The Chronicle’s Nancy Sarnoff says low appraisals are becoming the “newest threat” to Houston’s housing market. Her example? The story of the redone bungalow at 6707 Fairfield St. in Idylwood, where the sellers accepted a full-price offer less than a week after the property was listed.
But the appraisal on the 1,780-square-foot home came in at just $206,000. The buyer couldn’t come up with enough cash to make up the difference and [co-owner Derrick] DeCristofaro wasn’t willing to drop the price, so the deal fell through.
Why can’t the appraiser buy that $242,900 asking price?
Part of what’s at issue is a new rule that went into effect May 1 prohibiting loan officers, mortgage brokers and real estate agents from selecting appraisers.
The rule falls under the new Home Valuation Code of Conduct, the result of an agreement between Freddie Mac, Fannie Mae, the Federal Housing Finance Agency and the New York state attorney general to enhance the independence and accuracy of the appraisal process. It applies to lenders that sell single-family mortgage loans to the government-sponsored enterprises.
The rule was meant to prevent inflated appraisals like those that proliferated during the housing boom.
The home is back under contract again. What is the property worth, really?