Dee0522
And then there were four...
Member since 6/09 2088 total posts
Name:
Denise
|
Question about appraisals and comps
I live in a condo development where there are 68 units. Unfortunately, in the past year or so, two different homeowners have passed away and neither had any family to deal with their homes. Without having all the details I assume these condos went into foreclosure, as no one was making mortgage payments. Both condos were eventually purchased, but at crazy low prices (maybe short sales?) which is great for those buyers, but AWFUL for the rest of the community. My question is, can those units be considered comps for my unit? I feel like it isn't fair to base the value of MY home on these two homes that were sold off by a bank at a large discount. Those sale prices severely distort the value of my condo. An appraiser shouldn't be able to use them as comps! It is not a true comp, IMO.
I ask because we are selling, and currently negotiating price with the buyer. I'm afraid that the appraisal is going to kill us (and we're already taking a loss!) 
Do we have a leg to stand on? Is it possible to challenge an appraisal if it comes back super low?
|
|
|
Re: Question about appraisals and comps
The condos wouldn't have gone into foreclosure that quickly after someone passed away (assuming you are in NY). In NY, foreclosure is done through the judicial process and takes around 7 years to complete, on average.
I doubt these were short sales, either -- A short sale would only happen if the seller owed more on the remaining mortgage balance than what they could sell it for, such that the sale proceeds wouldn't be enough to satisfy the mortgage and the seller would be "short." If the homeowners who passed away were older, I would assume that is probably not the case.
But even if it there were short sales or foreclosures, appraisers still need to factor those in when pulling comps. I think they recognize that they were distressed sales, and that your sale is different, but they can't totally ignore them.
They may have been estate sales -- when the homeowners died, their property went to somebody (either because they had a will or a court decided how to distribute their assets). And the person who inherited it then sold it, which is what we call an estate sale. Those sometimes sell for less than you would expect, too, if the relatives just want to get rid of the property and not pay carrying costs (taxes, maintenance, etc.).
If there is a low comp from your development, and you know the circumstances of the sale (can explain why it was low), that is always helpful to provide to the appraiser.
However, most banks don't want the appraisers they hire to go back more than 6 months (and some even want comps within the last 90-120 days). So if these sales you are speaking of occurred 2-3 years ago, they would not be eligible comps for the appraiser. If they are the most recent sales, the appraiser might be aware of them as background info, but couldn't use them as a comp for the current market.
The best comps are those from within your complex, but if it's a small complex with no recent sales, they may look to similar condos in the area that have had recent sales (same town/same school district). I would also check with your condo management to see if there have been more recent private sales that you may have not been aware of (they might not have been advertised or listed).
Do you have an agent? He or she can help you with this, if you do! Part of my job, when I am the listing agent, is always to handle the appraisal. I like to be there to meet the appraiser and provide comps that I've selected, as well as any other info that may be helpful to the appraiser and favors my client.
Good luck!
|
