Your home has more than one value

One of the challenges of all real estate transactions in our current market situation is answering the question "What is the property worth?" Before the market correction and mortgage meltdown began a couple of years ago, this was no problem; all prices were bubbling up consistently and there were plenty of sales of like properties from which to establish a value. And buyers, sellers, appraisers, real estate agents and lenders were all sure of one thing: the property was worth more than it was the last time it sold.

Since the correction, during which home prices have fallen considerably, and the tightening of credit markets, there is more subjectivity in appraisals because it isn't as easy to find three or more properties like yours, and close enough to yours, from which to establish value. Appraisers sometimes have to go outside their standard parameters in order to determine a value, and therein lies the problem.

Lenders review appraisals much more carefully these days, and they focus on comparable sales - the sales that the appraiser used to establish the value of the subject property. How old are those sales? How far away are they from the subject property? After answering these and other questions, the lender may question the value arrived at in the appraisal or demand additional support for the value; if their demands aren't met, they can reduce the value of the property for their loan purposes.

Naturally, this can throw a wrench into a real estate transaction in a hurry, and it usually does.

Just one more thing to be aware of in today's real estate market.

Carl Trawick is a Mortgage Specialist and Licensed Mortgage Broker with the firm Access e*Mortgage. He can be reached at 904-343-1145 or ctrawick@nefcom.net