With the changing housing market, many homes are closing at the listed price, but there are substantial benefits that are coming to the buyers besides the house. That is part of the reason that home values have remain high in the face of the soft market. Most notorious for these practices is the new home builders.
Suppose, for instance, the builder waves a $50,000 Lexus SUV in front of someone looking at a $500,000 house that has been finished and sitting empty for several months. The place is costing the builder money each month. But rather than lower the price and make his previous buyers unhappy, he decides to toss in a car to get rid of it.
If the buyer bites, the house he agrees to pay half-a-million dollars for is really worth only $450,000. And if the buyer is seeking an 80% loan, he’d be able to borrow only $360,000 instead of the $400,000 he thought he could. Now the transaction is $40,000 short, and the difference has to come out of the buyer’s pocket. via the Los Angeles Times.
So now appraisers have to keep an eye out for the new boat in the driveway, or that the builder advertised a special perk for new buyers. Otherwise the home will be appraised at one level and the true value, and the banks exposure, is much different.
I can not believe that this is the sole reason property values have not dipped much, I think that is mainly because sellers are not in that much of a hurry. However it can explain why new home sale prices have not dipped drastically in the face of record inventories. The Bloodhound Blog has an interesting story about a buyer and the deal he got buying new that provides a great example of the deals builders are offering these days.
So appraisers, you have to put on you x-ray glasses and do some detective work these days. Good Luck.
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With stuff like this happening how are Zillow et al even meant to get close to a true value.