what have you… What have you gained or what have you lost? [chuckle] You should’ve bought the house.

0:06:20.8 Speaker 1: You know, if you think that uh, $800,000 property is gonna be worth $600,000 in a year or two, if you really believe that, I guess you should wait. I don’t believe it, and I really haven’t seen it in our market ever in the past. Uh, if that’s your belief, you should certainly feel free to act on it, but I don’t, I don’t believe that. So anyway, I just wanted to share some of my market thoughts and some good data on appraisal challenges. You really should be having lengthy communication with your loan officer and putting together a strategy and a narrative and a cover letter and a plan on how you can defeat this low appraisal, and then from there, you’ve done your best and you just… You hope for the best from there and see how the appraiser responds. I hope that helps. Feel free to reach out to me with anything else related to appraisal values, the marketplace, interest rates, mortgage guideline questions, anything that I’ve talked about in this email or, or anything else. Always here to help, uh, and I hope these videos have helped you too. Thank you.