Pressure Justified?

[Pamela Crowley (Florida)]

Is this pressure justified or what are the reasons given for this pressure on Appraisers?


Please keep your replies directed to this question. General answers and/or specific examples would be good here.

Keep in mind that there are (or might be) more specific questions regarding this issue in other questions. You might want to read through each thread question before starting your answers.

 

[Tim Hicks (Texas)]

The pressure is never justified unless the appraiser did not competently perform the appraisal. Many mortgage brokers rationalize that the lenders want the system the way it is because more mortgage loans fuel the American economy. They say that lenders turn a blind eye to the bad appraisals because the money flow outweighs the problems that develop from bad loans.

 

[Mary Tiernan]

In probably 90% of the cases where I am asked to attain a certain value, it is solely due to a prior inflated appraisal.

Most homeowners feel that their property value will rise by a certain inflationary percentage, as has been the norm for many years. Some areas of my market have increased beyond normal inflationary levels due to higher demand (primarily waterfront properties).

A homeowner who refinanced within the last few years bases his/her estimate of market value upon the prior appraisal + inflationary increases.

The loan officer is basing their assignment results on this information provided by the homeowner, or their prior appraiser.

When a correct market analysis is performed and the property is found to be below the prior appraised price, there is pressure from the lender and homeowner.

It is my opinion that the prior appraiser should be called to the carpet and sent before the review board, with just punishment for such inappropriate practice.

It should be noted that as a newer appraiser, my experience and opinions are based upon the last five years of data in my area.

Due to my limited experience level, this then warrants the question, are comp checks as requested by lenders directly related to their knowledge of prior inflated values?

 

[Don Clark]

B) Pamela,

Pressure on appraisers should be directed to:

1.Using the best comparables that are the most similar to subject, in as close proximity to subject as possible, and that reflect the market for the subjects property type.

2. Maintaining a truely indepenednt, unbiased, and disinterested posture(disinterested meaning having no interest as to buyer, seller, or property).

3. Complying to USPAP and applicable state regulations.

4. Doing their work in a professional, friendly, no hostile manner.

5. Accepting no compensation except that which is due for the work performed, and within a reasonable time frame not exceeding 30 days from date of inspection.

I believe you get my point.

 

[DTB]

Mary,

I don't stretch values, certainly not beyond supportable levels. However, I have had occasion to appraise a property that I did before and lo and behold the comps available now are non existant.

Sometimes it comes in lower than last time.

I hate those, but that doesn't make my prior appraisal any less valid. Does it?

 

[Edd Gillespie]

Originally posted by Pamela Crowley (Florida)@Jan 22 2005, 07:01 AM
Is this pressure justified or what are the reasons given for this pressure on Appraisers?

Assume you mean pressure to make a predetermined subject value or to otherwise conform appraisal results to some criteria other than what is arrived at from good appraising.

Based on that assumption I will say, YES the pressure is justified-succumbing to it is not.

MB's and others seeking appraisals are doing so for a reason. Making a loan, selling the house, lowering taxes. The public knows that the appraisal industry hasn't kept a clean house and that many appraisers are not sufficiently grounded to do reliable work. How do you find a good one without a test? Word of mouth, referral, lisdts form the state, BBB? The most readily available test to cut through the crap is to pressure the appraiser to do what is wanted. As long as the customer can find an appraiser who will do what he/she is told the pressure is justified. They should keep it up until we all know what we are doing and why.

 

[Mary Tiernan]

No, Mike, I would assume then that in your situation as described you would fall into the 10% "other" category.

Please note my response is directed to the question as asked, with my opinion clearly noted as developed over a limited five year experience span.

Sorry if I hit a nerve with you.

 

[Lobo Fan]

Most often the pressue comes due to the poor credit ratings of the borrowers. They need a ridiculous value to get to the LTV required by the lender. The old story of I need this value to make the loan doesn't wash with me anymore. If anything a poor credit risk will turn into a default sometime soon, and the the crap will hit the fan.

 

[Mister Ed]

Don,

I actually have three clients who give me the exact pressure you described!!!!

No more... No less....

They keep me busy enough and pay their bills either Collect at Door, Collect at Delivery, or within 10 days of invoice.


As to the others who call my office--they either learn quickly that "it is what it is" or they move on to another appraiser.

The only way to not have to put up with pressure to "hit the mark" or "ignore the needed repairs/maintenance" is to INTENTIONALLY DETERMINE that we will not give in under ANY circumstances!!!

 

[wyecoyote]

This is the way I have seen it from my perspective of knowing some brokers who are now underwriters. Most pressure to hit a predetermined value comes from LO/MB who know no better or were trained that way. Many are trained that the value is 20%+, the original mortgage amount+closing costs+debt payoff+money owner wants to take out. That is the value as some or many see it. So if the total debt/payoffs + loan costs, + cash back equals say $80K then the value must be $100K regardless of what it really is.