Are we partying like it is 2007 again? Hopefully everyone hasn’t forgotten the last real estate party and how badly it ended. With the market on fire in many locations throughout the country, there is increasing pressure to get transactions closed. According to a Wall Street Journal article an estimated one in seven appraisals analyzed between 2011 and 2014 inflated the home values by 20% or more. Do you know how to spot a “dodgy” appraisal?
Although as a private lender we don’t require appraisals, many borrowers will send recent appraisals that were done to help substantiate their property value. I’m always skeptical when I look at an appraisal (see what do Domino’s and Appraisers have in common) and I’ve recently seen a large uptick in terrible appraisals. One last week took the cake!
I was asked to loan on an investment property in Northern Colorado. I am very familiar with the area, having done multiple loans in the vicinity. For this transaction, I pulled the property history along with some fresh comparables. My value came in around 400k. The borrower then sent me an appraisal with the value almost double what I determined. I was concerned to say the least. Was I off on my value this much? Why is there such a huge difference of opinion in value?
See full article written by Glen Weinberg for the CO Biz Magazine: http://www.cobizmag.com/Trends/The-party-is-back–Can-you-spot-a-BS-appraisal/
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in the Colorado Real Estate Journal, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, Illinois, and Florida. They are recognized in the industry as the leader in hard money lending with no upfront fees or any other games. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all they need is their simple one page application (no upfront fees or other games).