Real Estate Appraisal Forum

appraisersforum.com logo
The Premiere Online Community for Real Estate Appraisers!
 Fastest Way to Find a Real Estate Appraiser Enter Zip Code:
 
 
Go Back   Appraisers Forum > Real Estate Appraisal Forums > General Appraisal Discussion
Register Help Our Rules Calendar Archives Mark Forums Read


Closed Thread
 
Thread Tools
  #1  
Old 01-03-2010, 07:06 AM
Craig Farr's Avatar
Craig Farr Craig Farr is offline
 
Join Date: Sep 2004
State: Arizona
Professional Status: Certified Residential Appraiser
Posts: 327
Exclamation Short-sale appraisal fraud to be 2010 story?

Over the past several months I have noticed three trends:

1) MLS listings for Short-sales with "Seller has an option to purchase" included in the details.

2) MLS listings for short-sales with "Seller desires to rent this property".

3) Evidence that appraisers are discussing value with short-sellers.

I can't get my head fully around the twists and turns of how a short-seller can purchase his own property in a short-sale, but a crooked appraisal obviously greases that chute. And I can sense that a crooked appraisal would greatly help a short-seller/renter and a short-buyer/investor. The invitation for appraiser corruption is dripping with sweet and gooey.

Some of my recent appraisals have been to assist lenders in decision-making after they receive short-offers on their collateral. In some cases the sellers mention "another appraiser was here......you're the second appraiser". And it is only a few sentences later when the sellers announce that the first appraiser told the sellers what value the appraiser would report. Stunning.

Thus, I predict that 2010's biggest real estate appraisal story will be appraisal fraud associated with short-sales.

And your predictions?
__________________
Your mileage may vary.:
Sponsored Links

  #2  
Old 01-03-2010, 10:41 AM
The Argus The Argus is offline
 
Join Date: Feb 2005
Location: The Mile High City
State: Colorado
Professional Status: Certified Residential Appraiser
Posts: 860
Default

I just recently saw similar verbiage in a listing here in Denver. Should be interesting to see what happens. One thing's for sure, there will be more distressed propertes comin down the pike.
__________________
What are you going to do? Stand up and be counted, or roll over and play dead?
  #3  
Old 01-03-2010, 11:35 AM
ZZGAMAZZ ZZGAMAZZ is offline
 
Join Date: Jul 2007
State: California
Professional Status: Certified Residential Appraiser
Posts: 2,587
Default

I'm not an economist but it appears that the institutional impact on real estate markets precludes the use of the term "market value" in an appraisal.

Short-sales and REO-owned properties comprise approximately 90% of virtually every market I have encountered in the past 6 months. Consequently, the supply-demand ratio is convoluted by lenders' shadow inventories; and the duress of impending foreclosure contradicts the classical definition of MV.

One thing seems certain: The large proportion of short sales that are pending foreclosure portends significant downward pressure on value.
  #4  
Old 01-03-2010, 11:52 AM
Terrel L. Shields's Avatar
Terrel L. Shields Terrel L. Shields is offline
 
Join Date: May 2002
Location: Springtown, AmeRica
State: Arkansas
Professional Status: Certified General Appraiser
Posts: 37,590
Default

Quote:
I predict that 2010's biggest real estate appraisal story will be appraisal fraud associated with short-sales
In the early 1980s, Farmer's Home Administration (FmHA) loans to farmers were going sour right and left. Typewriter salesmen who became instant dairy farmers (the guidelines was supposed to limit loans to genuine farmers but did no such thing) became bad debts rapidly. I know of one foreclosure auction where FmHA sold a property back to the occupant for about 50% of what he owed FmHA. He hadn't even paid interest on most of the loan. Farmers who had made interest payments but couldn't pay on the principal were outraged but couldn't do anything about it but complain. So FmHa created a program to write down the loans to current land values (which had plunged in my area by about 1/3rd). My typewriter salesman/slash neighbor i mentioned above, took it up after he and his wife split. She got nothing. He got a windfall, bought a cadillac convertable, found him a blonde, and proceeded to divide the farm up into 5 and 10 acre tracts. Sold them for a huge profit, which he was supposed to split with FmHA under the write down agreement. From all appearances, he did none of it. Moved on to a big farm in Oklahoma and retired....nice work if you can get it...all paid for by the taxpayers of America.
What you describe is business as usual. I would not expect anything bad to come of it.
__________________
I yearn to say "goodbye" - Madonna
  #5  
Old 01-03-2010, 12:02 PM
panappr panappr is offline
 
Join Date: Dec 2007
Location: Los Angeles
State: California
Professional Status: Certified Residential Appraiser
Posts: 4,710
Default

We predicted this would happen (or something like it) 3 years ago. We were on the rear patio discussing how bad the fall out was going to be, and someone said "Just watch...the same brokers and agents as well as crooked lenders will all be requesting low values so they can reap the profits amongst themselves, family and friends. I'm sure an aerial view would show a large number of appraisers jumping the fence scrambling to the other side, like chameleons now focusing on how to facilitate the new artificial markets. But then came along the HVCC and a whole new layer of corruption emerged. Initially we thought working for AMCs would bring some sort of stability, offering less pay, but better working conditions, and the no influence aspects would create a better, more ethical client base for most appraisers, in turn creating a more sound lending environment, however, and without a doubt, it has failed beyond Andy's wildest schemes.

