EXAMPLE OF WHY THE BORROWER SHOULD NOT GET A COPY OF THE....

[Verne Hebert]

REPORT.

I have to share this story.

My former neighbor is a "horse trader"; he trades property for property, generally.

He traded a townhouse on the golf course for a grand home on acreage. At the time the home was listed too high-the builder gave him $ 15,000 too much for the townhome in the trade and sucked him in on the deal.

After the trade my neighbor builds a massive shop and an indoor pool (we don't have indoor pools here). 4 years passes and he puts it on the market for $ 625,000-It is superadequate and is probably worth more in the area of $ 450,000. It is not selling, but the rates are dropping. So he goes to a vermin mortgage company who sends out either a green or lackluster appraiser who values the thing at or near list price--It funds.

Now he trades this for motel (probably with some additional cash) and uses this appraisal to support the market value to the motel owner. The property stays on the market, vacant. Now after seventeen months the listing price drops to $ 550,000.....................and in the MLS it reads.............."$ 50,000 below appraisal!!!!

It has an offer on it this morning. The realtors are selling this thing based on the appraisal. Complex property. And you can bet this is an out of town buyer relying on his agent.

This will be a comparable in the marketplace as a function of the elevated refinance appraisal report- and the saga perpetuates itself.

Oh I forgot to mention, my ex-neighbor is a felon. He has torched a few properties in the past and collected the insurance dough.

These reports should never be passed on to anyone, ever!

 

[Randy Beigh]

Verne

Gotta disagree with you on this one.

It isn't the appraisal that is being passed around that is the problem. It's all the fraud that is taking place and that would or could include a faulty appraisal, but the fact that the borrower was given a copy of the report is not the problem.

People who wish to commit crimes will do so with or without appraisals. I have knowledge of a loan officer that changed the value of the appraisal of a tavern to reflect what he wanted. Using your line of reasoning, the problem is the appraisal and that is not the case.

 

[Restrain]

I agree. It's not the appraisal, its the combination of a crooked borrower and a crooked lender. Sooner or later, this house of cards is going to come crashing down and I hope it takes the LO with it.

Roger

 

[Verne Hebert]

The appraisal report to borrower made it all happen.

This an example I am very privy to. The reality is, I can't tell you the number of times I read in MLS or the local paper....."property is priced $ 30,000 below appraisal".

The only person aware of that scope of that appraisal is the appraiser. And that is a fact.

But the public does not know that. It is not good for the appraisal profession.

 

[Terrel L. Shields]

I'm with Verne. Several things can be used to make your appraisal appear higher...subject to repairs being the easiest one. And a borrower can defraud an appraiser. Also we are human. We may think we are unbiased, but the bias of no bias is a bias. Example?

I have a manual written by an operator/investor in Car Washes who worked with an appraiser for years. He has a section in his book on Appraising Carwashes dealing with what questions to ask an appraiser to get a feel for whether the appraiser views a car wash as real property or as a business enterprise. And from this info he will choose the appraiser who will get him the high appraisal - for lenders and who can get him a low appraisal - for tax assessment. It is obvious by reading it that he has done it and appraisers have fell into that trap.

I, too, cringe when I see "and in the MLS it reads.............."$ 50,000 below appraisal!!!! " because it suggests that appraiser likely was wrong or his report is being construed in a way that is misleading. Do you think that the average Joe or Jo reading a URAR for the first time is going to understand the check boxes for as is, subject to or plans/specs?

 

[Ross (CO)]

I see that wording quite frequently here in MLS listings......"$ X X,000 less than appraisal". Were I a prospective buyer and visiting a listed home with that promo-line in some flyer or that listing I would surely directly ask the listing agent to show me that report ! It would be no different than asking to see other information, in print, about the house. Bet you, however, they might have a real hard time producing that report to show you and there would then be some blathering lines of excuse for why it was not available to show. Just seeing that in print may keep a prospective buyer from having his own appraisal done to see what price is realistic. They're probably expecting that stating such is a real expression of seller's motivation or desparate need to sell and move out. Likewise, it may also be a strong (silent) statement that the value of that house in that neighborhood is going down ! !, and the unsuspecting buyer and un-helpful or un-informed buyer's agent is not fully engaged in support. Were I a buyer's agent I just might say to the lister.....so, my client likes the house, but he tells me that he wants to come back in 2 weeks and see if your "$75K below appraisal" has become "$100K below appraisal", at which point he says he'll REALLY be interested in the house then.

 

[Elliott]

Hmmmm.....if appraisals had any creditability in advertising
then why don't we ever see the advertisement,

"Price is $25,000 above appraised value."

If the price is below appraised value than all its
saying is the appraisal (appraiser) is wacky.

elliott

 

[Verne Hebert]

No.

What it is suggesting is that a deal is available. The "appraisal" is gospel, and the owner is discounting it, and it is your lucky day.

The reality is, it could be old, artificial scope, or just poor work.

I have always struggled with ".....a knowing buyer"--and an appraisal floating around (of any kind) is not good-------------unless the purpose of that appraisal was to establish market value for listing purposes and the client was the owner.

Happy Holidays!