Purchase vs. refi appraisals

By Ann O’Rourke

I recently spoke with a savvy appraiser who is turning down all purchases. Too much hassle and way too much pressure.

In many markets, including mine, there are many multiple offers way over list on almost all sales. In my market, appreciation is increasing on an almost daily basis.

I call multiple offer bids “auctions”. The eventual sales price may, or may not, be market value – the most probable sales price. We had them here in the 2000s boom.

I spoke last week with a local Alameda resident who asked me about appraising her house for a home equity loan. She had read about non-local appraisers coming in way too low. I explained that appraisers are licensed and subject to laws. Also, borrowers could not choose the appraiser. I also explained about the crazy local market. I asked her about the equity in her home. It was a low LTV, so I told her that the value she “needed” was much lower than prices today. I also told her that an appraiser may not be used – an AVM may be used. If an appraiser is used, it may be a “driveby” appraisal where the appraiser did not come inside.

I go on the local broker tours almost every week. I had not been to one for a few weeks and went out yesterday. WoW – what a change!! Prices are increasing at a faster rate – easily up to 4% or more per month.

If I was doing lender appraisals today, I would not accept purchase appraisals either. I hate being a deal killer and subject to pressure. Plus, it is very, very difficult determining current values now.