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?
- Tighter appraisals hurting home sales [Houston Chronicle]
- 6707 Fairfield St. [HAR]
HCAD value is $192k so I think $202k is more realistic.
Having said that, I also think HCAD values are too high for the current market as the trend is flat to down across the county given the tighening in loan criteria.
My wife noticed that the complainer is an investor. Probably leveraged himself up with dollar signs in his eyes and now has to unload it. The new rule has suddenly removed the greater fools. Of course, it’s not his fault for speculating.
A fair price is what someone WITH THE MONEY will pay for the house. If he can find someone to pay his price in cash, then he is proven right. A fair price is not what someone can borrow using a dodgy loan like in the bubble years.
As Robert Shiller says most homeowners have unrealistically high ideas of the value of their houses. It takes them awhile to get real.
It actually hasn’t removed the greater fools (witness the would-be buyer). It just made them unable to get lending. Functionally, of course, the result is the same vis a vis the real estate market, but the world will never run short of idiots.
I have to doubt the criticism of appraisers based on my own experiences. I just got an appraisal on my own house in the Heights at 20% above what I paid 2 years ago. While I would like to think I made a great choice (I do love it), I am a bit skeptical. [HCAD, this post is full of lies]
This house is really cute. Where is Idylwood?
That house is not worth the asking price. Low $200s seems more appropriate. A 2/2/1 on Rockbridge was recently listed in the 190s, and it was just as nice. Of all the updates made to this house, why didn’t they remove that tacky enclosed porch? It’s killing the front of the house.
Idylwood is a very nice little neighborhood bordered by the Gulf Frwy, South Wayside, Lawndale, and a bayou (Buffalo?). I guess I’m a little partial ’cause I grew up near there and I love the brick houses and slopey yards and streets. That said, it is flood-prone and I remember a Chronicle article a couple years ago that listed it as one of only 2 neighborhoods out of hundreds in the greater Harris County area whose values were depressed despite the boom going on everywhere else.
The appraisal price seems more realistic than the asking price. Idylwood is really nice, but it’s also east of downtown where prices are lower, and given what else is on the market there, $206 for that house (which looks very nice) seem slow, but not that low.
If there’s a foreclosure, the lender is left with the collateral – the house. You can’t blame them for not wanting to lend more than they will be able to get for the house.
Now if HCAD would appraise honestly we’d be in good shape.
$206 seems just right for that house.
That’s a nice house.
$200K is a nice price.
A house is worth what someone is willing to pay for it. In that case it was worth the $243,000. I have had listings recently get into bidding wars if they are desirable. My own home had an appraisal in March for $487,500 and then in April by a second appraiser for $350,000. It appraised 4 years ago for $425,000 so I know the April appriaser is more than a bit off…
All of you people are batsh!t crazy if you think you can get a house like that in Idylwood for the low $200’s. If houses LESS than 1300 sq ft have been selling for just under $200,000 or $145 to $150+ a foot. Do the math. 500 more sq ft, a second bath that not all of the other sales had and more upgrades for only $10,000 or so more? Obviously some of you can’t do simply math.
This house has closed. It sold for $242,000 as well it should.
I don’t think it’s that we can’t do math; but more that none of us are in your words, “batsh!t crazy” enough to pay $242k for a house whose location is qualified in terms of its proximity to the Gulf Freeway lol.
People stood in line for the privilege of doing just that.
robert, don’t waste your time and energy on these “knowledgeable” people. i am not updated on this particlar market but i know it is quite nice. if it sold again for the same amount, was appraised and closed, then there must have been data in there. of course we all want to get a good deal but the negativity and brillance of the “feds” doesn’t always help.
Bobby – if your only knowledge of the neighborhood is “its proximity to 45” — then you really know nothing about the neighborhood.
Tried to a buy a house there lately? Aren’t many for sale, and I think his price was just right for the place, given the market conditions in the neighborhood, and the size/condition of the house. Obviously, there are a handful of others who thought it was right too – including a bank. I just bought a house in the same neighborhood, and let’s say that $206k appraisal was egregiously low given the comps, and the appraisals on other homes in the neighborhood. And no, your personal opinion about its location does nothing to dim the desirability of a well-kept, practically crime-free neighborhood spitting-distance from downtown.