Any underwriter can tell you that one of the three “C’s” in making a decision stands for “Collateral”. Yes, the property is important. Properties have, for the most part, been appreciating in the last year or two, but problems still pop up with appraisals.
It is important for LOs and borrowers to know that comments on listings in the MLS can impact future home values in the area. "Puffing" listings to get more shows has been around in real estate sales as long as the weekend open house, and helps the seller feel better about the property, but unfortunately the practice does more harm than good.
By over-stating, or dressing up the condition of a property, agents are impacting future values and home sales: appraisers who do not view active listings, but instead review MLS data and comments, do not know how truthful the comments may be. As a result many homes that sell for near the lower end of the market due to condition of the property but are listed with remarks of ‘gorgeous throughout, remodeled kitchen and baths, re-carpeted’ create a comparable for appraisers for many months of a low price sale for a high condition property.
In other words, many low value appraisals are the result of the information provided to the appraiser by real estate agents in their MLS comments. A good loan officer, and Realtor, when viewing listings will often suspect when there is a great disconnect between the agent comments in the MLS and the reality of a home's condition. A good loan officer will often contact the listing agent and ask them to amend their comments to more accurately reflect the condition, or suggest leaving the comments regarding condition blank. Instead of "gorgeous throughout" say "great opportunity for new homeowners" or "easy to show and priced well for the market."
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