Sandra Koutsopoulos
Senior Member
- Joined
- Jul 13, 2005
- Professional Status
- Certified Residential Appraiser
- State
- California
Now, I don't know whose point of view I am supporting in this example, but I think there's some truth on both side.
Situation: Borrower is defaulting on a mountain cabin which was a prettied up flip, and which the buyer wanted to use for STR.
Seller bought it for $80,000, put in new drywall, vinyl plank floors, kitchen cabs, appliances, new modest bathroom fixtures (skipped exterior painting and repairs, just covered over the bad wood with painted flake board and sold it for $199,900. Buyer (now defaulter) obtained a mortgage on the property which I ASSUME entailed an appraiser going there.
Took a couple years for the Buyer/borrower to realize the property had major issues, and he defaulted. I'm doing the pre-F/C appraisal. Observed significant sags and humps in the flooring where the doors couldn't even close, planks pulling apart, new vinyl windows, and a LOT of rotted wood members from porch, roof, fascia, porch deck, siding and skirting around the crawl space. It is the 450 sf cabin that's pretty.... HORRENDOUS! As I looked into what I observed, and what it means, what caused it, what is likely to happen without structural stabilization, it became obvious that IF there was an appraisal inspection on this property when it was purchased a couple years ago, the appraiser overlooked floors sloping in 2 or more directions, the progressive rot on overhangs, porch decking, siding... and the painted flakeboard which is not a watertight exterior siding product.
I guess my point is, that NO eyes on (waivers) means nobody can alert the proposed lender to potential structural issues which will certainly affect their risk in that collateral; or was there an actual appraisal done by someone who either didn't point out these deficiencies or was inexperienced and didn't pay attention. I dunno.
So waivers are the most risky imo, and unengaged or unknowledgeable appraisers' appraisals are not far behind. Best case is a qualified appraiser doing a thorough inspection with their eyes open, without bias, who can lay out the facts and value opinion that reflects reality. On the negative side, of course, is that kind of inspection typically takes longer than 5 minutes, and in this game, time is money, ....hurry, hurry, hurry, we need it in 2 days for a wholesale fee. And that combination feeds the quicky-icky appraisal pressure we live with. And lenders who hold loans with flawed collateral are holding the bag. A competent appraiser is worth the fee they charge, which could save the lender 10X to 100X the costs incurred before the nightmare is over.
If the gamble is that waivers will allow in a percentage of bad properties, at what point does that % of bad properties become significant enough to re-think the process?
Situation: Borrower is defaulting on a mountain cabin which was a prettied up flip, and which the buyer wanted to use for STR.
Seller bought it for $80,000, put in new drywall, vinyl plank floors, kitchen cabs, appliances, new modest bathroom fixtures (skipped exterior painting and repairs, just covered over the bad wood with painted flake board and sold it for $199,900. Buyer (now defaulter) obtained a mortgage on the property which I ASSUME entailed an appraiser going there.
Took a couple years for the Buyer/borrower to realize the property had major issues, and he defaulted. I'm doing the pre-F/C appraisal. Observed significant sags and humps in the flooring where the doors couldn't even close, planks pulling apart, new vinyl windows, and a LOT of rotted wood members from porch, roof, fascia, porch deck, siding and skirting around the crawl space. It is the 450 sf cabin that's pretty.... HORRENDOUS! As I looked into what I observed, and what it means, what caused it, what is likely to happen without structural stabilization, it became obvious that IF there was an appraisal inspection on this property when it was purchased a couple years ago, the appraiser overlooked floors sloping in 2 or more directions, the progressive rot on overhangs, porch decking, siding... and the painted flakeboard which is not a watertight exterior siding product.
I guess my point is, that NO eyes on (waivers) means nobody can alert the proposed lender to potential structural issues which will certainly affect their risk in that collateral; or was there an actual appraisal done by someone who either didn't point out these deficiencies or was inexperienced and didn't pay attention. I dunno.
So waivers are the most risky imo, and unengaged or unknowledgeable appraisers' appraisals are not far behind. Best case is a qualified appraiser doing a thorough inspection with their eyes open, without bias, who can lay out the facts and value opinion that reflects reality. On the negative side, of course, is that kind of inspection typically takes longer than 5 minutes, and in this game, time is money, ....hurry, hurry, hurry, we need it in 2 days for a wholesale fee. And that combination feeds the quicky-icky appraisal pressure we live with. And lenders who hold loans with flawed collateral are holding the bag. A competent appraiser is worth the fee they charge, which could save the lender 10X to 100X the costs incurred before the nightmare is over.
If the gamble is that waivers will allow in a percentage of bad properties, at what point does that % of bad properties become significant enough to re-think the process?
