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Avm's Vs. Appraisers

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Mike Simpson

Senior Member
Joined
Jan 30, 2002
I just received my online version of Working RE Magazine...the article sent electronically is entitled; "Appraisers & AVMs: Doing the Bump?"

The following caught my eye & stuck in my craw;

"Lewis Allen, VP Chief Appraiser, Option One Mortgage and a pioneer in AVM technology, touched on one of the main reasons why the lending community is looking for valuation alternatives: If appraisers hit the sales price so often (95 percent of the time by some accounts), why do we need them? Allen says the fact that there has always been an appraiser present in the transaction (a cop on every corner), has kept everyone relatively honest. The question he poses is: what happens when you take the cop off the beat?"

"In a separate inverview, Allen said, "Yes, appraisers agree with the sales price most of the time because all parties know that at the end of the day there is an objective appraiser in the process to make sure the deal is within market bounds."

The rest of the article is due out in the September issue of Working RE Magazine, and I'm awaiting my copy with baited breath...can't wait to read 'the rest of the story.'

I'd love to know where these people get their statistics? "Appraisers hit the value 95% of the time?" This is a slanted crock of propoganda slung by those attempting to drive a wedge between the appraiser and their fee...a never ending campaign of lies and inaccuracies that I for one can no longer tolerate without responding.

I'd like to sling some unsubstantiated statistics of my own--which I consider far more accurate than those bantied about by the walking, talking billboards. I say--appraisers hit the value 95% of the time because appraisers who 'come in low' (a.k.a. conservative appraisers) are ostracized and left unpaid for their efforts in favor of number hitters who'll appraise according to their masters whims.

I say that appraisers are badgered and berrated by predatory lenders and greedy real estate agents 99.99999% of the time should their value estimate fail to equal or exceed those individuals predetermined values. The appraiser either complies (at the risks of their license) or goes in search of a better quality clientele (rarer than some endangered species).

I say that the problem is so severe that an online website petition to stop these rediculous practices has been signed by more than 7,000 appraisers nationwide, and some of their stories can be read with disgusting frequency on that website. Moreover, ethical appraisers in the know lament at having to work with these kind of mortgage brokers at all (some flately refusing to do any mortgage work...period), and long for the day the industry will change, giving them their due credit and acknowledging the need for their services in the marketplace!

I say "taking the cop (ethical, unbiased appraiser) off the beat" would be a dangerous experiment supported by those who'd gleefully remove the checks and balances within the system. If anything--the ethical, unbiased appraiser needs protections from those who'd manipulate the system for their own benefit!

-Mike
 

wyecoyote

Senior Member
Joined
Jan 15, 2002
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Washington
Mike,

Tell me how you really feel B) . The other thing not mentioned is what about the times that the appraisers come in low initially and the P&S is reworked to indicate that appraised value. These are things that they are not seeing when they get the loan.

Ryan
 

Randy Beigh

Senior Member
Joined
Jan 16, 2002
Mike S

To expand on that a bit is the fact that their are so many people in the sales transaction that the appraiser becomes the only unbiased person forcing the other parties to play it straight. As a result, of course the appraisal will hit the sales price most of the time. If the agents and buyers have done their job, then the sales price should be the market value or within reason.

Where the above shows up is in the FSBO arena. All to often, the sales price is way out of whack, either high or low, when it comes to FSBO's.

Not to worry, Mike. The appraisers are a valuable and needed posiition. AVM's have a place, also. We do, however, need to find ways to compete with the AVM's in terms of time and quality. Quality is the key and if we could clean up our house, that is an issue that would help the situation. Time is important, because telling a customer, that we out 4-5 weeks is unacceptable and we have got to find ways to improve that.

Just my opinion.
 

Dale Smalley

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Florida
What an idiot! The ones that don't make value are never submitted.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Yesterday a LO called wanting a "comp check and if it hits what we need, we'll order an appraisal". So I proceed to tell him that there are lots on internet sites that will give him an AVM. He said, "But, AVMs are so far off they're worthless!"

