Another over inflated value

By
Real Estate Appraiser with AmcAppraisalsinc.com

I just finished reviewing a condominium appraisal in Davenport, Florida from October of 2005.  Another appraiser who over inflated the value by $50,000!   When you have to go 6+ miles for comps, and ignore 222 closed sales within a 5 mile radius…you are REALLY working hard to hit that sales price!

Appraisers are not supposed to ‘hit a number’ or ‘support a sales price’.   They are to be auditors of the transaction. 

Imagine if this buyer, who now has lost this unit to foreclosure and perhaps faces judgments and financial hardship as a result, could have been told, “you are paying $50,000 too much for this unit when compared to the rest of the market around you.”.    Imagine if they had that choice or option?

Sure, they likely would have been mad at the appraiser for ‘killing the deal’.   But hindsight is now 20/20 !!!

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Rainer
76,724
Deb Jamail
HomeLife Southern Properties - Galveston, TX
Galveston County Real Estate

Richard,

I really hate to hear that.  I had hoped all this mortgage mess would sort some of this out as well.  I guess everyone can't be controlled.

Jan 27, 2011 12:25 AM #1
Rainer
240,853
Jesse Skolkin
Independent New York State Certified Real Estate Appraiser - Fresh Meadows, NY

Great, it took over 5 years to find out that fraud was involved in a transaction that just went south.

The "number hitter" is probably off the hook on that one due to statute of limitations and record keeping requirements.

Jan 27, 2011 12:39 AM #2
Ambassador
757,417
Doug Rogers
Bayou Properties - Alexandria, LA
Your Alexandria Louisiana Agent

5 fives ago all most people cared about was their monthly payement "right now". I hope we all learned our lesson!

Jan 27, 2011 02:09 AM #3
Rainmaker
173,450
Richard Glesser
North Country Appraisal Services - Gaylord, MI

Seeing more retor enhanced reviews for 5 and even 8 years back.  Very difficult when MLS systems have purged their data bases.  Up in Northern Michigan, I recently turned down a requests because the local board had merged with an adjoining board and after 1 year, cleared their old data base so information is not available to even check the information used.

Jan 27, 2011 02:42 AM #4
Rainmaker
68,543
Richard D. Ferris
AmcAppraisalsinc.com - Clermont, FL
Florida State Certified (FHA) Appraiser

@Deb - this someting from 5 years ago - isn't it amazing that back then - people were not likely thinking "what will happen in 5 years and will this appraisal hold up to srutiny then?"

@Jesse - you would not believe how much of my current workload is on files from 3-5 years ago - it's like a big ugly trunk of files being unpacked these days!

@Doug - how true how true!

@Richard - luckily here in Florida - ours goes back about 10 years - they just keep this stuff around!  I can still access sales from 1999 which makes for some good 10 year trend history graphs!

Trend analysis

Jan 27, 2011 03:23 AM #5
Rainmaker
90,411
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

This is all too common a sight on the retro reviews we are now seeing.  Our market went up so fast & so much that the sales prices often stopped being supportable by ethical means.  The tough part of that was, be ethical or loose clients.  The writing was on the wall telling of a pending correction before the market started going down, but the most we typically heard was it's just slowed over the holidays before it starts up again, right.  When I started telling people in the Spring of 05 it was over inflated & was likely to correct down, people thought I was either crazy or didn't know anything.

WE hope that lenders have learned from this fiasco, but when they continue to order the cheapest, fastest valuation, (sometimes not even an appraisal) just to save $100 or so & wind up with valuations $50k off, maybe thay have not learned.

Feb 02, 2011 03:49 AM #6
Rainer
312,297
Jack Hughes
Hughes Appraisal Group Inc. HUD/FHA Approved) - Lehigh Acres, FL

Good post. I have been getting numerous request for field reviews for 2007 appraisals. The type of work is changing,but those number hitters are still out there. HVCC hasn't changed the result just the players. Realtor pressure replaces Lender pressure and even AMC had some pressure.What have we learned from this ? Appraisers are always the fall guy

Feb 04, 2011 11:30 PM #7
Rainmaker
119,707
Sara Goodwin
Ashcroft & Associates - Portland, OR
Portland, Oregon Appraiser

Wow.  Where were the underwriters on this one?  That just seems way too obvious to miss...

Feb 11, 2011 04:12 AM #8
Rainmaker
90,411
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

I think we like to think that underwritters are totally "unbias" like appraisers are supposed to be, but think, who do they work for, who pays their salary?  Could they at times be under some kind of pressure or conflict of interest to be more flexible or less strict?  I don't know for sure, but think about it?  If appraisers are placed in that position to make deals happen or loose work, what kind of subtle pressure could be placed on an underwriter?  Just wondering?

Feb 16, 2011 04:46 AM #9
Rainmaker
68,543
Richard D. Ferris
AmcAppraisalsinc.com - Clermont, FL
Florida State Certified (FHA) Appraiser

@Sara - ha!  Yeah right?

@Craig - I 100% agree! In fact, I knew some underwriters from back during the boom - and they were all under a lot of pressure to approve the deal!  If someone else killed it, they were ok - it was someone else's problem!  But if THEY killed it....well....they might not have had their job for too long!

Feb 16, 2011 05:44 AM #10
Rainmaker
39,989
Tom Horn
Thomas Horn, Real Estate Appraiser - Alabaster, AL
Appraising The American Dream

Richard,

I may have already asked  you this, but what software are you using for graphs like you included in this post.  Sorry if this is a redunent question.

Feb 20, 2011 05:37 AM #11
Rainmaker
68,543
Richard D. Ferris
AmcAppraisalsinc.com - Clermont, FL
Florida State Certified (FHA) Appraiser

Tom - I use Excel 2003.   I use a screen capture program (Jing) to copy the images to insert into reports. 

Feb 21, 2011 12:30 AM #12
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Rainmaker
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Richard D. Ferris

Florida State Certified (FHA) Appraiser
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