- — A few things have come easy for Justin Bieber: He became a superstar from a chance discovery via YouTube, he has a cool girlfriend in Selena Gomez and Forbes estimates his worth to be $53 million. This however, doesn't all add up to an easy home buying process for the 18-year-old.
The latest news to come out of the the Biebs' real estate hunt is that the sprawling Calabasas house he has his eye on has been appraised for significantly less — $6 million less — than the asking price, reports TMZ.
This is bad news for any buyer, Bieber included, because a home appraisal that doesn't come near the fair market value can significantly slow down a purchase.
In May 2009, the Home Valuation Code of Conduct (HVCC) was adopted to reduce the possibility of inflated property appraisals, the kind of thing that was a little too common during the real estate boom.
The goal of the HVCC is to get a independent, unbiased appraisal of the property, which in theory is good, but it forces banks to choose an appraiser through a third-party "Appraisal Management Company" or AMC, rather than their local, preferred appraiser.
Sometimes these third-party appraisers come up with a value that appears to be significantly off market value because they may not be familiar with the area or use appropriate comps. However, due to the HVCC, the lenders must go along with the AMC's appraisal, making it harder to buyers to sell or homeowners to refinance.
So what can Beiber, or more likely Bieber's team, do about it?
They have a few options:
- switch to a new lender and thus get a new appraisal
- reduce the purchase price
- depending on the deal, the buyer brings more money to close
A low appraisal doesn't mean the end of the line for Bieber's dream home but it does mean a little more work on both the buyer and seller's end.