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Appraisals: Costing Us Equity? Its not just location location in this market. Much more complex issues drive value of both residential and investment property. When serious damage is done to an asset class and there is a big re-think regarding its true  worth, no one truly knows what its worth,
past assumptions may no longer be relevant. So appraisers are shooting
in the dark. Without significant sale or leasing activity, it becomes
difficult to do comps. And looking back is useless, since we know the
data series is completely debunked.FDIC Lawsuits The FDIC has taken over more then 200 banks in the last 2 years and is considering legal claims against anyone involved in a bank failing. If an appraiser did an appraisal for a failed bank, the FDIC could look to sue. Many appraisers are concerned that there appraisals may be considered high in light of all that equity loss. Appraisers are afraid that they may seen as having fooled the banks or been party to irresponsible lending practices. The FDIC is rumored to be hiring hundreds of law firms to pursue professional liability law suits. How Appraisers Are Adapting They Are Coming In Low Extremely low appraisals, using the lowest possible comparables, are disrupting the housing market. Taking the position, in uncertain times, that best way for an appraiser to avoid a lawsuit today is to low ball the appraisal. Play it safe. This is causing home valuations to drop even further and perhaps unnecessary so. The write downs in property values are ranging from 10% to more than 60% and they are impacting performing and non performing property.There is a concern that existing and legitimate equity is not being recognized as appraisers over compensate for fear of a law suit down the road. When you have to refi, as the CRE sector does, this may mean coming up with massive amount of money just as they step up to wary banks. Owners who are selling are finding that these low ball appraisals are causing them to pull property off the markets or sell for even less. REsourced from www.yourpropertypath.com You may republish this article, as long as you do not edit and you agree to preserve all links to the author and www.yourpropertypath.com
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