My lender's appraisal came back $20,000 lower than my low-ball offer (and I mean really low low-ball). I was afraid I would be asked to either split the difference or dip into savings but their bank accepted the lower offer in 7 days. The seller was heading towards foreclosure which might make a difference.

I'm living this!! (see "Do closings happen" thread)

Here is a link that might be useful: Appraisals roil RE Deals

triciae, great article. This re-enforces the postings from about a month ago on appraisal questions and the effect of the HVCC and the AMC's.

These "under" appraisals are having a huge effect on the market as more and more buyers and sellers are caught by surprise.

It is still questionable if these "under" appraisals are truely too low or a valid market correction.

One thing's for sure, this will continue to create headaches for buyers and sellers alike!

Here's article that quotes from the WSJ report about low appraisals and the problems with the new process. One appraiser is quoted as saying that approximately 50% of his appraisals are coming in low!

Here is a link that might be useful: Now Appraisals are Too Low?

Not to be callous, but it SOUNDS like banks are FINALLY tightening lending stds., and thus insisting that appraisers conduct themselves responsibly, but RE Agents are WHINING because it "scares" them into thinking they'll have to do a bit more work, and sweat a few more details, in order to close some deals... NOT like the easy-breezy halcyon "Bubble Days". PUH-leeze. Do you think you deserve a WHOPPING 6% just for showing up?

Buyers may determine the value to THEMSELVES, but the bank has its own mechanism, and they're the ones holding the proverbial bag, eh? The deal needn't fall through though--THE BUYER JUST NEEDS TO PUT DOWN THE DIFFERENCE, IN CASH, and/or renegosh. Problem solved. Market clears. RE Agents get juicy commissions and drink expensive single malts... and hopefully, stop WHINING! ;')

PS: Yes, I've said it before, and I'll say it again: Just because you've "never seen it before", doesn't change the new truism, to wit:

Foreclosures ARE VALID COMPS! HELLOOO! Knock-knock! Who's there? Reality, Banking and Market REALITY is calling!

"Foreclosures ARE VALID COMPS! HELLOOO! Knock-knock! Who's there? Reality, Banking and Market REALITY is calling!"

Only of last resort, when there are no other arms length type comps per USPAP regs.

rar-"These "under" appraisals are having a huge effect on the market as more and more buyers and sellers are caught by surprise. It is still questionable if these "under" appraisals are truely too low or a valid market correction."

fixizin-"Buyers may determine the value to THEMSELVES, but the bank has its own mechanism, and they're the ones holding the proverbial bag, eh? Foreclosures ARE VALID COMPS! HELLOOO! Knock-knock! Who's there? Reality, Banking and Market REALITY is calling!"

I wonder why foreclosures wouldn't be considered valid comps. It is not like they are opaque toxic products waiting to be traded above the market....! Is it possible that the banks are waiting to repay their TARP loans BEFORE putting all of these foreclosures back on the market? Perhaps appraisals will more closely mirror reality once this shadow inventory has been processed!

Banks aren't reselling many foreclosed homes
Carolyn Said, SF Chronicle Staff Writer
April 8, 2009

A vast "shadow inventory" of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.

Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.

"Foreclosure numbers are artificially depressed," said CEO Sean O'Toole. He puts California's shadow inventory at about 100,000 homes.

So why aren't banks selling off their foreclosures?

Observers say several factors are at work.

-- The "pig in the python": Digesting all those foreclosures takes awhile. It's time-consuming to get a home vacant, clean and ready for sale. "The system is overwhelmed by the volume," Sharga said. "In a normal market, there are 160,000 (foreclosures for sale nationwide) over the course of a year. Right now, there are about 80,000 every month."

-- Accounting sleight-of-hand: Lenders could be deferring sales to put off having to acknowledge the actual extent of their loss. "With banks in the stress they're in, I don't think they're anxious to show losses in assets on their balance sheets," O'Toole said.

-- Slowing the free-fall: Banks might be strategically holding back some foreclosures so prices don't fall as fast. "They want to be careful about not releasing them too quickly so they don't drive prices down and hurt the values," O'Toole said.

Besides the shadow foreclosures, yet another wave of distressed properties is in the pipeline. These are homes with delinquent payments for which the banks appear to be prolonging the foreclosure process. Some of that could be because they're negotiating with homeowners about loan modifications or other ways to keep them in the home. But banks also could be deliberately foot-dragging for the same three reasons listed above.

