Today, all that has changed. The real estate market is no longer a free market. Over a decade ago, after the real estate bubble burst, in order to correct the massive loan fraud that had created the bubble, Congress stepped in and placed restrictions on lenders and appraisers. The result of which is the real estate industry now operates within a managed market not a free market. Lenders do not like to “portfolio” loans. Instead of holding a loan in-house, they prefer to sell the loan to the secondary market. However, in order for a loan to be sold off, Congress has mandated that it must conform to the standards of what is deemed a “qualified residential mortgage”. Importantly, in order to be considered a qualified residential mortgage, a loan cannot significantly exceed the appraised book value of the subject property (usually no more than approximately 3%). Furthermore, appraisers are now required to be licensed, and consequently, they are held to a much higher standard than in the past. Today, appraisers are hired through independent third- party brokers who have no vested interest in the appraisal. Gone are the days of in-house appraisers who would produce an appraisal at whatever amount a buyer needed or a lender requested. Consequently, what matters today, is not so much what a buyer and seller agree a house is worth, rather it is what the appraiser considers it to be worth. Therefore, your asking price should be as close to a home’s appraised value as possible. Is your house priced correctly to attract the most qualified buyers? A house is not a can of soup. All too often I see properties listed for $549,000, $599,000, or $629,000, etc. Ostensibly, that is because people believe that, like the pre-inflation price of a can
40
Powered by FlippingBook