What is up with Philadelphia Appraisers ?
Getting a mortgage is hard enough these days with borrowers having to give blood samples and piles of documentation in 
order to get a loan approved. And if you are lucky enough to make it through that, keep your fingers crossed that the house you are under contract for appraises for value.
Many of the big banks use Appraisal Management Companies (AMCC) for their appraisals which means who gets assigned the appraisal is almost pot-luck and often times it could be someone who is not experienced with the neighborhood where you are buying a property or flat out is just incompetent as it becomes a bidding war as to who "gets the appraisal".
And if there is an error in the appraisal report or something missed, the appraiser might be too arrogant to make changes and the bank might be too conservative to request a reconsideration of value. And of course you have the "danger spider web" of who is allowed to talk to who. The appraiser might say "I am not allowed to talk to you, Mr Listing Agent - call the bank." Great...I already did and now I need to talk to you about this incompetent appraisal.
Now most appraisers are very good at what they do. Unfortunately, it is the ones that are not that give their industry a bad name and blogs like this are created. And the unintended consequences of the AMCC has hurt their industry. It is unfortunate when deals fall apart due to the lack of knowledge of neighborhood sales of an appraiser and the follow-up support of banks to support some of these god-awful reports. It is like the big banks never wanted to do the loan in the first place...and perhaps they did not...
Some recent examples:
- A new construction property in Northern Liberties appraises for $20K less (by a big bank) than the other new construction properties that already sold within 6 months standing right next to it. Incompetence at its best. What happened? Buyer switched mortgage companies and a new appraisal came in at the sales price.
- A 7 year old property in Northern Liberties came in $50K below (by a big bank) the sales price! The house next door just sold for the same price a little over a year ago. I do not think there was that much depreciation or any at all! What happened? Buyer switched mortgage companies and a new appraisal came in at the sales price.
- An Old Kensington property had 2 appraisals done as it was sold within 6 months - one was $19K below the sales price and the other $15K below. What happened? The seller came down to meet the lowest appraisal since he is a Realtor and Owner of a real estate office and did not want to make waves. That seller was myself.
These are just 3 recent examples in the last 3 months. There will be countless more situations like this all over town. And if the buyer uses Citizens Bank, watch out for excessive FHA repairs being called for on a FHA loan. One repair was so ridiculous for a property in Old Kensington the buyer had to pay for it out of pocket - over $1,000. When I asked other mortgage companies if they would have called for that repair, they indicated it would have been waived. But since Citizens Bank underwriting department is in Rhode Island, they know nothing about Philadelphia homes and have to "stick to the report". It is insane. I had another deal where Citizens Bank on a FHA loan refused to do the loan because there still was $50 left of painting that needed to be done from $3,500 of work that was called for. That painting was completed on Wednesday but Citizens still could not close the loan 2 days later - again underwriting is in Rhode Island. The seller can now terminate the contract if he wants to.
What is the moral of the story here? Simple, if you are buying a house, use a local mortgage broker or company. My recommendations are Cardinal Financial, Allied Financial, Trident, 3rd Federal Bank, Beneficial Bank and Guaranteed Rate.
My list on who to avoid are Citizens Bank, PNC, Bank of America, JP Morgan Chase and Citibank. The theme - STAY AWAY FROM THE BIG BANKS! And if you are the listing agent or the seller where the buyer has to use one of the big banks for their loan, definitely plan on the possibility of an appraisal issue and the high probability that the settlement will not happen by the settlement date. And of course have a very experienced listing agent who has the experience of dealing with banks, appraisers and buyers agents to navigate through the process to keep the deal alive when the appraisal does come in low.
What is your experience?
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