Complicated or an Easy Target?
Recently, I've seen some craziness coming from the appraisal world (surprise, surprise, right!?). I'm thankful to be busy, but with business comes headache, and in the past couple weeks, nearly all of that headache comes from the appraisal world. I could start with the appraiser in Northern Maryland who was kind enough to accept an order well out of his market place, only to come back about $30K less than our anticipated value (now, I don't 
know IF the home would sell for our anticipated value, but I DO KNOW I'd feel a heck of a lot better about it if the report were done by someone I knew was knowledgeable of the local market.
Fast forward a few days, and I get an accepted offer for a client on a pretty unique property - acreage, swimming pool attached to the kitchen (awesome, AWESOME home), lots of square footage in very close proximity to San Francisco - price tag well above $1 million, appraisal price tag of $750. Not bad considering the unique property.
But boy, are they trying to get me in Tennessee. I haven't worked in Tennessee long enough to have our in-house appraisal panel set up throughout the entire state, and I've been working in a new area fairly frequently in the past couple months. With my recent Veteran clients, we've had no issues with ordering appraisals through the VA portal, but when trying to get an Appraisal Management company (AMC) to get our appraisals scheduled - $850. For purchases in the $100K price range. For USDA and FHA clients (low-moderate income, using darn near all their savings on their home purchase).
$850? Well, I've never been the type to accept things as they are without asking questions, so of course I inquired of the AMC, why in the heck is that price tag so high!? "Complexity, government loan appraisal, acreage, rural area" are the reasons I was given.
Well, each property is about 2.5 acres. From my knowledge of Tennessee, that doesn't fall under the "high acreage" classification. Rural? Well sure, but 'middle of nowhere' rural? Nope, there's plenty around, and the VA appraisers sure had no problem getting out there with a invoice price that started with a '5'.
Complexity? One is a small home with an outbuilding, and another is a manufactured home (double wide) on a permanent foundation. With a quick Zillow search, I found out that SURPRISE, neither property is out of the ordinary. Would they require more work than a cookie cutter property surrounded by other cookie cutter communities in a major metro area? Sure. Enough work to DOUBLE the cost of an appraisal? Hell.To.The.No.
This is why I hate AMCs. It's why I hate Dodd-Frank. It's why I hate that our lesislature doesn't think we should have control over the appraisal process -- they'd rather see people with very little money robbed of what little they do have, all so they can buy a home that they'll be paying transfer taxes on and real estate taxes on forever to that same legislature.
Think lenders pressuring appraisers into high valuations was bad behavior? I agree. But to eliminate that problem only to have low-income folks gouged of their savings simply because an AMC can gouge isn't the solution. It never has been and never will be. Frankly, I don't have time to fight these fights. I don't have time to go back and forth with an AMC over pricing on a 30 day contract. I don't have time to research appraisers in the area, reach out to the real estate agents I know for help, and to spend hours trying to rectify the situation. I also don't have time to write a blog about it.
But I'll make time. If it sheds light on the problem. If I can fight to save my clients a few hundred hard earned dollars so they can afford to furnish their new homes after buying. If I can make the AMC think twice before thinking to quote us an invoice price that high hoping we won't call them out.
When it comes to improving our industry and calling out both inefficiencies and what I would consider extremely unethical behavior (that damn near EVERY AMC participates in), we can sit by idly and take it, or we can become vocal and do something about it. None of us have the time to do the latter, and it's the more difficult route. But when it comes to righting the wrongs of our industry, I'll make the time.
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