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Widespread Corruption In Appraisal Values Coming Home To Roost

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http://www.realestatejournal.com/buysell/m...25-hagerty.html

The Wall Street Journal
New Headache for Americans:
Inflated Home Appraisals
By James R. Hagerty and Ruth Simon
From The Wall Street Journal Online
As the housing market cools, Americans are confronting a problem that was easy to ignore during the boom: inflated appraisals of home values.
Critics inside and outside the appraisal business have long warned that many appraisals are unrealistically high. That's partly because generous appraisals help loan officers and mortgage brokers, who often choose the appraiser, complete more deals. If a home is appraised at less than the buyer offered, the deal is likely to fall through.
Inflated appraisals didn't matter much when home prices were rising at double-digit rates, since market values would quickly catch up. Now, however, prices are leveling off in many places and falling in some. Some homeowners are finding that the market value is below what past appraisals led them to believe.
For sellers, that can mean being forced to drop their asking prices. Some people hoping to refinance, meanwhile, may be unable to lock in new loan terms because they have less equity in their homes than they thought. Lenders and mortgage investors, too, could take a hit if it turns out the collateral backing their loan is worth less than expected.

It could never happen in the Uk where our RICS and EAs are all decent and honest professionals who value properties in accordance with strict ethical guidelines. :)

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Some homeowners are finding that the market value is below what past appraisals led them to believe.

Shock! House prices can go down!

Some people hoping to refinance, meanwhile, may be unable to lock in new loan terms because they have less equity in their homes than they thought.

This will happen here.

All those buying today with 90%-100% mortgage loans will find that after 2-3 years when their fixed rate deals are up they will have to go onto banks SVR mortgage rates and their mortgages will jump 2-3% overnight.

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Shock! House prices can go down!

This will happen here.

All those buying today with 90%-100% mortgage loans will find that after 2-3 years when their fixed rate deals are up they will have to go onto banks SVR mortgage rates and their mortgages will jump 2-3% overnight.

Alredy happening here.

http://money.guardian.co.uk/property/story...1669126,00.html

For sale - at a price that's far too high

Lenders issue warning about valuations on new-build homes

Phillip Inman, Rupert Jones and Lucy Barnard

Saturday December 17, 2005

The Guardian

Are you being ripped off by a dubious valuation on a new-build apartment? Mortgage lenders said this week that they are becoming increasingly concerned at valuations on new-build flats which are inflated to the point where a Manchester home can have a Monaco price tag.

The Council of Mortgage Lenders (CML), which represents the bulk of banks and building societies, says the public is being duped by surveyors who rubber-stamp developers' advertised prices for apartments at far higher levels than the market can sustain.

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Shock! House prices can go down!

This will happen here.

All those buying today with 90%-100% mortgage loans will find that after 2-3 years when their fixed rate deals are up they will have to go onto banks SVR mortgage rates and their mortgages will jump 2-3% overnight.

Also a 25 year IO mortgage means that they have 25 years to pay of a capital that they cannot afford.

can't refinance and you have 20 years?

15 years?

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Boy, they'll blame anyone but themselves, won't they? 'But, but, they said my studio flat over a crack den was worth 250,000 pounds and would be worth 300,000 by next Wednesday tea-time, that's why I bought it'.

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It is madness.

I don't understand how the 2 bed flat market in the UK has got out of hand so much. Where I am in London (nr Battersea, Wandsorth SW18/SW11) you can still buy 2 bed riverside flats for £260,000-£280,000 http://www.findaproperty.com/DisplayProp.a...p;agentid=05135 These were new a just a couple of years ago. In developments up the road the prices are £360,000 for similar stuff and spanking new builds still on plan 400yds away are at or way above this level. Some people fall for the "new build" seduction. Even in one micro area the "comparable" values for surveyors etc seem questionable.

The fact that 2 bed flats in Manchester, Leeds, Bristol, Newcastle and anywhere else you care to mention are going for £250,000+ seems to me to be lunacy. There is just no way these places can command the same general true "value" as London - never have and never will.

Anecdotally, I know someone who bought a new build flat in London Docklands in late 1989 - top of the market - £90,000 or so. When he came to sell in 1992 it was valued at £58k. He rented it out and moved - took until late 1995 until he could sell w/o negative equity.

One day (no time soon I fear) I expect regional flat prices to readjust to reality - and plummet. It seems to be trickling through to mainstream but without a general pressure to sell it won't mushroom for a while. Imagine what a few sales at the levels in the Guardian article would do to HaliWide quarterly figures!

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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