Posted by: rgmorgan | April 30, 2013

Who is really driving home prices?

The old adage that prices in real estate are market driven is just that an old adage. Remember when a property was priced for sale and the reaction from buyers told you if the price was too high? If you received no requests for showings it was probably priced too high. If you had several showings but no offers it was probably priced too high. If you had many requests for showings and several offers it was either priced correctly or maybe even a little low.
In today’s environment that “ain’t necessarily so”. You can have showings and receive offers which tells you that the market agrees with the pricing but wait. Then comes the appraisal process. Lenders not only have made the ability to obtain a home loan much more difficult they now are the sole determiner as to the homes value. In many cases using appraisers not familiar with the market area nor the many nuances that differentiate properties and their value. While I can certainly understand the banks need to ascertain the value of the collateral it seems strange to me that they base their decision on a single appraisal from one person. Yet when a lender needs to determine the value of a foreclosure or short sale they choose to utilize real estate professionals to provide them with broker opinions as to the right price.
Isn’t it time for some type of system that has more flexibility or at least some input from the market itself and what it is telling us?

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