Declining Market = Do Not Use?

[California Di]

95% of my reports are in declining markets (Central California). I do not have a problem with the larger mortgage companies and banks. It is those brokers that send you one request every two months. I provide extensive data to support the declining market. On the one that I previously mentioned, the realtor even got involved on my behalf and they still would not accept it. Very frustrating.

 

[Kevin Pennick]

I have been reporting declines since, probably last December, but only in some neighborhoods. I don't think I have lost business due to that. What I have found recently is that my neighborhood analysis is taking much more time. Though I guess that is an obvious result in a slowing market. I typically will do an absorption study and will then look at each comparable to see how many listings there have been (i.e. reductions) for each. This can take ten to fifteen minutes per comp, or more. I wonder how many appraisers out there have ever appraised in a declining market. Its a little more difficult, but its also more fun!

 

[Realty Advisor]

Yes. The market is what it is; being in front of market change is tough for an appraiser; timing is difficult to predict. Show the data, if the market is declining, then the indices support it. If the client doesn’t want to believe your analysis, fire the client.

 

[Joe Booth]

I marked decline on a report for a prominant lender only once and have not recieved an order since.

 

[Steve Metz]

I have been marking decline in some of my counties for the last 6 weeks and I just lost 2 big clients to this even though I have 6 months worth of data proving it. I can not afford to comit comerical suicide so I am no longer marking the box. (In one of these counties there are over 1000 active homes on the market and only 34 homes have sold so far in Oct. Typical sales volume is 180 to 240 homes a month. Sales prices declined 9% in most segments since 2006.)

 

[Narkissos]

I have been marking the declining box for many neighborhoods since mid to late 2006. I argued to no end when I first noticed the decline in values, in an effort to prove my point. I have been removed from two lenders lists that I am aware of and have been told " The report needs to say stable or we can not use this appraisal or you in the future". I have now confirmed that I have been placed on their do not use list for failing comply. I began arguing this fact in Michigan over a year ago, finally a few others are following suit. Although, every report I see still says stable.

 

[Bryan]

Perhaps adding a category for appraisers to indicate that they know the market is declining, but mark “stable” to keep everyone happy. This would certainly shine the light on subtle lender pressure.

 

[Lobo Fan]

I did it for the first time for an appraisal in Santa Fe. All the data, including the MLS data shows a 10% decline in values. I attached the MLS report, along with a lengthy Excel sheet I created. Didn't hear anything but my orders stopped cold.

 

[LadybugLover]

We've been marking declining.

We are a small mom/pop shop in Central CA - we've been marking declining for several months and haven't lost any clients over it - when they ask, we show them the facts - can't argue with that - The common response is we can deal with declining being marked, they just want very recent sales and listings - listings are easy, recent sales are few and far between. Been told by several MB's that the result of checking declining market is a higher LTV ratio - they add another 5% in there. We have a large client base, we're keeping busy, still working a few weekends and having a good time. I think this market is making us all better appraisers - I'm enjoying it oddly enough And, yes, I'm a newbie on this board, discovered it a few weeks ago and have been catching up on all the posts to see what's going on outside our own little world. We've been in this business for a lot of years, been through this cycle before and we'll hopefully be in business long enough to see it correct and come again down the road.

 

[Bryan]

Commission and incentive driven mortgage originators can’t do business with an appraisal report that states that the market is in Decline, Oversupply, 6+ month marketing time. It eliminates full funding and it just messes up an otherwise very productive day, not to mention their commissions and incentive quotas. Plus the extra time wasted in locating a good ‘old appraiser that understands the loan process is not cost efficient. The chance of a faulty report being discovered is probably 1 in 6000 maybe more.. Those are good odds, so who cares about ethics! Provide what they want and pay some bills. Faulty neighborhood analysis (stable not declining), and cap it off with a glorious overly inflated sucker value. Your phone will be ringing off the hook with new orders to fill… we’re dealing with idiots and they order the appraisal. They have the assumption that we work for them. Cut ‘em some slack.