"The problem is that no one knows how extensive (the shadow inventory) is," said Patrick Newport, U.S. economist with the Massachusetts research firm Global Insight. "It's a wild card. If it's a really big number, you'll see prices drop a lot more and deeper problems for the financial system."

A link that might be useful:

www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/04/08/
MNL516UG90.DTL&type=business

"I wonder why foreclosures wouldn't be considered valid comps."

Appraisers try to find arm-length transactions when doing an appraisal. These are considered sales at market value, offered for sale by a willing seller and purchased by an able and willing buyer, with neither party under duress.
Even if it means using comparable sales from an adjacent neighborhood and adjusting for value, most appraisers can find arm-length transactions to use in a appraisal.
If a foreclosure is used as a comp, its not a good comp and it is not given a lot of weight. Foreclosures do not represent market value, and most appraisers can find regular sales to use in their appraisals.
If there are only foreclosures in an area, then that affects market because it becomes the value.

Well, dreamgarden...these are very useful & definitive phrases that tell us a lot, don't they?

"Accounting sleight-of-hand: Lenders COULD BE..."

"Slowing the free-fall: Banks MIGHT BE..."

"Some of that COULD BE..."

"The problem is that NO ONE KNOWS..."

"IF IT'S A REALLY BIG NUMBER, you'll see prices drop a lot more and deeper problems for the financial system."

Yep, those are all statements that you can take to the bank, can't you? (pun intended - grin)

/t

Wait a minute....
I'm a non-distressed seller, I've got a willing buyer, we have a valid contract (lower than I hoped, of course). The buyer is a 1st time homeowner with golden credit putting 20% down. There have been so few sales in the neighborhood, that the nearest comp is barely comparable and has more adjustments than should be allowed (note the appraiser doesn't think there's difference between an end-unit or interior townhouse). There aren't even foreclosures or short sales to comp.
And the bank won't give him the money because it's appraising $10K lower than the sales price (well above the loan amount), and the Underwriter is pressuring for another $5K reduction.
Hmmmm.....Why?

"There have been so few sales in the neighborhood, that the nearest comp is barely comparable and has more adjustments than should be allowed (note the appraiser doesn't think there's difference between an end-unit or interior townhouse)."

I agree with you!
Appraisers are running scared in this environment. Adjustments are non quantifiable and are at the discretion of the appraisers opinion. Remember, it's only one persons opinion and the next appraiser might look at it a lot different and in your favor. It's not a perfect system.

Well, dreamgarden...these are very useful & definitive phrases that tell us a lot, don't they? Yep, those are all statements that you can take to the bank, can't you? (pun intended - grin)

Thanks! But in case you haven't noticed, many people don't have much left to 'take to the bank' since the sub-prime shakedown of the citizenry, do they? But at least now we have a clue about how much real estate the banks are waiting to put back on the market. Your DH is a banker, he probably has an much better idea of how much RE there is out there than the rest of us do. Its a shame that THAT info is only available to privileged insiders...

Tell us triciae, how DOES one go about appraising a property for its REAL/ACCURATE value when one DOESN'T have the comps for ALL of the real estate in a given area? Foreclosures included.

Why do YOU think the banks are hanging onto these foreclosures? Could it be because they are more valuable (slightly) then those pesky, toxic derivatives the banks are trying to unload on the government/taxpayers?

dreamgarden,

Berniek has already said it very nicely. Value can be determined between a willing seller & a willing/able buyer both of whom are not under any duress. That is what creates an open & free market whether it's real estate, equities, or your tchotchkes from eBay.

There's always implied duress in a foreclosure sale & usually existent duress. Therefore, an appraiser will consider a foreclosure sale, if necessary, but it will not be weighted equal to a non-duress transaction.

Exceptions are places like Stockton, CA where there are large clusters of foreclosures within the same neighborhood. While acknowledging there are several cities experiencing these "clusters" most states, cities, and/or towns are not...giving appraisers ample opportunity to find comp sales reflective of willing seller/buyer. That is preferable even if it means moving slightly outside a usual distance range. Every area is unique & so are its property values. There's no one-size fits all.

