Unintended consequence of reviews

[alebrewer]

Or by allowing appraisers to provide a range of value with confidence intervals. Problem with that is that most appraisers I know don't know what a confidence interval is.

 

[Surf Cat]

If I'm a homeowner (or buyer) and I have to drop $500-$600 for an appraisal, if I get one back where the appraiser's opinion causes the deal to fall through, I'd like a 2nd opinion.

The borrower has a right to know if that appraiser is from 50 miles away, not familiar with the market area, and was only paid $200 for the assignment. That second opinion is on the lender and shouldn't be on the borrower as they're responsible for hiring the right Appraiser for the job initially..... even if it's through an AMC.

And before y'all jump all over me.... yes, I know that appraisers can be familiar with Market areas 100 miles away. Again, that's up to the lender, whom hires the AMC, to stipulate they want appraisers with geographical competency for their loans.....not the cheapest / fastest appraiser who causes the buyers to fork out another $500-$600 to get someone to do it right.

 

[J Grant]

Or by allowing appraisers to provide a range of value with confidence intervals. Problem with that is that most appraisers I know don't know what a confidence interval is.

I am fine with providing a confidence interval but what would that solve?
If a lender has an optio to loan more or less on a property than the MVO, it would resolve a lot of issues.

 

[J Grant]

The borrower has a right to know if that appraiser is from 50 miles away, not familiar with the market area, and was only paid $200 for the assignment. That second opinion is on the lender and shouldn't be on the borrower as they're responsible for hiring the right Appraiser for the job initially..... even if it's through an AMC.

And before y'all jump all over me.... yes, I know that appraisers can be familiar with Market areas 100 miles away. Again, that's up to the lender, whom hires the AMC, to stipulate they want appraisers with geographical competency for their loans.....not the cheapest / fastest appraiser who causes the buyers to fork out another $500-$600 to get someone to do it right.

We know a schill will pipe up with , "The fee does not matter! I have seen plenty of bad appraisals done for high fees ! ( where is the example of it? They just want you to accept it - though of course it can happen, the point is the low fees shut out a pool of experienced appraisers and the low fees induce churn and burn tactics )

 

[Sadie]

I completely get that there is a cost associated with borrowing money - and am ok with that. I just see a ton of deals go sideways because appraisers don't know how to employ appropriate valuation tools.

As a processer and underwriter, I saw plenty of deals go south because of the credit report and weird stuff on the title. People get emotional about the appraisal. Maybe because its a person and not a company like the credit agencies, etc.

 

[DWiley]

The borrower has a right to know if that appraiser is from 50 miles away, not familiar with the market area, and was only paid $200 for the assignment. That second opinion is on the lender and shouldn't be on the borrower as they're responsible for hiring the right Appraiser for the job initially..... even if it's through an AMC.

And before y'all jump all over me.... yes, I know that appraisers can be familiar with Market areas 100 miles away. Again, that's up to the lender, whom hires the AMC, to stipulate they want appraisers with geographical competency for their loans.....not the cheapest / fastest appraiser who causes the buyers to fork out another $500-$600 to get someone to do it right.

Although USPAP allows an appraiser to gain competency during an assignment, the GSEs do not. See certification item 11 in the URAR. Given that language has existed in the URAR for nearly two decades, why would a lender ever have to "stipulate" that geographic competency is expected/required? That is a given for a GSE assignment and has been since at least 2005.

If an appraiser accepts an assignment in an area where that appraiser has no prior experience, and then falsely signs a certification, who is (primarily) at fault?
You mentioned lenders and AMCs, but what about the appraiser who signed a false certification? I ask because you made no mention of any appraiser fault.

 

[RCA]

Good, then go pay for a second opinion - if the lender allows it.

The RE agents should inform the buyers that if the appraisal or valuation falls short, a buyer can opt to put up their own funds for the difference. If a buyer lacks the funds or refuses to put them up, then why is that the appraiser's fault?

I suppose an AVM can be consistently right , or wrong.

The problem with the logic here is:

1. If the first appraiser screwed up, the chances are, from the borrower's point of view, that the second one could screw up as well. In fact, a certain paranoia could set in, where appraisers are perceived as forming a conniving mafia.

2. The point being that appraisal and appraisers are not trusted. The news media is full of stories about appraisals that are 100's of thousands of dollars apart.

3. So, a second appraisal is definitely a gamble from the point of view of most borrowers.

4. And don't imagine people are generally willing to part with any more of their money than necessary, even if "necessary."

5. Whatever, currently there is not much to do about it, except provide an appraisal that, in the first place, you are very sure can be defended in court.

6. And from what I have seen, the appraisers who lose lawsuits are optimistic types who don't think about the downside. They may be very smart (for appraisers) but they are too optimistic. They are about pleasing their customers. They know it. But they can't help themselves. In so many ways, they are too reckless and optimistic. THEY JUST CANNOT HELP THEMSELVES.

 

[RCA]

Then there are the one's who undervaiue. Then the ones who do a decent job, but the borrower has mental problems. Sometimes, there is no way to keep everyone happy. Blame that on a rotten legal system and plenty of rotten attorneys.

 

[alebrewer]

As a processer and underwriter, I saw plenty of deals go south because of the credit report and weird stuff on the title.

Credit and title are issues of fact. An appraisal is an opinion. I'm sure you've heard the colloquialism that compares opinions to various (rather odorous) body parts.

 

[Sadie]

Credit and title are issues of fact. An appraisal is an opinion. I'm sure you've heard the colloquialism that compares opinions to various (rather odorous) body parts.

Credit reports and title reports have errors.