Awful Appraisal Article

[Pittsburgh Pete]

Don't think that having multiple interested parties/bidders rises to the level of being an undue stimulus. Usually just indicative of a market with limited supply and strong demand (not to be confused with Mr. Perry's "economic lesson" that if supply is created, demand will follow! ) Such markets tend to have rising prices. Our job to report and reflect--not our job to judge.

 

[Dublin ohio]

I don't really know what else is "awful" about it

Except the headline and the fact that they blame everything on the appraiser or appraisal. Other than that It's a ray of sunshine.

 

[J Grant]

Don't think that having multiple interested parties/bidders rises to the level of being an undue stimulus. Usually just indicative of a market with limited supply and strong demand (not to be confused with Mr. Perry's "economic lesson" that if supply is created, demand will follow! ) Such markets tend to have rising prices. Our job to report and reflect--not our job to judge.

Report like a mirror ? Our job is to make conclusions, opinions, and analysis. AVM's report. They are data driven mirrors. We are supposed to bring analysis to the table.

Of course strong demand lower supply markets will have rising prices, the point is, do the rising prices still correlate to value? And the problem compounds when too many appraisers are number hitting, which facilitates prices to rise much faster than if we did our jobs, because a closed sale can be the next comp, and if a sale closes at an inflated price pushed by an appraiser...well, you know what happens.

What threshold does undue stimulus kick in? Never,? Interest from multiple parties may not be undue stimulus, but a time frame pressure bidding war resulting in a price over the list price and over the last recent sale of a better property, what in your view affected the price? Nothing? We are a mute mirror reflecting back with no opinion? Who needs us then...hire a broker to to a BPO or an AVM to spit back data.

 

[J Grant]

Buyers in the market are free to over pay, not be prudent etc. They can do whatever they want and pay whatever they want. But in the appraisal, our market value opinion price is supposed to be arrived at by the theoretical buyer who acts in a manner as defined in the MV definition...one that is well informed or well advised, acting in their own best interest, and acting prudently with a price unaffected by undue stimulus.

 

[George Hatch]

I tell you what, if I was seeing sale/list ratios in excess of 100% and exposure times of under 2 weeks in a market segment and I pegged my market conditions adjustment at that rate to my listings and someone like you attempted to hassle me for it I'd mop the floor with you. Moreover, I'd fully anticipate vindication by the market after the fact. And vice versa when the market is in decline.

With that said, I almost ALWAYS report the previous highs/lows from the prior peak pricing to present and compare the current values to the previous peak as a means of providing context for these prices. From there the lenders can decide for themselves what they think of their risk factors - as is their prerogative and responsibility.

 

[Terrel L. Shields]

I pegged my market conditions adjustment at that rate to my listings and someone like you attempted to hassle me for it I'd mop the floor with you.

In other words our job is to shoot the imprudent BEFORE the battle and then the wounded we shoot after the battle is over. No wonder the bankers want rid of us. What do we do? Nothing. We are like Geo. Scott in the movie "Hospital" hanging out the window screamed, "we cure no one.."

 

[miktay]

.. Appraisers badly need to pool funds and hire our own PR outreach to plant articles in our favor to counteract the onslaught of garbage published....

To change the public opinion of appraisers would take a boat-load of cash and PR.

 

[George Hatch]

In other words our job is to shoot the imprudent BEFORE the battle and then the wounded we shoot after the battle is over. No wonder the bankers want rid of us. What do we do? Nothing. We are like Geo. Scott in the movie "Hospital" hanging out the window screamed, "we cure no one.."

We are answering the question that they're asking. It's not our fault if they have no interest in asking other questions, nor would it be ethical for us to impose that different answer to their existing question.

The bankers or their investors could choose - at any time - to ask us the supplemental question of where we think the values should be via use of a different definition of value and whatever assumptions they wanted to load into it. That wouldn't require any changes to banking law, regulation or even the appraisal forms themselves. Just load the additional requirements into the engagements starting next Monday morning.

That none of them have done that speaks for itself. To repeat, if/when the lenders ask us what we think the values should be I have no doubt that appraisers will be capable of answering that question.

Even if you think "what's the MV as of today" is a stupid question, the very worst you could say accrues from that can be summed up as "ask stupid questions and you get stupid answers".


We are not responsible for what these users think is meaningful to their decisions. You can't push on a string.

 

[djd09]

Joe why do you say the lenders are controlling? lol

 

[J Grant]

Appraisers factor in market conditions ( time adjustment) and of course we consider pending and listings and trends. After market condition adjustments and physical/location adjustments made and other approaches to value have been applied, some prices are going to be credibly market value and others will not be.

Vetting a price for market value terms does not mean beating up the price or coming in below a sales contract price. We may in fact end up opining above the SC price. But by applying analysis of MV terms we credibly support our own value opinion be it low, high or mid range. In any case it is our job, so why the hostility to it?