In my area, as example, prices are down but they've absolutely not tanked. DOM, however, is slower than cold molasses. So, appraisers are stretching out time frame rather than distance for comps but still using free market sales. We have had so few foreclosures I've not heard of one hindering an appraisal in this area but, of course, there may be one or two & I've just not been aware of those particular situations.

Yes, lots of Americans have seen their 401(k)s descimated in the last 12-18 months. Most did have the choice of re-allocating their funds into fixed-rate investments within their 401(k) programs. Unfortunately, many chose to hang tight & ride it out & some have lost sizeable chunks. Some have time to recover & others...not so much.

As with all investing...we have choices. We win some & we lose others. Only I am responsible if I make poor choices & lose my investment. Each & every one of us is personally responsible for actually reading the prospectus of every fund into which we allocate a percentage of our investment dollars. So, if one of us felt that the housing bubble was bound to blow-up & associated institutions/companies would go bust...we all should have pulled assets from funds holding equity positions in banks, home builders, construction equipment, home furnishings, appliances, etc. ad nauseum. If we didn't do that...Barney Frank is not to blame...we are. If we don't understand a prospectus then we shouldn't be investing in anything other than fixed-rate funds. It's called personal responsibility & accountability.

Yes, my DH does know how much real estate his bank is "sitting on" to put on the market. And, I also know that answer. And furthermore, I'll tell you the answer. It's ZERO. Yep, goose-egg. Nada. None. Now, I understand that answer is not nearly as engaging for those who enjoy a good conspiracy story; but nevertheless it's accurate. They do not have an REO Department because they do not own any REOs. Their auto repos are higher than normal; but not high enough to be materially significant.

IMO, many of these foreclosures, especially within the sub-prime debacle, are not worth anything. My opinion is based just on pictures I've seen of the various assets. Lots look like they're urban properties that should be condemned & I wonder how/why a mortgage was ever granted in the first place. Putting thousands of those homes on the market isn't going to much change the value of a property in reasonable condition located 10 miles away. Your average US bank, however, wasn't involved in writing those mortgages. They seem to be contained within those institutions that were securitizing this cr@p & pawning it off as AAA-rated paper. I think we've got a pretty good idea at this point of what institutions were scamming. I seriously doubt there will be any big new surprises this late in the party.

I lost a bit mid-2008 but in the last 90 days have recovered virtually 100% of those loses (fortunately they were not large loses). I've now pulled that money off the table 'cause I just don't see how we can continue this "green shoots" stuff without testing those lows again. I want to be in cash collecting my measly 1.5% while that happens. We are very near retirement, don't have time to rebuild a portfolio, & being ultra-conservative now is for us the prudent decision. We've reevaluated our portfolio using miniscule rates of return for the next five years. That will hurt our retirement income but far less than taking a large principle hit now.

I do still have this vague sense that there's another shoe to drop; but, I can't identify the direction from which it might arrive? I'm not particularily concerned about collapse of the banking system anymore...I 'think' we'll stumble along & eventually be on solid footing again. I don't, however, believe credit will ease significantly in the near term (meaning 2-3 years). Everybody's still spooked. Banks are sitting on tons of cash...way more than they want. CD rates are practically zilch & still people push their wheelbarrows in filled with cash to deposit. Banks are under zero pressure to raise interest rates on savings. The spike in refinances helped banks put some of the cash to work but they've still got the vault stuffed to the ceiling. I don't mean that literally, of course. Consumers are saving more & borrowing less. I see that trend continuing for some time into the future. The entire country has been ruffled with this bust. It's going to take some time to both rebuild employment & confidence. We'll get there though...

Also, commercial real estate has the potential to be even a larger bust than residential but we won't hear as much about it on the news...just doesn't get people all riled up like houses so cable news won't devote much pundit time to the story. It is going to continue hampering the banks though well into 2012, IMO. We'll see...

Now, about that other shoe... (rofl)

/t

Well I did a search by putting Bank in the owner field and should over 9900 properties in my county that are listed as owned by a bank. Ok so a few might actually be the building a Bank is in but most of those are foreclosed houses. I wonder how many more are owned by financial institutions that don't have the word bank in their name. Some of these are tear downs but a lot of them are move in ready in good neighborhoods. The condition of the home needs to be considered but if the foreclosure is move in ready it is a comp IMO. If there are 3 houses on your block for sale all in the same condition but the others are foreclosures they are your competition.

