Appraisers Struggle To Keep Pace with Market | Print |  E-mail
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Wednesday, 06 June 2012 08:53



By Carl Medford, CRS
Special to the Forum


 

 

 

A few years ago, flying from Nairobi, Kenya to Entebbe, Uganda we crossed over Africa’s massive Lake Victoria. Skies were clear with the exception of a large, solitary black cloud hovering over a corner of the lake.


It seemed odd, but, having seen storm clouds before, I didn’t think much of it until the Kenyan seated beside me, in his rich accent, asked, “You know what that cloud is, don’t you?” My blank look signaled to him I had no clue, so he explained. “That’s a swarm…” he stated, “…of Tsetse flies.”


I spotted a similar cloud in Castro Valley last weekend… of buyers.


Just a few short months ago, potential homeowners were able to visit long lists of homes; and, while poking in closets and opening drawers, ask, “So how far under asking price can we go on this one?”


Those days are now just a faint memory of the way things were — completely overshadowed by the new reality.


Pulling up properties for one of my buyers last weekend, I expected to come up with a list of about 20 possibilities. I was shocked to find… three. As we visited all of them, we noticed similarities: all had prices higher than any of the local comparable sales, each had open houses, an offer deadline was specified for every one and there were vast amounts of cars jockeying for parking spaces in front of them all.


Inside, the numbers of buyer wannabies reminded me of the lines for food samples at Costco on a Saturday afternoon.


As explained in previous articles, we’re firmly in a seller’s market with limited inventory and swarms of buyers. Following the laws of supply and demand, prices are going up as multiple offers pound in on almost everything. Way up. So much so that appraisers are having an extremely difficult time keeping up with the new reality.


As a result, we’re seeing record numbers of appraisals coming in low. It’s a tricky situation: appraisers, with memories of the last market boom, are reticent to get blamed for signing off on higher prices.


On the other hand, the market has turned and higher prices are the new reality. In fact, appraisers with consistently low valuations are actually keeping the market from growing as quickly as it could.


It’s a catch 22 scenario and, until we get some kind of resolution, this new real estate reality is giving everyone involved massive headaches.


Next Week – Appraisals Part 2 – Record Numbers Of Low Appraisals Spawning

 

 

New Buying Strategies

Carl Medford is a licensed Realtor with Prudential California Realty in Castro Valley and a licensed general contractor. This article is sponsored by the Central County Marketing Association at www.ccmgtoday.com

 


 

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