Many of us have seen deals go down the drain because of appraisals that were done by appraisers who are not in the market where the appraisal is being done or the appraiser low balling the appraisal to protect themselves. NAR President Charles McMillan also said shoddy appraisals were hurting the market. “To maximize the potential for a housing recovery and subsequent economic recovery, we need realistic appraisals that are based on proper comparisons and done by a local specialist,” he said. ~ Mortgage News Daily"In the past we've pulled comps to show the appraiser their appraisal was off and justify the listing price. In some cases we even resorted to a second opinion. What are your experiences and what are you doing to overcome this challenge?
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Here is some comments from colleagues from another site where I posted the same discussion:
Rules have changed as to use of Appraisers...choice and communication with...the fact is that the banks are using a low listing price strategy to generate multiple offers on their REOs, this strategy backfires on appraisal values as part of comp analysis is taking into account the lisiting prices on market.
Posted by John Mourraille
As a former appraiser's assistant, I have experienced the stresses of an appraiser. The banks are extremely hard on them, without actually saying it, the banks expect the appraiser to come in at a safe value... vs full market value. Banks are going after appraisers now for deals that turn sour and/or they will remove an appraiser from their "lists" if a review is to come back at a lower value than what the appraiser sets as "value" for the home/property. My experience is that appraisers are consciously or subconsciously scared. They fear that they may lose what remaining business they have or may be sued/litigated. I don't agree with it, however, I do understand! Then of course there are also some arrogant appraisers out there that want to have their own agenda & personal say on what the market does...it is a passive/agressive way of control. I strongly dislike those appraisers.
Here is a link from bloomberg article today regarding the home valuation code of conduct (HVCC) that went into effect on May 1st. The HVCC will have a negative impact on price declines. Get ready for a long summer...
Posted by John Wittrock
I agree had one the other day purchase price $160,000 appraisal $125,000 now if she would have come in in the $150s I would have said ok but I sold a much older home in worse condition down the street for $125,000 this was brand new construction that went to REO.
Heather the Realtor. Orlando & Lake Mary First Time Home Buyers & Luxury Homes (RE/MAX Central Realty)
I have actually experienced the opposite, one of the asset companies that I deal with uses safeguard and the appraiser that safeguars sends to the REO properties is from out of my area, and she tends to appraise everything higher because in my city the prices can dramatically change from one block to the next, and she always goes for the highest price.
I like most appraiser I think that is a very important job and now doing so many BPO's I can see it is not an easy job, but part of the problem, at least in my city, is that some appraisers over appraised properties to get more business from loan officers.
I know everybody is scare now days, and I have experience several delays with lenders ordering appraisers and sometimes requiring 2 appraisals to make sure the value is correct.
I agree 100% with you it is imperative that the appraiser knows, not just familiar, with the area that he or she is appraising, to get a true value on the properties.
Replies
Rules have changed as to use of Appraisers...choice and communication with...the fact is that the banks are using a low listing price strategy to generate multiple offers on their REOs, this strategy backfires on appraisal values as part of comp analysis is taking into account the lisiting prices on market.
Posted by John Mourraille
As a former appraiser's assistant, I have experienced the stresses of an appraiser. The banks are extremely hard on them, without actually saying it, the banks expect the appraiser to come in at a safe value... vs full market value. Banks are going after appraisers now for deals that turn sour and/or they will remove an appraiser from their "lists" if a review is to come back at a lower value than what the appraiser sets as "value" for the home/property. My experience is that appraisers are consciously or subconsciously scared. They fear that they may lose what remaining business they have or may be sued/litigated. I don't agree with it, however, I do understand! Then of course there are also some arrogant appraisers out there that want to have their own agenda & personal say on what the market does...it is a passive/agressive way of control. I strongly dislike those appraisers.
Posted by Michele Simonis
http://www.bloomberg.com/apps/news?pid=email_en&refer=&sid=...
Here is a link from bloomberg article today regarding the home valuation code of conduct (HVCC) that went into effect on May 1st. The HVCC will have a negative impact on price declines. Get ready for a long summer...
Posted by John Wittrock
I agree had one the other day purchase price $160,000 appraisal $125,000 now if she would have come in in the $150s I would have said ok but I sold a much older home in worse condition down the street for $125,000 this was brand new construction that went to REO.
Heather the Realtor. Orlando & Lake Mary First Time Home Buyers & Luxury Homes (RE/MAX Central Realty)
I like most appraiser I think that is a very important job and now doing so many BPO's I can see it is not an easy job, but part of the problem, at least in my city, is that some appraisers over appraised properties to get more business from loan officers.
I know everybody is scare now days, and I have experience several delays with lenders ordering appraisers and sometimes requiring 2 appraisals to make sure the value is correct.
I agree 100% with you it is imperative that the appraiser knows, not just familiar, with the area that he or she is appraising, to get a true value on the properties.