I would say around here you aren't selling your house if you don't have to. Of course this is for Las Vegas one of the hardest hit areas. Most people I know that want to sell are deciding to rent out the house until the market improves.

On commercial real estate what I can't figure out is why they are still building strip malls when there are several sitting vacant in the same area. A new strip mall goes in and before they take the grand opening sign down a going out of business sign goes up.

"As with all investing...we have choices. We win some & we lose others. Only I am responsible if I make poor choices & lose my investment. Each & every one of us is personally responsible for actually reading the prospectus of every fund into which we allocate a percentage of our investment dollars. So, if one of us felt that the housing bubble was bound to blow-up & associated institutions/companies would go bust...we all should have pulled assets from funds holding equity positions in banks, home builders, construction equipment, home furnishings, appliances, etc. ad nauseum. If we didn't do that...Barney Frank is not to blame...we are. If we don't understand a prospectus then we shouldn't be investing in anything other than fixed-rate funds. It's called personal responsibility & accountability. "

Sorry, but I have yet to read a single prospectus that says my stock was rated triple A because the company PAID the ratings agency to say so. Hopefully, this is NOT what you mean when referring to personal responsibility and accountability. People can be responsible, accountable, AND read prospectus's until the cows come home, but it won't do them a lick of good if they aren't getting honest, accurate information in the first place. Right?

I'm glad I had a few trusted sources for information that enabled me to see the writing on the wall before things got so bad. But unfortunately, too many others didn't. Not enough of the players responsible for tanking our economy are having their feet held to the fire. Even Angelo Mozilo was playing games since 2005. What took so long for the regulators to take notice? Bribes, thats what.

"Yes, my DH does know how much real estate his bank is "sitting on" to put on the market. And, I also know that answer. And furthermore, I'll tell you the answer. It's ZERO. Yep, goose-egg. Nada. None. Now, I understand that answer is not nearly as engaging for those who enjoy a good conspiracy story; but nevertheless it's accurate. They do not have an REO Department because they do not own any REOs. Their auto repos are higher than normal; but not high enough to be materially significant."

Thats great to hear that DH isn't sitting on any foreclosures! But I'll bet he knows a few folks who are! Don't worry, I won't ask who they are......!

As for the comment about conspiracy stories. Definition of a conspiracy theory is:

"A conspiracy theory is a term that has come to refer to any tentative theory which explains a historical or current event as the result of a secret plot by usually powerful Machiavellian conspirators, such as a "secret team" or "shadow government".

I would have to say that is seems as if Machiavellian conspirators have been aided by the government to transfer wealth from the people to the privileged few. Too bad it took so long to be uncovered. Just like the SEC. They waited 8 yrs. to go after Madoff even though they had more than enough proof that what he was doing was illegal.

"The entire country has been ruffled with this bust. It's going to take some time to both rebuild employment & confidence. We'll get there though..."

No triciae, I wouldn't say the country is 'ruffled', more like enraged. And who wouldn't be? Especially those who have lost their life savings and have to continue working indefinitely while we loan the perpetrators money.

"Also, commercial real estate has the potential to be even a larger bust than residential but we won't hear as much about it on the news...just doesn't get people all riled up like houses so cable news won't devote much pundit time to the story. It is going to continue hampering the banks though well into 2012, IMO. We'll see..."

I agree that commercial loans are going to get a lot more attention by the end of the year as well as into next year. I just hope our current administration will be able to overcome those special inside interests who cannot seem to run their business's without being subsidized by the taxpayers.

Links that might be useful:

Distortions, Deceptions and Outright Lies
by Martin D. Weiss, Ph.D.
April 7, 2008
www.moneyandmarkets.com/issues.aspx?
Distortions-Deceptions-and-Outright-Lies-1640

Next economic crisis looms: Commercial real estate defaults
Kevin G. Hall : McClatchy Newspapers
Apr. 29, 2009
www.mcclatchydc.com/politics/v-print/story/67187.html

Top Senate Democrat: Bankers 'Own' the US Congress
April 30, 2009
www.salon.com/opinion/greenwald/2009/04/30/ownership/

The issue I find disturbing in all this is the demonization of good professions. Many good people who have always practiced good ethics are now suspect. Too often I hear contempt for corporations or big businesses, now insurance and banking. Real estate agents and attorneys have long been the brunt of jokes.
It is sad to think that this attitude is hurting all of us. Hard work and financial success, brings growth and prosperity to all of us.

