In the complex world of real estate, an accurate appraisal is more than just a number; it's a critical tool for informed decision-making. Whether you're buying, selling, or refinancing, understanding the role of a real estate appraisal is paramount. At On The Mark Appraisals, we're dedicated to providing precise and reliable valuations that empower our clients.
A real estate appraisal is an unbiased, professional opinion of a property's market value. This valuation is crucial for lenders to determine the loan-to-value ratio, ensuring they're not lending more than the property is worth. For sellers, it helps set a realistic asking price, while buyers use it to confirm they're paying a fair market value. It is also a very important tool for estate planning, or tax purposes.
The appraisal inspection is a thorough process that examines various aspects of the property. Our appraisers at On The Mark Appraisals meticulously assess the following:
Our goal is to provide a comprehensive and accurate appraisal that reflects the true market value of the property. We understand that every detail matters, and we strive to deliver thorough and reliable reports.
At On The Mark Appraisals, we believe in transparency and professionalism. Our experienced appraisers are committed to providing you with the most accurate and reliable valuations. Contact us today
Over the past few years, the real estate market in San Antonio has been influenced by noticeable changes in how home appraisals are handled. These changes come from government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac, which play a key role in the housing finance industry. One such change is the expansion of appraisal waivers, a policy shift that became even more prominent during and following the COVID-19 pandemic. These waivers allow certain homebuyers to bypass the traditional appraisal process, replacing it with what the GSEs now call “value acceptance.” While this terminology makes it sound like a consumer-friendly option, the reality is far more complex and potentially problematic. By relying heavily on data-driven algorithms to determine a home’s value instead of physical assessments done by professionals, the system introduces significant risks. In a market like San Antonio, where homes are already in high demand and prices are on the rise, these risks could have long-term consequences.
Real estate experts like Phil Crawford have described the growing problem with appraisal waivers as “data cancer.” This term refers to the way appraisal waivers manipulate market data, resulting in unreliable or inflated home valuations over time. Here’s how it happens: When a GSE grants an appraisal waiver, the sale of that property goes through without an unbiased property valuation conducted by a professional appraiser. Buyers may end up overpaying, often due to market pressures, or they may unknowingly purchase a home with defects or issues that impact its true value. That inflated or inaccurate sale price then becomes part of the property sales data, known as a comparable, or “comp,” that influences future home valuations in the area. This is how one unchecked sale can distort market data, artificially raising property prices in the neighborhood or even destabilizing the market.
For a city like San Antonio, this issue is especially significant. The region has been growing rapidly, with steady population increases and a high demand for housing. These market conditions already lead to rising property prices without needing the added problem of inflated comps. Appraisal waivers only make the issue worse by allowing high-priced sales to infect market data. This can create situations where homes become overvalued, pricing out potential buyers or putting existing owners at risk of owing more on their mortgages than their houses are worth.
In the past, appraisers played a critical role in real estate transactions by providing an independent and professional assessment of a property’s value. This step was designed to act as a safeguard for both buyers and lenders, ensuring that the agreed-upon price of a home was fair, based on the property’s condition, location, and comparable sales in the area. But the introduction of appraisal waivers has significantly shifted that role.
During the pandemic, the Federal Housing Finance Agency (FHFA) relaxed appraisal requirements, citing safety concerns over in-person inspections. While this may have made sense in the short term, it paved the way for permanent changes, leading to a situation where many loans no longer require appraisals. Today, a significant number of homes funded through GSE programs—especially those involving only small down payments as low as 3%—are sold without ever being appraised by a professional.
This shift has consequences for homebuyers in competitive markets like San Antonio. When appraisals are skipped, buyers are at greater risk of paying too much for a property. Without the professional review, there’s no check on inflated listing prices or hidden issues with the home’s condition. Over time, these unchecked sales result in inflated market prices, which could persist for years.
San Antonio’s real estate market is heavily shaped by specific regional factors, including its relatively affordable cost of living, a strong local economy, a steady stream of military personnel relocating to the area, and the ongoing influx of buyers from higher-priced markets like California. These factors combine to create a unique and often competitive housing market.
Appraisal waivers add another layer of risk to this already complex market. By removing the safety net of a professional appraisal, GSEs make it more likely that homes in high-demand areas, such as new subdivisions, will sell for artificially high prices. When this happens, the inflated data becomes the benchmark for future sales, potentially creating a cascading effect across the entire market. Buyers who purchase homes at inflated prices could eventually find themselves in a financially precarious situation known as negative equity, where they owe more on their mortgages than their homes are worth.
For San Antonio, a market that relies on steady growth and affordability to attract buyers, this trend has the potential to become a serious problem. Rising home values, driven in part by appraisal waivers, could ultimately make the market less accessible for local buyers.
The implications of appraisal waivers extend beyond individual buyers and sellers. For the government-sponsored enterprises, investors, and even taxpayers, this change in policy could introduce major financial risks. Mortgage-backed securities, which are largely funded by GSEs, rely on accurate property valuations to maintain their value. When appraisals are waived and market data becomes unreliable, the risk of mispricing on a large scale increases.
As San Antonio continues to grow and attract buyers, the widespread use of appraisal waivers could make loans backed by GSEs in this area riskier over time. Investors in mortgage-backed securities may demand higher returns to compensate for this increased uncertainty, leading to a potential rise in long-term mortgage rates. This could affect affordability not just in San Antonio, but across the housing market.
The real estate market in San Antonio is at a crossroads. The increasing use of appraisal waivers by GSEs poses significant risks to buyers, sellers, investors, and the market as a whole. While these waivers may seem like a convenient and cost-saving measure, they have unintended consequences that can destabilize the housing market. Without professional appraisals to provide accurate property assessments, home values can become inflated, leading to systemic issues and creating financial hardship for future homeowners.