Appraisals and the Catch 22
So, the other day at the marketing meeting I was bemoaning the trials and tribulations of a certain transaction with yet another appraisal gone bad and a very reputable appraiser in town who was eaves dropping asked if he could interject some of his experiences. Well, being the perfect gentleman that I am I said absolutely please enlighten us. Boy, oh boy…. He Did!!!!
He went on to tell us that the very same large financial institutions that own most of the inventory we mice are scurrying to sell has delivered down to the appraisal department or their HVCC management company a commandment to undercut the market value by 10-15%.
Wow!!!! We all say as we stand in utter disbelief. That declaration got the minds rolling and we stood around for the next few minutes comparing notes from our previous escrows gone awry and low and behold if that dude wasn’t absolutely right on mark.
I just don’t want to believe it…. Why would the seller of property want the appraisers to come in below market value? Uh, I am beginning to feel like the super computers Captain Kirk used to destroy with his keen sense of logic, thanks to Spock.
Kelly…
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3 Responses to “Appraisals and the Catch 22”
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Right now we have the “perfect storm”.When you use the term “lender” in this market, one never knows if you’re referring to the seller or the buyer’s new mortgage company. It’s very confusing when you’re talking about a real estate transaction to keep the players straight. Another confusing thing (one of many) is that the appraisers are now supposed to be sepaprated from the lenders (via the HVCC rules) which is hysterical because these “middle men” firms are now owned by the banks(lenders) who are supposed to protect them from themselves. Something is very wrong !!!!!!
Get your head out of your short term commission check and start looking at the long term consequences. There’s no catch 22. It’s about integrity and appraiser independence. The HIGH appraisal is NOT always the best appraisal. Haven’t the losses since 2007 attested to that fact? Yes, the HVCC that is now incorporated into Dodd Frank has been hijacked by AMC’s that are owned by the big lenders. Everyone is paying the price and I don’t see it getting any better.
Hi Joyce,
Thank you so much for your comment. I am pretty sure we are both saying the same thing. Back in March of ’10 when this was written we were just beginning to experience firsthand what the big financial institutions were doing to the appraisers and how they were influencing where the market was in terms of value in a given area of the U.S.
I was trying to say that the appraisers should be allowed to come in at market value….. Not at an inflated value or an artificially deflated value.
I have worked with many competent appraisers over the years and am witnessing today, a good year and few months later, these appraisers turning to other means of income due to the decreased amount of the appraisal fee that they receive after the supposed HVCC management company takes their cut, which to me is a very sad thing that is happening to the industry.
Thank you for reading, your input is valuable.
Kelly…