Blame the market, not appraisers
Letter to the Editor
By Inman News, Monday, August 31, 2009.Re: '"Bad appraisal" dims financing options' (Aug. 27)
Dear Editor:
After reading both of these articles -- "'Bad appraisal' dims financing options" and "Low appraisals sabotage more deals" -- I take exception to the characterization of "bad appraisals" and "low appraisals."
Have the media and the borrower given any consideration to the fact that appraisers are doing their job? Their job is to report the current market value of the property being appraised. In the case of the letter, which describes a borrower renovating her home, I have seen this situation often and it is a reflection of the current market, not necessarily a "bad" appraisal.
Maybe the first appraisal was inflated? I'm sure the market was different at the time the borrower applied for a loan. Anyone reading the newspaper these days knows the market is in a downward slide. Maybe it wasn't a good decision by the borrower to add on at this time?
As for the article suggesting that low appraisals are "sabotaging" deals: Again, the appraiser is reflecting the current market, and Realtors/agents and loan officers should know this.
If they are looking at a purchase and the appraisal is coming in low, maybe they need to look again at how wise their purchase is. Additionally, the article touches on a huge problem in the appraisal/mortgage industry and that is inexperienced appraisers working for far lower fees and in areas that they are not familiar with.
So, the question that needs to be asked is, "How experienced is the appraiser doing the work?"
Fees to the borrower are considerably higher while the fee paid to the appraiser is lower. In that situation, you will not be getting the best, most experienced appraiser to do the job. Until this is corrected I think it is unfair that the appraisal industry as a whole is blamed for sabotaging deals.
Kim Napier
Appraiser
Woodford, Va.
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Submitted by Robert T. Boyer, Ph.D. on August 31, 2009 - 1:52pm.
Kim,
Great comments. It seems personal responsibility has been out the window for some time and the goal of finding a scapegoat has been paramount. It's the lenders, the realtors, the appraisers, etc.
There is the oft quoted phrase, "The fair market price is the value a buyer will pay for a house in an arms length transaction; a transaction where the seller is not in peril." How do you rectify the concept of fair market value and the appraised value?
Robert T. Boyer, Ph.D.
Co-Founder - FinestExpert.com
The Cashflow Search Engine
Home of the FE-Score
VP America's Finest Real Estate
Submitted by George Farmer on September 4, 2009 - 1:08pm.
Well, seems like many times the appraisal comes in just what needed for the loan. Odd huh?
George.
LAND FOR SALE
Submitted by Mary Thompson on September 6, 2009 - 5:45am.
Kim
Could not agree more!!!!!
I have written many blogs on this subject as many Realtors, seller and buyers do not understand the appraisal process. My one liner for them is Appraisers do not determine value, the MARKET does. I was so tired of hearing people say that it was a bad or low appraisal...This shows they do not understand.
Consider this....We have NO vested interest in the property we appraise (we shouldn't and if we do, we must disclose our interest) so why in the world would we under or over appraise a property? In the past lenders have always pushed appraisers for that HIGH number, some appraisers succummed to the high pressure and that is what started this whole foreclosure and mortgage fraud mess.
We are hired to protect the clients (banks or others) interst. We are just doing our job by REPORTING and ANALYZING The market..Period! There is no good reason why we would do anything else.
As for George's comments above about why it seems appraisals come in just what is needed for the loan....Well there are some appraisers who believe in the theory that the market value is what a willing buyer will pay and a willing seller will sell the property for and thus the sales price determines values. This is a valid argument. But I have appraised homes higher than the sales price if the MARKET tells me that this home sold under market.
You are correct Kim, with HVCC now in effect, there are many appraisers working for 1/2 the fee with appraisal management companies and these companies do not really care about experience, they care more about your FEES.
I recently was removed from an appraisal management company's appraiser panel, because I refused to work for 1/2 my fee. In this day and age it takes alot more time to complete a quality appraisal and I do not believe in cutting corners.
I have over 16 years of experience, but that did not matter to them, they would not budge because in their own words they have other appraisers in my area that will do the reports for less....and they admitted to me that their fees are LOW!
That scares me! There is a concern about expertise out there and I am a firm believer that you get what you pay for in this world! If you are dealing with a person who travels 30-60 miles to get to your home, chances are they have no clue aobut the inner workings of your particular neighborhood.
Does anyone want to know which lender (a big one) and Appraisal Management company I am talking about, just drop me a line!
Lakefront Appraiser
http://www.activerain.com/blogs/lakelanierappraiser
http://www.marytappraisals.com
Submitted by Jean Powers CRS on September 6, 2009 - 7:07pm.
REALTORS do understand the appraisal process. A few years ago when prices first started to rise, the homes were being appraised for $50,0000 or more, over the listing prices. That should have never happened! If properties are appraised at market value then why now, do they come in at purchase price everytime? It doesn't happen very often that a property appraises over the purchase price. I don't like placing blame, I just want all to be right..
Jean Powers CRS, e-PRO, PMN
Broker Associate
Kane & Associates
Alameda, CA.
510 908.9002
Homes@JeanPowers.com
www.JeanPowers.net