Appraisal laws meant to protect the public sometimes hurt them!

Real Estate Agent with Century 21 Redwood 35104

When legislators regulate a business they clearly know nothing about the results are rarely if ever good!

      I have a transaction closing this afternoon that has been an absolute nightmare. Why? Because under the new regulations regarding appraisals the appreisers seemingly have no accountability. Those of you reading this who are good professional appraisers know that what's happening is hurting you too! 

      The subject property is a townhouse that has been totally renovated. New kitchen cabinets, appliances, flooring, carpet, new bathrooms, a total renovation. There were recent sold townhouses a few blocks away. Similar in age but a little larger. A pretty easy adjustment. Did the appraiser use those??? No, he went a few miles away across a major highway to a different town, totally different market. As a matter of fact, one of the comps he used was a duplex with no HOA and two levels rather than three like the subject property. 

      About the description of the property. He stated the kitchen renovation was 6-10 years old. Really? There was still styrofoam and tape from packing in the refrigerator. The shiny new stove had clearly never had any food on it. The cabinets had clearly just been installed. The bathroom description said renovation was 1-3 years. Again, it was clear the toilets had never been used. Sink tops and vanities looked fresh off the showroom floor. Did I mention the brand new heat pump. Normally that would be maintenance however these townhomes originally did not have AC. They were built with electric baseboard heat. 

      In the appraisal the appraiser also cited an active listing across the court listed at the same price and with a long time on the market. I went through that unit. It needed new carpet. The front windows had broken seals and were clouded. The front foundation wall was damp and slightly bowed and although it did have a heat pump the unit was very old and either close to or past the end of it's life expectancy. 

      These issues should be of major concern to both my Realtor friends and members of the public. We are seeing appraisers from different areas who are not familiar with the local market conditions giving values that clearly have nothing to do with available comparables. 

      Yes we are finally going to settle this transaction but not without a lot of jumping through hoops that should never have been there. My hope is that those who are reading this, especially members of the public would let your concerns be known to your legislators. With the market we're in, depending on where you are an inaccurate appraisal can make the difference between being able to sell your home as a standard sale or being forced into the difficulty of being involved in a short sale. 

Comments (8)

William Feela
Realtor, Whispering Pines Realty 651-674-5999 No.

I have a client that ran into a problem from some of the new rules

Nov 03, 2013 08:50 AM
Larry Riggs
Century 21 Redwood - Frederick, MD
GRI, SRS Your Frederick County Specialist

Just reinforces the saying that laws passed as an emotional reaction are almost always bad laws.

Nov 03, 2013 07:50 PM
Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

Larry- I am happy to hear that you are closing the deal!  It sounds like it has been a  nightmare!

Jan 06, 2014 11:26 PM
Martha Brown
Long & Foster Real Estate, Inc., Annapolis MD 21403 - Annapolis, MD
Your Homes Around Annapolis Agent

I have not suffered through that as of yet Larry. I do ask when I get a call from the appraiser whether they are local to the market and really know the neighborhood. If I feel there is a challenge I will call the lender and complain before the appraisal is done. I have been known to get new ones. :)

Jan 08, 2014 11:14 PM
Larry Riggs
Century 21 Redwood - Frederick, MD
GRI, SRS Your Frederick County Specialist

Unfortunately under the new laws the lender has very little to do with the appraisal. A management company assigns the appraiser. The lender is not supposed to have any contact with the appraiser. Getting relief from a bad appraisal can be a pretty frustrating project if you can get it at all.

Jan 08, 2014 11:59 PM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Larry~ I feel sorry for appraiser and consumers... Appraiser are handcuffed by terrible regulations and CAN'T do their job properly. I turn consumers are paying the price 

Mar 18, 2014 01:51 AM