Lloyd Segal - Home Appraisals No Longer Derailing Sales

Online, September 17, 2013 (Newswire.com) - Lloyd Segal

Home appraisals no longer derailing sales

Consider this one more sign that the housing market is heating up: Appraisers are putting higher values on homes again, allowing for more deals to go through.

During the housing bust, sales were often derailed by low-ball appraisals that fell far shy of a home's selling price.

For example, if a home cost 0,000 and required a 20% down payment of 0,000, the buyer would need to finance 0,000. But if the appraiser valued the home at 0,000, the buyer would only be eligible for a 0,000 loan -- making the home too costly for some buyers.

But now, as home prices climb and housing inventories shrink, appraisers are valuing homes at or above their selling prices, according to Lawrence Yun, chief economist for the National Association of Realtors.

Builders hold lotteries for eager new homebuyers

Demand among homebuyers is so high in some parts of the country that builders are holding lotteries to decide who gets to purchase homes in their developments.

O'Brien Homes started holding a monthly housing lottery for its 228-unit development called Fusion in Sunnyvale, Calf., after seeing throngs of prospective buyers camp out at the openings of other new condo complexes in the area.

"We didn't want that," said Susie Frimel, a spokeswoman for O'Brien Homes. "We wanted our customers to be pleased with the process."

Each month, as new sections of the development came under construction, roughly 50 buyers would show up at O'Brien Homes' sales office hoping to be picked for one of the 10 or so sites available. The participants were already pre-qualified for a mortgage and had their down payment in place. After being assigned a number, they crossed their fingers and waited for each bingo ball to be plucked from the tumbler.

For each unit, the company drew a winner and a backup, just in case the winner backed out.

Lotteries are not a perfect solution, especially for the buyer who walks away empty-handed.

"Some people would come back month after month," said Frimel. "It got very frustrating for them."

Adding to that frustration was that home prices rose virtually every time a new group of homes went on sale. The two-, three- and four-bedroom homes started out between 0,000 and 0,000. The last grouping went for 5,000 to 5,000, a 32% increase.

Home sweet 'dome'

Artist Fritz Haeg lives in a Los Angeles neighborhood where traditional houses dot most of the hilly landscape. One glaring exception: the home with a dome.

"The house really stands out in the neighborhood," said Haeg, who has lived in the home since 2000.

Built in the 1980s, Haeg's distinctive home is made up of three levels connected by a circular staircase. It's one open flowing space, and except for the cooking area, there's no room that says specifically what's supposed to happen there. The bottom floor is an underground cave-like retreat, the middle is a simple kitchen with sprawling views of the city, and the top is a geodesic dome.

"It's strange--when people refer to the house they always call it the 'dome' even though the dome is just one part of the house," said Haeg.

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