Where Do Appraisers Come Up With Stuff Like This?

[timd354]

Good answer since ethics do not appear to be involved, but my next question is how did it get by an AMC or chief appraiser. I understand that in either case someone could have reviewed the appraisal and not had a license or really had a grasp on the principles of appraisal practice or secondary marketing guidelines like FNMA guidelines.

So, once again management is a problem in the appraisal assignment and review process.

The comments were buried in the middle of a four page addendum that was mostly CYA and boilerplate....these comments could have easily been missed by an underwriter or AMC reviewer.

 

[timd354]

]I pended the file with some stips even though I believe that the contract price is supported....

The purpose of an appraisal is not to support a SC price...how do you know this appraiser is not a number hitter who ignored sales in the subject division because they did not "support the contract price, and went outside to cherry pick higher price sales? " If I were in your position I'd be ordering a field review.


I am using this as an opportunity to try to educate this guy. Since we are only the insurer and not the loan originator, I do not not have direct contact with the appraiser and cannot called him to have a discussion, which is what I would do if I were the chief appraiser at the lender.

Can you call the lender and have a discussion with them? Does this appraiser really need educating charging a fee of $450 and getting it, or are they a number hitter, who lender is happy to pay a good fee to because of that?

I am not going to turn this guy into the state board if that is what you are asking. I will not turn in someone for making a mistake that does not involve dishonesty or a likely inflated value without first giving him or her a chance to correct that mistake. In this case, the 22 sales in the subdivision that this guy did not use most likely would have supported the appraised had any of them been included in the appraisal.

How do you know if any of the 22 sales would have supported the appraised value since the appraiser did not use any of them? I'd ask the appraiser to list the 22 sales and their prices to see if that is the case.

I know the sale prices as I easily found all 22 sales myself in about 5 minutes since it is in a disclosure state with really good online assessor's records. Every sale with a lower sale price was a smaller model home and there were 4 or 5 model matches that all sold within a very tight range that includes the subject contract price and there were some larger models that all sold for substantially higher. This guy did not appear to cherry pick the comps.

 

[J Grant]

By the way, a guy like this probably can be saved as he did not do anything dishonest, he likely just had a really bad mentor.

Sorry but how do you know that? Do you know the prices of the other sales in subject subdivision he did not use? Did he really not know how to choose sales or did he go outside to superior subdivisions? Why not order a field review ?

How long has this appraiser been appraising?

 

[Eli]

The comments were buried in the middle of a four page addendum that was mostly CYA and boilerplate....these comments could have easily been missed by an underwriter or AMC reviewer.

That answer is not good enough for me. It sounds like more of an excuse on their part. How much business do they send you?

 

[J Grant]

I know the sale prices as I easily found all 22 sales myself in about 5 minutes since it is in a disclosure state with really good online assessor's records. Every sale with a lower sale price was a smaller model home and there were 4 or 5 model matches that all sold within a very tight range that includes the subject contract price and there were some larger models that all sold for substantially higher.

That all sounds good as far as prices, but just from looking at online assessors records you have no idea if the similar size model matches had same level of upgrades as subject or highly superior upgrades or if there were concessions etc. It's your call but I don't understand why a field review is not ordered . A fee like that does not sound like a newbie but who knows...maybe he/she is just a lucky person able to get a good fee for doing crappy work , since nobody in charge wants to spend a dime for a field review nobody knows.

 

[J Grant]

The appraiser is certainly confused and is an appraiser that I have already been tracking due to past issues.

So why is the lender using them...is this appraiser always making SC prices come in ? Hitting high refi amounts? Something sounds off the fee is high a lot of competent appraisers could be found at that fee in most areas.

 

[Michigan CG]

Sorry but how do you know that? Do you know the prices of the other sales in subject subdivision he did not use? Did he really not know how to choose sales or did he go outside to superior subdivisions?.........

Why don't you give the OP the benefit of the doubt about his opinion being involved in the situation? He certainly posts here enough for one to know what he is talking about.

Sounds like another example of bad mentoring. It sounds like he went through additional work to write the appraisal than if he had just used the sales in the subdivision.

One thing to note in this is again, AMCs sell themselves on quality and tout their "review" process when all it is is getting the correct boxes checked or making sure we use the correct canned comments.

 

[Tom D]

The appraiser is certainly confused and is an appraiser that I have already been tracking due to past issues.

oh wow, we track zombie appraisers on the no fly skippy list. can we drone them? so are we saying that getting the value right is second to how we write those other 30 pages. i did 2 reviews all of a sudden for my favorite lender. both had the value right, but what a mess to read. yea, yea, i do understand you USPAP-ers. i haven't figured out why, but every profession has people at the bottom who you don't want to operate on you, fix your car, or do your drywall.

 

[Terrel L. Shields]

The lender may certainly share some of the blame

Under bank regulations, they are responsible for the appraiser. The bad choice of appraiser is their problem.

Sounds like another example of bad mentoring

Maybe... Or bad advice from an instructor, guidance from a peer, etc. There is so much confusion over when a builder is so tied to the transaction as to preclude the sales from being "arm's length" - or just badly over-sold. The worst problem I see among such appraisers tends to be a bad judgment compounded by a lack of simple reading the Fannie Mae guidelines or the FHA guidelines. Those documents were meant to be read and referred to. I keep a copy of USPAP next my desk. If I did Fannie work, a copy of that document would be laying on top or beneath it...Ditto the 4000.1 -

I mean it is a simple read and nothing to preclude use of the builder's sales in Fannie Mae. Do you honestly think the appraiser has ever read it?

When appraising new construction, the appraiser may need to rely solely on the builder of

the property he or she is appraising to provide comparable sales data in accordance with the

requirements stated in Properties in New or Recently Converted Subdivisions, Condos, or

PUDs, below, as this data may not yet be available through typical data sources​

 

[NC Appraising]

Tim,

What is your stance (or the GSE's) on using pre-sale's or built-to-suit homes? I have alway's wondered about this.

I am speaking of a PUD development which is being built by a national builder in a typical tract home project. The lots are all owned by the national builder and the buyer goes into the model home or design center and chooses the selections and upgrades.

Some developments are selling so well that no active or closed sales are in the MLS.
Other builders list the sales in the MLS as "for comps only" or the good sales for the appraisers to use. They have "fake" DOM as most of the time the homes were already under contract when the builder put it in the MLS.

So I get where Marion is coming from. What is the DOM for these sales? Are pre-sales or built-to-suit homes market exposed sales? How do you derive market based adjustments for pre-sale homes? Download the builder cost sheet and make dollar for dollar adjustments?

FWIW, I avoid new construction appraisals..... it is a scam and a waste of time....worthless. My family is (was a mid-sized builder, we sold our residential building business for 90 million several months back) so I know what goes on.

I find it funny and ridiculous that a appraiser uses pre-sale homes as comparables and makes adjustments for quality or differences in upgrades....yeah...market based adjustments???? From what market...the builders cost sheet LOL!!! And then in the MLS the builder has one spec home that sold for 5-10% under what pre-sales are selling for and was fully finished and full exposed to the market.

Builders either own their on mortgage business or have their preferred lenders. Builders, real estate agents and the mortgage companies (and now AMC's) are all in bed together. From my experience, the same olde appraisers and larger appraisal firms gets most of the new construction work and sets the market for when the buyer does not use the builders preferred lender. Builders offering incentives for the buyer to use their preferred lender..... Trust me, if you kill a deal with a builder, you will not work for the builders preferred lender. To many bonuses and business deals for the lender to lose for some honest appraiser to screw up.