There are several things that have taken place in the last few years that have made my job stressful and in my opinion have put a lot of strain on the housing market. It mostly has to do with the pressure bankers and appraisers are feeling from the Feds. The other part is simply the credit score system being the main aspect of determining if a person is able to obtain a loan or not.
My first issue is with the appraisers and the restraints that are placed on them and the overly cautious way they do their job. Its almost as if all common sense has been taken away from them and they must simply do their job based on market history only. My problem with this is if an appraiser walks into a house with new carpet, totally redone kitchen with all the bells and whistles and updated bathrooms an appraiser will ignore that and look only at the most recent properties sold in the neighborhood than place an appraisal price that's exactly the same as the highest price home that had recently sold in that subdivision. If this keeps up no one's house will ever appreciate and we will never come out of the recession.
Another issue I have with appaisers is they seem to neglect their talents out of fear and put really modest figures on homes. Time and time again I have seen a seller come way down on their asking price and give a buyer a great deal and when the appraisal comes in its exactly the sales price of the home. When everyone involved in the deal knows that the house was sold at a bargain price and way below market value but the appraiser seems to think that the purchase price was right on the nail.
I have also been on the other end of the deal when I was representing the sellers and they have had a move in condition home with all sorts of updates and priced correctly and sold in less time than the market average. But still the appraisal comes in low and the sellers has to lower their price. Again how will we ever turn this housing market around with these low ball appraisals?
My other big problem is with the entire credit score system being the main determinant on whether or not you are able to get a loan. I really think the bankers should be able to use their own talents to determine who should and shouldn't get a loan, with the credit score being just a portion of the decision making process. Right now a person with $200,000 cash, a credit score of 500, absolutely no debt and a six figure income couldn't get a loan on a $300,000 home. But on the other hand a person with student loans, $2,000 in credit card a car loan, $3,500 in a savings account and a 700 credit score can get a loan for $100,000. Which isn't bad but I would think the first person would be the better candidate to obtain a loan. In my opinion a credit score is just measure of a person ability to carry debt and make payments on time, even if they are just making minimal payments.
I am not trying to bash bankers or appraiser I appreciate all the work they do for me and my clients, I just wish the government would get their hands out of my business and allow people to use their talents to do their jobs. These government restraints have a strangle hold on the housing market and until they let up and allow people to do their jobs the housing market will struggle to rebound.
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