Preforeclosure: Why Professional Appraisals Are a Necessity
By Steve Grimes (Certified Residential Appraiser)The last thing almost anyone thinks about in a preforeclosure position is spending more money getting a Valuation Specialist into the picture. Yet due to the financial landscape, the use of an Appraiser prior to the foreclosure is an investment that is necessary to make a truly informed decision as to what actions to take. There is a saying that "knowledge is power," and many have walked away from tens of thousands of dollars due to the lack of knowledge that would be remedied by a complete, professional appraisal. Why does this matter? For example, one thing the banks don't tell you is that in many states the overage of what is owed on the property (less legal fees) is to be returned to the last owner of record. So if you are in an equity position or have money in the house with an appraiser and a good realtor, you can do a short sale, get your money out, and avoid foreclosure.
But remember—a realtor is not an appraiser. In Arizona, where I have my Appraisal Practice, it takes over 2 years and thousands of hours to become a Certified Appraiser. A realtor can become licensed in 4 weeks. Big difference. And I have seen many receive a BPO (Broker Price Opinion) or an Automated Valuation Model which not only doesn’t reflect on the actual value of the property, but shows the property at 10-15% below the actual value.
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