2nd August 2012

Appraisers Hindering a Full Recovery in the Real Estate Market

posted in Appraisal Management Companies |

According to a recent article in the Washington Post, appraisers are hindering a full recovery in the real estate market.


http://www.washingtonpost.com/realestate/house-sales-hampered-by-appraisers-who-fail-to-recognize-appreciation/2012/06/21/gJQALhMetV_story.html

After reading the article, I believe that low quality appraisals are causing an influence, but we can’t accept all the blame. The article states that a recent poll to NAR members stated 33% of sales fell through due to problems with the appraisal. Sounds like BS to me, sounds more like selling agents trying to get the most $$$ for their clients in a heating up market. That doesn’t mean a buy should over pay for a property. Do we really want to go down that road again?

The article goes on to explain how many appraisers are afraid to make adjustments for appreciation due to the appraisal management companies. So to save some time and avoid backing up their data, I can see many underpaid appraisers just opting out and stating no appreciation for the area.

I can also see why AMCs are afraid of adjusting for appreciation. Most lenders don’t want to see this again after the big melt down.

The final value has to be supported by an ‘unadjusted’ sale as well, so I do not see how appraisers are getting blamed for this issue as well. If sales are showing appreciation, then ALL the sales should be showing appreciation, it is fairly easy to determine if an adjustment is required.

AMCs are controlling many aspects of the appraisal process which is hindering a full recovery of the Real Estate Market. The direct lenders who have their own ‘amc division’ and are forward thinking understand the value of a qualified appraiser and not only hire better appraisers but get better quality appraisals that reflect current market conditions.

Just my 2 cents.

Bryan

There are currently 6 responses to “Appraisers Hindering a Full Recovery in the Real Estate Market”

Why not let us know what you think by adding your own comment! Your opinion is as valid as anyone elses, so come on... let us know what you think.

  1. 1 /*On August 3rd, 2012*/, John LaScala said:

    Bryan:

    What BS.
    If there was any recovery going on it would be reflected in sale prices – which would in turn be reflected in appraisals. Appraisers have become the universal scapegoat of the mortgage industry implosion. Where are the big, national Appraisal organizations stepping up and countering these claims ? They are weak and bureaucratic parasites that are also sucking the life out of the profession from a different angle – pathetic. If you are an appraiser you are a man ( or woman ) on an island – surrounded by sharks from whom you must get your sustenance. This industry needs a unified voice – and that appears to be a dream – we will all be AVM’d out of existence ( like our Commander In Chief suggests ) long before that happens.

  2. 2 /*On August 3rd, 2012*/, Marisol Randoll said:

    Real Estate is actually booming in all of Texas. Homes are selling, people are excited and a lot of exciting things are happening.

  3. 3 /*On August 4th, 2012*/, Terry Larson said:

    Bryan,
    The last paragraph of the NAR article says it all to me. So much of the time when talking to real estate agents I ask what research they do to arrive at a listing, selling, and buying price and most of the time they are mumbling about a comp in the neighborhood that sold that was 500 sq ft bigger with more amenities and newer and use that to base thier decision with, no adjustments because they don’t want to put the effort in to research. I find real estate agents to be no different than most of John Q public if something goes wrong you automatically blame the other person rather than taking accountabilty for your own inaction of getting the job done properly and in a professional manner I spoke at a real estate office this week and this very subject was brought up, a realtor had a sale that would not reach contract, she wanted to use comps that were further away and would bring the value up and could not understand why this would not occur because the neighborhood was dominanted by short sales. The fact still remains if the short sales are dominant in that neighborhood and are setting the sales price the appraiser needs justification to pass those by.To me this was not taking her clients best interest into perspective, just wanted a sale no matter that the buyer would over pay and possibly have negative equity from the get go. In my view we still have a resposibility to all parties that the value be established isc in a non biais manner as to protect all parties involved in the transaction we must remember that the buying and selling parties have emotion in the process it is our job to step back and analyze without choosing the outcome ahead of time.

    Terry

  4. 4 /*On August 4th, 2012*/, Jim Scarduzio said:

    Bryan;
    I have sat here for the last 2 years and watched as the real estate industry blamed appraisers, lenders and anyone else that they could, for the mess that they created. We as appraisers use the sales figiures that they provided to set our values. We don’t(at least most of us) make up the figures. They are from a reliable public source and we must use them. Meanwhile, the banks are not approving credit for average people, the AMC’s continue to make their own rules and try to pay us less, The appraisal organizations grow less potent every day, the fed continues to create more rules along with Congress that generates more red tape and greater expense, but the appraisers catch all the blame for everything. I don’t know where it will end, but right now unless something changes, appraisers will go away as a profession and there will be complete chaos in the real estate market because the fox (NAR) will be in control along with the banks.

    Jim

  5. 5 /*On August 6th, 2012*/, William J. Schilling said:

    Maybe someone should wake up. Real Estate Brokers, Sale Agents are pushing for the acceptance of BPO’s and unrestricted appraisal possibilities, through Federal and State agencies.

    They set the Price through the listing and then expect the appraiser to meet their projections.

    Maybe if all appraisals would reflect a reduction of the contract price by eliminating the non-real property expense of the standard 6% commission, then the real property value would be more reflective of the real market value.

    Can anyone guess what the annual real estate commission fees that are included the the property loan which is not a real property contribution. Want to stir the pot bring that subject up and any Realtor’s meeting or open discussion. I did while attending an education class and created an explosion hear around the world and of all things was asked to leave the class without any return of the fee which was paid, of course I refused.

    Their are far too many facets involved in the real estate market to blame any one contributor. We may all be at blame but who started the problem, the listing agent’s listed price……

  6. 6 /*On August 6th, 2012*/, Michael U Nwosu said:

    I run into this all the time. The appraiser should not be intimidated by the listing agent who claims to know the area better than she knows herself. The appraiser does not set the market. The market and the property values are set by the market, which is set by the closed sales in that neighborhood. If a buyer is so interested in buying a property above the appraised value, that buyer should use his or her own money not public funds. The most important phrase in USPAP is “public trust.” By now the mortgage industry should have learnt a valuable lesson. You said it right. We do not want to go that route again. As long as you have done your neighborhood research properly, you should not worry. The appraiser is the only independent party in that transaction, and it should remain so.
    Another issue with AVM’s and cheap appraisals is that those who use them may get away with it most of the time, but one failure will more than likely bankrupt those involved. “There is peace of mind in a Quality Appraisal.”
    Michael U Nwosu, SCRREA
    Excellent Ideas of America

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