Well at least in most of the country you still have valid comps. Here in Texas we are only 1 of 5 states that do not have to disclose sales price. I posted this yesterday - but in short:

"...real estate agents, buyers and sellers are keeping sales prices under wraps on hundreds of houses - even on the Multiple Listing Service.

The trend is troubling some market watchers because Realtors and appraisers use the service to set prices and prepare offers. And everyone who depends on the data - including the economists who track the North Texas housing market - is getting only part of the housing picture."

" The MLS is a proprietary real estate database in which property agents share information about home listings and sales among themselves. Most home and condo sales are supposed to be recorded in the MLS, but the process is voluntary and unregulated.

Many MLS sales forms now have prices marked with a "Z" - Realtor lingo for a price that's not the actual sales price. Often the Z price is simply the original list price."

" Agents say the practice has grown over the last two years, partly because some buyers want to keep the data out of the hands of tax appraisers and sometimes because sellers don't want anyone to know how little they got for their houses.

Agents sometimes push secrecy as well.

Some of the lowest-priced homes are being kept out of the system, which makes overall prices seem higher, agents and appraisers say."

Soon it's going to be hard to get any accurate figures here. Many properties are undervalued on the tax roles and I've heard sellers complain that they are only being offered the tax value.

guvnah- Great link!

It shows how "broke" the system really is in Texas.

Some buyers and sellers want to hide the sales prices due to property tax issues which have become a huge burden in Texas. They should stand up to the local and state governments for more reasonable spending and taxation.

The problem is I don't see that happening anytime soon with local school districts building 80 million dollar sports complexes with jumbotrons, etc. They are sellng massive bonds to build mega high schools, and aquiring a huge debt load.

Realtors have long controlled prices, almost to the point of price fixing, with resticted and massaged sales numbers in MLS. If a house sold for $200,000, the public area of MLS will give a range of sold range of the house as 200,000 to 275,000. What good is that? Another pet peave is Days on Market(DOM)reporting on MLS. If a property was on the market for 180 days and the current listing contract expires, the current agent or a new agent can re-list it with a new contract and possibly a lower sales price, there by aquiring a new MLS number and start the DOM clock back to 1. I have seen properties that have been on the market for over a year have a DOM as recently listed and under 30 days! Sure you can go to a realtor to get that info, but why should you?

Appraisals and market pricing, in Texas, have always been controlled by realtors. They control what is reported in and out of MLS. They will tell you that it is the market, ie, buyers and sellers that set the price, but in its the realtors that that actually "set" market price by telling buyers and sellers what price they should offer and sell at.

I believe that if Texas had full disclosure that all values, after a settling period, would reflect the "true market".

Home owners and sellers would have to stop voting for massive bond and debt loads and hold the local and state officials accoutable for responsible spending.

Realtors/MLS sould be required to run an "open" book for listings and sales.

This is the only way to provide the information required for accurate appraisals. Then its up to the appraisers to use their training and experience to provide their opinion.

The first dominoes to fall were Freddie & Fannie.

Fannie had lasted for many years by having solid underwriting rules.
Freddie had the same basic rules.

Even FHA had tight enough rules to keep things under control.

Under pressure from the US Congress, and private groups suing banks, pressure was exerted to help 'under served groups.' (See Barney Frank in Congress and Barrack Obama in Chicago.)
A fancy term to hide that the groups had lousy credit.
Starting with Carter (and every succeeding president) home ownership was part of the 'American dream' that all should have access to.

Ability to actually pay the debt was pushed aside.

The low cost of money, driven by other economic conditions, was exploited by a number of commercial banks to make riskier and riskier loans.

They did not care about the risk, since the cost spread on money would make up for the high risk, and they would sell of the notes to Fannie, Freddie, and as bonds (the 'mortgage back securities).

Once credit locked up for Freddie and Fannie the crisis snowballed.
The government had to step in and take them back, making good on the debt.

The ripple effect was horrible.
All the private bonds got a quick examination, and the actual value could not be determined (Countrywide does not have the government to back them up like Freddie & Fannie).

The holders of the bonds had to write them down to essentially zero value since no value could be determined.

Now the banks have a capitalization problem.
They can no longer meet the rules for asset value.
The bank stocks then went into a tail spin.
Some failed and the FDIC placed them in receivership.

