Don't Shoot The Appraiser...Ahem...Messenger

Real Estate Agent with Barnes McQuade Realty

So where do I start?  With the whole mortgage meltdown over the past few years there are a lot of people pointing fingers on who it is to blame.  Quick answer....the greedy bank executives.  Throughout this whole ordeal there has been one group of people everyone loves to point there finger at and lay blame..... The Appraiser.  When times were good (hyperbole) because they weren't really good, the appraisers are in hindsight catching blame for giving "too High" of a value on properties, therefore putting homeowners in a house that isn't worth what they paid....these days they are getting blamed for deals falling through for not giving enough value for the home....and now the Realtors and sellers/buyers are upset at them.  Here is a fact, not opinion: Appraisers report the facts; what the market is bearing.  Sure, there may be some bad apples out there trying to make a sale and give a "not so accurate" report, but they have an Appraisal Board to take care of them.

Lawrence Yun, the "Chief Economist for the NAR" recently is reported saying..."poor appraisals are stalling transactions." He attributed May's less-than-expected sales increase on the fact that "some contracts are falling through from faulty valuations that keep buyers from getting a loan."  If these reports are indeed faulty, again, don't blame the Appraiser, blame the system.  Appraisers now must abide by the HVCC , which stands for the Home Valuation Code of Conduct.  Part of what is going on here is some banks have to use AMC's"Appraisal Management Companies" to outsource Appraisers.  From what I know of Appraising in general to all the Appraisers I speak to here is my take on this:

With blame falling on lenders and appraisers over the past years for these two having cozy relationships....meaning a lender knows a great Appraiser and keeps using them because they are good OR interpreted.... they ALWAYS hit our number requested......the AMC's were injected as a firewall to not let lenders call there "guy/gal" to do their appraisals for them....Appraisers are now randomly chosen by the AMC's to complete the order eliminating the "cozy" relationship.  This probably does cut out some of the "bad apples", but not really, because underwriting is more strict now and they are actually paying attention to the reports unlike the past when they were zipping through them just to get to the next one.  WHAT THIS ACTUALLY DOES is counterproductive.  The AMC's are now (this actually happened to me) getting an Appraiser from Greensboro NC to appraise a home in Raleigh NC....and he/she didn't even have access to our MLS.....HOW is he/she to get accurate information without our MLS....banks don't care because he was cheaper and doesn't know the lender.  D.U.M. dumb.  The banks are shooting themselves in the foot AGAIN.  They should allow lenders to choose their Appraisers as before because now there are more safety nets in place.

Here is the worst of it, the Appraiser is just like the Realtor, Loan officer and Home Inspector in the sense that they have worked all these years to get a clientele base to work with referrals.  So over the years they have developed relationships with lenders and can count on a certain amount of business coming in every month.  Now, they lose all these contacts because lenders are forbidden to call "their guy/gal" to get the appraisal done.  If they do get work, it is on rotation from AMC's that pay less, but charge the buyers more during the application process.  So an appraiser just starting out may possibly get just as much work as a seasoned appraiser.

I may be wrong, I may not have all the information needed to express my opinion, but to me it all goes back to the banks making all the money with the bad loans.....losing their shorts and then coming back making new rules that only benefits them.  I understand there has to be guidelines and restrictions in place to protect their investments, but common sense should be a part of their decisions. 

Just think, if we all paid cash it would be a lot easier:) (now that's a joke)

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