Buyer in Watercolor

[Smiling JOe]

Shelly, the lender is not looking for comps outside of those on the Appraisal. Whether or not to use a low priced sale as a comp, would be up to the Appraiser, not the lender. A decent Appraiser will make a phone call to the listing and or selling agent to find out more details of the sale, including whether it was an Arms' Length sale. If it is a non-Arms' Length sale, and there are other sales to use for comps, that particular sale would likely not be used to determine value for another property. Of course you know this and are just trying to stir the pudding, but I wanted to try and better explain it to others who are unaware.

 

[destinsm]

Shelly, the lender is not looking for comps outside of those on the Appraisal. Whether or not to use a low priced sale as a comp, would be up to the Appraiser, not the lender. A decent Appraiser will make a phone call to the listing and or selling agent to find out more details of the sale, including whether it was an Arms' Length sale. If it is a non-Arms' Length sale, and there are other sales to use for comps, that particular sale would likely not be used to determine value for another property. Of course you know this and are just trying to stir the pudding, but I wanted to try and better explain it to others who are unaware.

Are these "decent" appraisers the same ones that colluded with the banks and lenders to run up home prices over 20% a year for 5 straight years??? Any sensible person, let alone a sensible person whos job it is to appraise houses, would know that the values being "appraised" in 2004-2005 were complete pipe dreams...

I personally would much rather base my buying experience on a SALE... no matter it being Arms' Length or not (could be better referred to as ARM's length possibly)... than some coo coo appraiser that thought the same house was worth twice as much just two years ago...

 

[livingiSoWal]

Destin,I would have to think the buyers ran the prices up...

 

[SHELLY]

A decent Appraiser will make a phone call to the listing and or selling agent to find out more details of the sale, including whether it was an Arms' Length sale.

Appraisers are under the gun to actually do the work and stop relying on folks with a vested interest in hitting the number; and lenders are at the mercy of gun-shy investors and tighter requirements by Fannie & Freddie to offload their mortgages. A new day has dawned in the credit markets that supply cash to purchase assets.


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[Smiling JOe]

Are these "decent" appraisers the same ones that colluded with the banks and lenders to run up home prices over 20% a year for 5 straight years??? Any sensible person, let alone a sensible person whos job it is to appraise houses, would know that the values being "appraised" in 2004-2005 were complete pipe dreams...

Sounds like you have some resentment. Let me remind you that buyers were the ones who ran up the prices in 2004 and 2005, not appraisers. Also, since a "sensible person" without the title of "appraiser" is not able to calculate appraisals for lenders, we will have to stick with the appraisers calculating the appraised value on sales.

 

[Smiling JOe]

Appraisers are under the gun to actually do the work and stop relying on folks with a vested interest in hitting the number; and lenders are at the mercy of gun-shy investors and tighter requirements by Fannie & Freddie to offload their mortgages. A new day has dawned in the credit markets that supply cash to purchase assets.


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Originally Posted by Smiling JOe
A decent Appraiser will make a phone call to the listing and or selling agent to find out more details of the sale, including whether it was an Arms' Length sale.

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Reading back through my post, I can see how I miscommunicated. I was referring to the appraiser calling the listing agent and or selling agent on a property which would be potential used as a comp, rather than calling the listing or selling agent on the property which is under contract, for which the appraiser is calculating the value. Sorry for the miscommunication. I think your statement above is very true.

 

[SHELLY]

Sounds like you have some resentment. Let me remind you that buyers were the ones who ran up the prices in 2004 and 2005, not appraisers.

Appraisers were nothing but the market's Biyatches according to their testimony before the Senate Banking Committee in June 2007:

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Appraiser coercion

Appraiser pressure has received a great deal of media attention in recent months, and it was the subject of an independent study conducted earlier this year by the October Research Corporation. This study found that 90 percent of appraisers were pressured by mortgage brokers, lenders, realty agents, consumers and others to raise property valuations to enable deals to go through. This was nearly double the abuse findings of a similar study three years ago.

Moreover, the survey found that 75 percent of appraisers reported “negative ramifications” if they did not cooperate, alter their appraisal, to provide an artificial valuation. The prime culprits of pressure, according to the survey, were mortgage brokers (71 percent), real estate agents/brokers (56 percent), consumers (35 percent), lenders (33 percent), and appraisal management companies (25 percent). Pressure comes from every direction.

We must do everything we can to ensure an independent appraisal process in mortgage transactions. We cannot do that in a market halfregulated.
Pressure is especially strong when appraisals are delivered to parties whose
compensation depends on getting people to the closing table to complete the sale and mortgage. If the loan doesn’t close, these parties don’t get paid. They do what they can to be sure they get paid.

Unfortunately, these parties with a vested interest in the transaction are often the same people managing the appraisal process within many financial institutions, and therein is a terrible conflict of interest. In this situation our members experience systemic problems with coercion. Appraisers are ordered to doctor their reports or else never see work from those parties again.

http://banking.senate.gov/_files/hummel1.pdf

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[Smiling JOe]

---------------------------------------
Appraiser coercion

Appraiser pressure has received a great deal of media attention in recent months, and it was the subject of an independent study conducted earlier this year by the October Research Corporation. This study found that 90 percent of appraisers were pressured by mortgage brokers, lenders, realty agents, consumers and others to raise property valuations to enable deals to go through. This was nearly double the abuse findings of a similar study three years ago.

Moreover, the survey found that 75 percent of appraisers reported ?negative ramifications? if they did not cooperate, alter their appraisal, to provide an artificial valuation. The prime culprits of pressure, according to the survey, were mortgage brokers (71 percent), real estate agents/brokers (56 percent), consumers (35 percent), lenders (33 percent), and appraisal management companies (25 percent). Pressure comes from every direction.
...

Unfortunately, these parties with a vested interest in the transaction are often the same people managing the appraisal process within many financial institutions, and therein is a terrible conflict of interest. In this situation our members experience systemic problems with coercion. Appraisers are ordered to doctor their reports or else never see work from those parties again.

http://banking.senate.gov/_files/hummel1.pdf

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So maybe you can explain to us how real estate agents and brokers hold a carrot on a stick above the appraisers' heads, since we are not the ones ordering the appraisals and are not the ones referring business to appraisers. We truly have no influence over the appraiser, and typically don't even know who the appraiser is until after we see the appraisal. I find it difficult to believe that 56% of all brokers and real estate agents influence an appraiser's decisions. Now, if you want to talk about the lenders having some influence, that could be a different story.

 

[Busta Hustle]

to borrow a phrase from the early 1900's which might be called the buyer's lament: "In 04-05 we trusted in 07-08 we busted."

 

[destinsm]

Should I not have some resentment toward the entire RE complex... The collusion, fraud, and anything to get a buck mentality is exactly what put us in this situation...

Sure the buyers bought the property... but they needed someone to loan them the money... someone to hit the number of the forever increasing 20% per year real estate always goes up number... and the beat went on... they couldn't afford the loan but your industry just wanted their cut... then the banks can just repackage the crap and pass it to someone else... maybe even your oh so safe money market retirement fund... yea I have resentment and I think well deserved.

If you fed the frenzy your part of it... and because you fed it we hear about bail outs every single day in the market... eventually those bailouts will be looking for those people that didn't actually buy into the crap that your industry was selling and actually have some money in the bank for the day a purchase of property actually makes sense beyond speculation... maybe to live in!