But Barney and Barrack have clean hands.
It was those darn bankers who made all those risky loans.

cmarlin - I hear what your saying but consider this. Many of the good professions and professionals that are being tarred with the all inconclusive brush have overarching professional organizations that often carry a lot of weight both in local, regional and national politics, setting policy and "tone". Their members have input to the organization. If this organization fails in some way and incurs govt regulation - isn't their own fault for not self-policing and heading the problem off at the pass themselves?
Just a scenario - people around the country are complaining about some specific physician type problem - lets say for whatever reason urologists all seem to be performing some technique that is causing problems. The AMA or the certifying board of urologists or whoever the urologists hold dear as their supreme mugwump, refuses to acknowledge or self-police. The govt holds a panel and declares a problem and passes a law. The urologist and their mugwump cry foul. The way I look at it they had their chance. And if you get into conspiracy theories maybe they didn't self-police for a wide variety of reasons and let the govt do it for them even though they complain later to hide their reasons.

I'm sure brickeye has a point and "pressure was exerted" how much? was it all residential? or also commercial and coporate? and why didn't they fight back if they thought it was so wrong? and Brickeye - your right wing leanings are showing. Bush also advocated owning property
"We're creating... an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property." - President George W. Bush, October 2004.

generic123 - I think you've oversimplified a problem. How much influence does one person or several have in an organization. I'm not in the bank industry, I don't know how one bank can self-police another bank, when that other bank is operating within present banking guidelines.
My point remains, don't paint everyone with that all inclusive brush.

Also, you've stated our previous president advocated owning property. Don't most people, probably you also, advocate owning property? A better point would be what policy he enacted specifically to cause the mortgage crisis.
Can we keep the right-wing & left-wing label out of a discussion?

generic-

"Starting with Carter (and every succeeding president) home ownership was part of the 'American dream' that all should have access to. "

Reading is fundamental, or you don't remember who succeeded after Carter.
Federal programs have a life of their own.
It is very difficult (nearly impossible) to kill one.
Some group that is benefiting will object to their piece of the pie being cut (or even forced to grow at less than the inflation rate).

The 'community organizations' in a number of cities (Boston and Chicago are the ones I am more familiar with) sued local banks for not making enough mortgages to 'under served groups.'
Facing bad publicity and the possibility of banking regulators further hammering them the banks caved in.

It was pretty easy for the banks to simply comply and make riskier loans.

Countrywide was a big offender.
Trying and save themselves they put all the junk mortgages into IndyMac and spun them off.
Countrywide was then sold, and IndyMac promptly collapsed when the 'assets' it had turned out to be worthless.

We are in escrow. We offered $700,000 for a REO fixer upper which has been trashed by years of abusive renters. Basically, its the worse house in a *very* nice neighborhood. Zillows Zestimate is just over 1 mil for this house. I was very curious to see what the appraisal would come in at. Ready? It appraised for $700,000. Not a penny more or less than what we offered for the place.

Does this surprise anyone but me?

"Does this surprise anyone but me?"

How much you put down still affects the appraisal.

The lenders become less concerned with the appraisal accuracy if you have 30-40-50% cash into the deal.

Offer 5-10% and it gets dicey.
A 10% error in the appraisal puts you into the hole in their eyes.

Put 50% down and lots of questions never even get asked.

We are putting 20% down. Are you saying the bank may not lend?

The bank uses the appraised value when determining the loan amount.

If you offer $100,000 with 10% ($10,000) down and the appraisal comes back at $90,000 the bank thinks you have put zero down.

Your initial $10,000 just gets the loan amount down to the appraised value, 0% down.

They are likely to want to see another 10% ($9,000) to make the loan be 90% of appraisal.

Part of the problem in the mortgage market was abuse of 'stated income' and 'no documentation' loans.
These loans used to be for buyers putting well over 20% down.
The bank felt pretty safe if you put 30%.
They felt very safe at 40+% down.
All they needed to recover was the 60-70% of the value in a default.
Even if values decreased by 20%, they could get enough for the property and few borrowers are going to walk away from large (even if eroded) equity.

I have done no-docs as late as last fall on two investment properties.
I put 50% down, and the appraisals came in very close to the sales price (one higher, one lower, but less than 2%).

If the appraisal comes in low, you may need either more $$ down to achieve 80% loan to value, or get stuck with mortgage insurance.