Good "Comps" are harder to find

Many lenders have tightened their requirements for appraisers in areas of declining value. Many lenders have issued new guidelines and here are some of the changes that have been instituted:

1. Comparables must now be within 0.5 miles from the subject property in urban locations and must be within a 1.0 mile radius in suburban locations.

2. Comparables must have a date of sale within the past 3 months.

3. There must be a minimum of three comparables, of which at least two must be verifiable through the MLS as arms-length transactions.

4. In addition to the three "sold" comparables, at least one current listing or pending sale must also be provided.

5. The days-on-market time for the comparables must be within the average days-on-market time for the area.

Moreover, some lenders no longer allow appraisal updates in areas of declining value, which means the first appraisal is the final word. This is not just bad news for home sellers in areas of declining markets, but also increasingly for sellers in good markets, since many national lenders are treating all markets as if they are declining and will apply these and similar guidelines across the board.

Sandy Nelson
Realtor for Olympia area real estate
www.sandynelsonrealestate.com