Don’t Shoot the Messenger(-Shoot the AI, MAI, SRA, Appraisal Institute Member, OR IT’S MANAGEMENT.)
Appraisers Not at Fault for ‘Low’ Home Values
Many in the real estate industry have tried to blame the market’s distressed condition on appraisers, saying that appraisers are at fault for producing opinions of value that don’t match a home’s listing or contract price, delaying a recovery in the housing market. In fact, appraisers are undertaking the same thorough research and thoughtful analysis that they always have in order to continue producing reliable, credible opinions of value.(is this a JOKE?)
Appraisals aren’t intended to confirm a home’s sales price.
Appraisals completed for mortgage transactions are used to assist lenders in making lending decisions. Buyers and sellers often have emotional value attached to a home or are unaware of the market. They shouldn’t assume an appraisal is somehow “wrong” if it doesn’t match the listing or contract price. There’s no reason to assume the contract price is the “correct” price simply because it’s higher than the appraisal.
Appraisers don’t set the real estate market; they reflect what’s happening in the market.
Think of the appraiser as a mirror, reflecting the market – and the market is depressed as home prices have fallen far below values of a few years ago. Reliable, credible opinions of value help stabilize real estate loans and investments, promoting socially desirable real estate development.
Appraisers work not for buyers or sellers, but for lenders. (THE APPRAISER WORKS FOR THE LENDER! NOT IN MY PRACTICE, IN MY PRACTICE WE ARE AN INDEPENDENT PARTY THAT HAS ONLY ONEOR TWO BOSSES, MARKET VALUE AND USPAP. THE APPRAISAL INSTITUTE HAS ALWAYS WORKED FOR THE BANKS, WHEN THEY WANT VALUES TO GO UP THEY COMPLY, AND NOW WHEN THE BANKS DO NOT WANT TO MAKE REAL ESTATE LOANS, THE APPRAISAL INSTITUTE FRADGUENTLY HAS KEEP VALUES VERY LOW BY NOT USING MARKET TRANSACTIONS AS COMPARABLE. IF YOU THINK I AM BLOWING SMOKE ASK HER HOW MANY AI, MAI, APPRAISAL INSTITUTE MEMBERS HAVE DEGREES IN FINANCE, RATHER THAN REAL ESTATE.)
The appraiser’s client for appraisals completed for mortgage transactions typically is the lender – not the buyer or seller. Lenders order appraisals to get a stronger understanding of risk relating to the underlying collateral offered in a mortgage. Neither the lender nor the consumer benefits by entering into a mortgage that is more than the value of the property.
Appraisers are independent, third-party experts (AN EXPERT IS ONE WHO HAS BEEN SO DESIGNATED BY A TRIER OF FACT IN A COURT OF LAW, NOT THE APPRAISAL INSTITUTE) with no motive to be biased. (IT IS NOT A MATTER OF BIAS BUT A MATTER OF IGNORANCE AND COMPLISITY.)
Appraisers are particularly valuable because they are an objective and unbiased source of real estate information. Unlike some other real estate professionals, appraisers perform a professional service for a flat fee – rather than for a commission contingent on the value conclusion, the approval of a loan or the eventual sale of the property.
Appraisals sometimes are assigned to the least qualified, least competent appraisers. (AI, MAI, APPRAISAL INSTITUTE MEMBERS. )
Federal regulations and policies require a “firewall” between appraisers and lenders. To perform this “middleman” function, lenders often turn to appraisal management companies. AMCs’ business models are based on keeping as much of the appraisal fee as possible and paying as little as possible to the appraiser performing the appraisal. This can lead to the least qualified, least competent appraisers – including those from other cities or even other states without sufficient knowledge of the local market – being hired to perform complex appraisals.
(DO YOU REALLY WANT TO USE ONE OF THESE FOLKS (appraisal institute) THAT DOES NOT EVEN KNOW THE DEFINITION OF MARKET VALUE) Especially in a distressed market, competent and qualified appraisers – such as designated members of the Appraisal Institute – should be hired for difficult assignments.
Designated members of the Appraisal Institute have achieved levels of education, experience, standards, ethics and peer review above those of licensed or state certified appraisers. Those qualifications are particularly valuable when facing challenging valuation assignments … such as those found today.
(HOW DO YOU ADJUST FOR DISTRESSED SALES WHEN ESTIMATING MARKET VALUE? ASK HER, THE CURRENT PRESIDENT OF THE APPARISAL INDTITUTE HOW IT IS DONE. YOU ARE NEITHER COMPETENT OR QUALIFIED IF YOU USE DISTRESSED SALES AS COMPARABLES, THIS HAS BEEN A HARD AND FAST RULE SINCE I GOT IN THE BUSINESS, IN THE 70′S.) Appraisers know how to use distressed sales as comparables.(THEY ALSO NKOW HOW TO KILL YOUR DEAL, FIGHT BACK, SUE, HIRE SOMEONE WHO KNOWS THE DEFINATION OF MARKET VALUE!)
Qualified, competent appraisers are capable of using their experience and education to determine when – and how – to use distressed sales (such as foreclosures) as comparable sales. These appraisers know what adjustments to make, if any, when using distressed sales as comparables. In some markets, distressed sales are so prevalent that it would be improper not to use them as comparables.
LETS GET REAL, BANKS DO NOT WANT TO MAKE LOANS WITH THESE LOW RATES AND THEY HAVE A HIRED GUN! THE APPRAISAL INSTITUTE AND THE APPRAISAL FOUNDATION TO DO THEIR DIRTY WORK. FOR MORE CONSULT THE HARRIS COMPANY, REA/C http://www.harriscompanyrec.com