Verne Hebert
Senior Member
- Joined
- Feb 25, 2002
- Professional Status
- Certified General Appraiser
- State
- Montana
I have posted numerous threads on this issue of late.
I am appraising a complex single family property (with considerable functional obsolescence) as an REO today. I appraised this same property 15 months ago when it was on the market for 40 days (expired a couple of weeks ago at 467 days). It was listed for $ 339,000 and I appraised it for $ 231,000. The lender would not drop the listing price at that time because they were that deep into the loan. Got a discounted appraisal in 1994.
This property was never worth much more than today. It was overvalued because the lender shopped the low fee.............and they got what they paid for-now they are into the loan for +- $ 120,000.
I got my fee to do a good job on the last assignment and this assignment also.
But this is the real kicker. About 4 months ago, an offer came in on the property. $ 220,000 cash. The lender should have taken the dough (after reviewing my last report) and ran. But no. Their AMC shopped for the low appraisal fee, get a less than competant appraiser (no competant appraiser will appraised this property for less than their fee) to go out and "value the property". Well no kiddin', the appraiser comes in high (as usual) on the sales price and kills the deal because the lender believed they got a quality and accurate appraisal, and didn't want to "let the property go under market".
In my market this is a huge problem due to the complexity of the properties. I met the new potential listing broker at the property this morning..This broker is as good as any. He has no idea what the property is worth. And you know what? there ain't no AVM that is going to nail this value either, not even close.
Sometimes there is no substitute for "putting' the old pencil to work"..........................and that is what we do.
In complex markets, when it comes to an appraisal, you get what you pay for. This lender, I trust, thinks they are getting the quality and accuracy they are looking for when they call their AMC for an "appraisal" to collaterize a loan. Well guess what? They are getting the guy who will show up for the lowest fee. The problem is, the lender is paying a "good fee" to get the job they are looking for.
If only the stockholders knew! If only borrowers knew!
Maybe I'll start an AMC. Cheap appraisals. Two day turn. Top quality! I'll bet a get alot of work...............for a while.........then I'll buy a cabana in Costa Rica with that sweet profit margin! I'll sleep well-even in a hammock.
I am appraising a complex single family property (with considerable functional obsolescence) as an REO today. I appraised this same property 15 months ago when it was on the market for 40 days (expired a couple of weeks ago at 467 days). It was listed for $ 339,000 and I appraised it for $ 231,000. The lender would not drop the listing price at that time because they were that deep into the loan. Got a discounted appraisal in 1994.
This property was never worth much more than today. It was overvalued because the lender shopped the low fee.............and they got what they paid for-now they are into the loan for +- $ 120,000.
I got my fee to do a good job on the last assignment and this assignment also.
But this is the real kicker. About 4 months ago, an offer came in on the property. $ 220,000 cash. The lender should have taken the dough (after reviewing my last report) and ran. But no. Their AMC shopped for the low appraisal fee, get a less than competant appraiser (no competant appraiser will appraised this property for less than their fee) to go out and "value the property". Well no kiddin', the appraiser comes in high (as usual) on the sales price and kills the deal because the lender believed they got a quality and accurate appraisal, and didn't want to "let the property go under market".
In my market this is a huge problem due to the complexity of the properties. I met the new potential listing broker at the property this morning..This broker is as good as any. He has no idea what the property is worth. And you know what? there ain't no AVM that is going to nail this value either, not even close.
Sometimes there is no substitute for "putting' the old pencil to work"..........................and that is what we do.
In complex markets, when it comes to an appraisal, you get what you pay for. This lender, I trust, thinks they are getting the quality and accuracy they are looking for when they call their AMC for an "appraisal" to collaterize a loan. Well guess what? They are getting the guy who will show up for the lowest fee. The problem is, the lender is paying a "good fee" to get the job they are looking for.
If only the stockholders knew! If only borrowers knew!
Maybe I'll start an AMC. Cheap appraisals. Two day turn. Top quality! I'll bet a get alot of work...............for a while.........then I'll buy a cabana in Costa Rica with that sweet profit margin! I'll sleep well-even in a hammock.