This is definitely a pressing question these days: Who is driving the appraisal process these days?

If you answered the answered the appraiser, unfortunately you are wrong.

If you are answered the lender, ding, ding, ding, you're right.

 

There are many reasons why the lender is calling all the shots these days, not the least of which is they are still licking their wounds from the bad decisions they made in the prior decade.  Additionally, there's an old adage in banking:  Bad loans are made in good times and good loans are made in bad times.

It is fair to say that we are not in good times, therefore, good loans are being made due to lenders being overly cautious.  On the contrary, back in the heydey of 2005 to 2007, those were very good times and many bad loans were made.

Were the requirements from lenders for the appraisals different between 2007 and 2012, you bet your gym shoes they were.

Preferably, there should have been no difference in the appraisal quality provided by the appraisal profession, but unfortunately, that was not necessarily true across the board.  Therefore, in today's lending environment, lenders have gone out of their to take conservative steps to insure the higher probability that they are making good loans in this less than good time. 

And whether you like it or not, they are lending not investing, so it is prudent to be conservative, but maybe just not nearly as conservative as they are being these days.  One day soon, possibly the appraiser will have more say so in the appraisal that ultimately gets produced for lenders, but until the lender's balance sheets improve, they continue to call the shots.

 

Michael Hobbs, PahRoo Appraisal & Consultancy

 

 
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4 Comments on Who Is Driving The Appraisal?

MAY
15
2012
393,067 Points Outside Blog

If the appraisal process would be just more consistent perhaps I would buy in. In so many cases they seem to drastically discount what the buyer is paying or willing to pay.
8:06pm • #1
548,216 Points 9 Featured Posts Outside Blog Called Shot Master

Michael:

I have found that most appraisers work very hard to get the appraisal right.  There may be a few who just call it in, but not many. 

8:11pm • #2
623,759 Points 1 Featured Post Outside Blog

Of course and with the Dodd Frank deal we are lucky and it will only get worse to close anything.
8:11pm • #3
1 Featured Post

Michael - Us lenders have little choice.  HVCC and now Dodd/Frank have us pretty tightly cornered.

Winston - Find yourself a Lender in PA that orders their Appraisal through their own, self-managed Appraisal Manager.  We have one for our office.  It only has about 14 Appraisers in the pool and they are all Geographically Competant.  If your Appraiser drove more than 10 miles to get to the property, he/she is probably not geographically competant.  Lenders that are using HUGE pools of 1000s of Appraisers, are stumbling over themselves left and right.
8:14pm • #4


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Michael Hobbs, SRA

Michael Hobbs, SRA, LEED GA, RAA

Chicago, IL

More about me…

PahRoo Appraisal & Consultancy

Address: 1707 W. Roscoe Street, Suite 1, Chicago, IL, 60657

Office Phone: (773) 388-0003

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