Houston appraisals falling short

[Daniel Schiller]

As we all sit in anticipation of what the crude collapse means for the Houston market, has anyone had issues with appraisals coming in underwater? I noticed the HELOC market begin to dislocate between pre-approvals and appraisals over the summer, and just last night heard a story about a home in the Memorial Park area coming in $200k below contract price - the buyer was ecstatic to walk away.

[Adam K.]

For the appraisals I have purchased and seen the appraiser used recent sales comparables for determining their opinion of value for the lender. I did not see the price of oil mentioned anywhere on the report. I think oil prices will figure into the big lenders numbers and risk tolerance before an appraisers residential   report will. When home sales slow an start selling at lower numbers then oil can be blamed.

People get excited and fall in love with houses and make big offers. With the low days on market and competition you have to go big to get a contract. That's fine if the buyer is paying cash but if it's financed and the comps didn't support the offer it should have been clear.  The agent should have advised the buyer and the selling agent could have looked at the offer a little better. I tell sellers the highest offer is worthless if it will never close.