My first short sale with an AMC (in this market) came back with a request to only use short sale comps in my report? Translation.... please lower the value. The agents were screaming bloody murder.. "Your killing the deal, you don't know what you doing, he doesn't know the area" (less than 3 miles from my office), etc, etc., and everyone from the underwriter, buyer, seller, both agents, and the AMC chimed in with the comparables I should be using. Although I did get paid for my appraisal, and the AMC concurred with my value, the consequence was no more work. Can't have appraisers out there killing deals? I submit to all of you...How is this any different from having a loan broker ordering an appraisal?

Fast-forward to last week, the exact same short-sale scenario with a different AMC has presented itself.... I could swear I was talking to the exact same people. We are sitting in a cesspool of fraud and corruption that has turned my livelihood into an unemployment line. I keep trying to jump start my business with new AMCs, but they don't seem to last very long. I only have a few left that still like my work, but aren't willing to pay for it, nor are they willing to wait an extra day for a more complete report. So my crystal ball and 25+ years of experience tells me that I innocently/unknowingly chose the wrong profession. I'm in my 50's now, still hard working, but looking for a more reliable source of income.
  #6  
Old 01-03-2010, 12:18 PM
panappr panappr is offline
 
Join Date: Dec 2007
Location: Los Angeles
State: California
Professional Status: Certified Residential Appraiser
Posts: 4,710
Default

Quote:
Originally Posted by ZZGAMAZZ View Post
I'm not an economist but it appears that the institutional impact on real estate markets precludes the use of the term "market value" in an appraisal.

Short-sales and REO-owned properties comprise approximately 90% of virtually every market I have encountered in the past 6 months. Consequently, the supply-demand ratio is convoluted by lenders' shadow inventories; and the duress of impending foreclosure contradicts the classical definition of MV.
I see big trouble ahead....
  #7  
Old 01-03-2010, 01:10 PM
CSP 49 CSP 49 is offline
 
Join Date: Dec 2008
State: Florida
Professional Status: Certified Residential Appraiser
Posts: 548
Default

While I think the number of short sales will increase dramatically (banks are finally figuring they get a higher net proceed then with foreclosure) I don't think fraud will be more extensive.

Since the seller can be on the hook for a def. judgment I can't see what their motiviation would be. To the best of my knowledge most lien holders are conducting multiple BPO's and/or appraisals. I just can't believe too many games can be played.
  #8  
Old 01-03-2010, 01:53 PM
Peacemaker Peacemaker is offline
 
Join Date: Oct 2003
Location: Phoenix/rearranging deck chairs on the Titanic
State: Arizona
Professional Status: Licensed Appraiser
Posts: 512
Default

Quote:
Originally Posted by Craig Farr View Post
Thus, I predict that 2010's biggest real estate appraisal story will be appraisal fraud associated with short-sales.

And your predictions?
You may be correct in your prediction. My prediction is that no one will care about this any more than they cared about all the fraud leading up to this point. The government will say a lot of things, do very few things, markets will eventually normalize, and 20 years we'll do it all over again.

Personally I plan to be better positioned, next time.
  #9  
Old 01-03-2010, 02:17 PM
ZZGAMAZZ ZZGAMAZZ is offline
 
Join Date: Jul 2007
State: California
Professional Status: Certified Residential Appraiser
Posts: 2,587
Default

The AMC that I do most of my work for includes a statement in the engagement letter that additional data might be required if the opinion of value differs by more than xxxx% from the BPO.

I've never received a request for additional information/comps/etc.

Does that mean that my opinions are similar to the BPO's?
  #10  
Old 01-03-2010, 02:43 PM
Lloyd Bonafide's Avatar
Lloyd Bonafide Lloyd Bonafide is offline
 
Join Date: Jan 2006
Location: Poway / San Diego
State: California
Professional Status: Certified Residential Appraiser
Posts: 4,785
Default

I'm just glad to hear that lenders are having appraisals done as part of the short sale. I thought that many or most lenders were only using BPOs to establish values on their short sales, and that really invites fraud, when the listing broker does the BPO, and comes in with a ridiculously low-priced value.
Sponsored Links

Closed Thread


Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump




Copyright © 2000-, AppraisersForum.com, All Rights Reserved
     Terms of Use  Privacy Policy
AppraisersForum.com is proudly hosted by the folks at AppraiserSites.com

Fastest Way to Find a Real Estate Appraiser Enter Zip Code:
Partner Sites:
AppraiserUSA.com - National Appraiser Directory AllDomainsUSA.com - Domain Name Registration
DeadbeatListings.com - Deadbeat ListingsAppraiserSites.com - Web Hosting for the Professional Real Estate Appraiser
Find FHA Appraisers - FHA Appraiser Search Commercial Appraisers - Commercial Appraiser Search
Relocation Appraisal - Find Relocation Appraisers Domain Reseller - Business Opportunity
Home Security Buzz - Home Security Info Radon Testing - Radon Gas Info
My Medicare Forum - Medicare Info Stop Smoking Help - Help Quitting Smoking
CordlessPhoneStore.com - Great Cordless Phones AndroidTabletCity.com - Android Tablet Computers

Follow AppraisersForum.com:          Find us on Facebook            Follow us on Twitter


All times are GMT -5. The time now is 01:24 PM.

SiteMap: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93