Nope, I didn't do a comp check nor did I get an appraisal order. There are a few dozen here that will do comp checks and I'll bet the highest one got the appraisal order.

:eyecrazy: :twisted: :twisted: :twisted:
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Mike said:
I say--appraisers hit the value 95% of the time because appraisers who 'come in low' (a.k.a. conservative appraisers) are ostracized and left unpaid for their efforts in favor of number hitters who'll appraise according to their masters whims.

Yup Yup... and let us not forget that the lenders are even mroe than willign when faced with an honest 'little tooo low' appriasal from an honest appriaser that they usually love because they cause difficult appraisals to (legitimately) go through without a hitch... order a second appraisal from a known individual who is unlikely to stick to their guns!

A small thing, but a definite part of that '95%' picture!

And HUD really threw the baby out with the bath water when they permitted reassignment if the value "comes in low"

DUH.
 

Mike Simpson

Senior Member
Joined
Jan 30, 2002
This issue is a boiling caldron ready to explode.

Interest rates are up, REO's are increasing significantly (we called this several years ago), and decent, good paying jobs are being lost everyday--some 100,000 tech jobs in the Puget Sound Region reportedly down the drain since the NASDAQ Bubble Burst!

The problem of non payment for a low appraisal has become so severe ethical appraisers clear across the U.S. are forced to charge C.O.D. just to stay in business.

Too many AVM'ers skew their numbers to support their product--the flawed AVM. I doubt seriously I'm the only one to notice those pushing the AVM's are attacking appraisers merciously. I've read, "Appraisers aren't rocket scientist," I've read appraisers compared to "yesterday's gas station attendants," and this rediculous notion that appraisers hit the sales price 95% of the time--heck some even claim higher percentages!

AVM's are not the answer to the industries woes--not in their present form at least. Protecting the ethical appraiser from undue influence (panderers) is the only reasonable solution currently available.

-Mike
 

Pat Butler

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Dale made my point- I heard years ago that lenders did not keep track of their loans that did not go through when the appraisal came in lower than what they needed. So they only analyzed data based upon closed loans-- that's where the 95% came from. What about the tens of thousands of deals that fell through because of low appraisals? We'll never know because they don't keep that data!

The appraisal also affects the whole process starting with when a realtor lists a property for sale. They know in advance that the property will have to appraise out. That provides an incentive for the listing agent to tell a seller to be realistic with their pricing. Also, the whole appraisal process keeps prices in line across the board because each property has to appraise out. That generally means that sales comparables all had to appraise out themselves. Without appraisals, individual properties could sell above market value then those same properties could be used as comparables for other over priced properties. It would be a vicious cycle. You never hear anyone talking about these sorts of intangibles...
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
LO called wanting a "comp check and if it hits what we need, we'll order an appraisal"
My comp check fee is $350. ;) My appraisal fee is $300. Which one you want?? :mrgreen:
 

jtrotta

Senior Member
Joined
Jan 16, 2002
Mike
ya bean venting bout everything, yer panties are so twisted ;) Me thinks yer wearin a thong :rofl: and it's keepin ya up late nights :beer:

I read the article also, and there was a point in which they were attempting to state that they need appraiser's to be the on the corner "cop" - which an AVM cannot do, they actually need our physical presents. Nextly - accordingly the #hitters are bein watched and they only amount to 1-8% of the industry and therefore, all parties are happy at this time.

Now ta git to the Sold property at; $125k - ifn ya come in above because that's where it should be by all yer data gathered, they'll call you and make you adjust the numbers ta read whats on the contract; WHY - because they all love U :mrgreen: nope-because the contract price is "market value" according to the Buyer & Seller - who have had a meeting of the mindless and settled on that particular number. Ifn ya come in below, they'll always call for a second opinion and ifn yer bein a jerk and can't find a reason ta bring it up a thou or two, cause yer sooo good, they want the other opinion ta drive ya nuts, because yer that good <_<

B)
 
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