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I Think We Are In Trouble

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David M. Swaim

Thread Starter
Freshman Member
Joined
Jan 28, 2002
I just got my quarterly magazine from the State (CA). It appears appraisers are just not getting the message. There are dozens and dozens of disciplinary actions being taken every time I get this magazine. Most of them are for misrepresenting the condition of the subject and the comparables or selecting comparables which are not comparable. Which just means going to other areas to get higher values to make the deal work. Meaning an over valued property. After how many years now of being told that we are going to be under the microscope, so many many still think that nothing will happen to them and they will get away with it. Its not worth it people. Tell your lenders that pressure you to get lost even if it means losing them as clients. You can lose your livelyhood! It seems that its not a small minority of appraisers doing it but a very very large percentage. No wonder Fannie and Freddie want ot get rid of us!
 

Caterina Platt

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
New Mexico
I hear you Quark. When we see this, I can understand Fannie and Freddie's point.

Just turned down an assignment this week due to the fact that this 2500 SF home was built around a pre-HUD singlewide. The owner/builder did an excellent job. Quality finish and construction throughout, Propanel roof over the entire structure and stucco finish. But you can't help but see the 14 X 70 in the floorplan. It's obvious once you open the front door. I feel for the guy. His home has value per our market and he should be able to borrow money against it. And in reality, the 2700 SF adobe up the road that was originally a 2 room adobe 93 years ago probably has more structural and functional problems that this place doesn't have. But guidelines are guidelines. I can't be misleading.


They said they'd just call the appraiser that did it the last time. :roll: Would I ever love to get my hands on that one. Happens all the time. The honest ones are the poor ones.
 

Austin

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Virginia
We keep going in circles on this question of comp selection. First: Unless it is established that the appraiser in question is deliberately over appraising property, which can only be legally established by a standard 3 review, then why would the comp selection be in question? When I do a residential appraisal, I review as many as 20 comparable sales, among other things, in doing the appraisal. But, when it comes time to doing the report, I pick three comps to illustrate the results of the appraisal. I pick one comp that is larger and obviously superior, one that is smaller and obviously inferior, and the one that is most similar.
I do this for a reason-to gauge the sensitivity of price differences. If the client calls me up and says, hey, we think you are to low, I just say. “Look at sale 2 & 3. Sale 3 is far superior but only sold for $10,000 more than the appraised price of the subject, and sale 2 is very similar adjusted to the estimated price of the subject.” If the client says you are too low, I just say, “Look sales 1 & 2. The subject is obviously superior to sale 1 and most similar to sale 2. I also pick comps to show location or other differences to gauge these differences for the client. For example, if one subdivision’s has a higher average price for comparable property, I will pick a sale from that subdivision to illustrate the fact and the magnitude of this location difference. By creative sale selection, you can illustrate many market characteristics at the same time you are doing the appraisal. To do this, you have to use a different sequence of adjustments. I adjust for physical differences first like: basement, porches, garages, etc., in the order of their $ magnitude, then make a size adjustment using a regression method. Then any remaining variance is a residual and I can gauge the variance and determine how much is left to adjust for and derive some indication of what value factor is causing the variance. For example, if I run up on a comp with a swimming pool, I might use it with this sequence of adjustments to show how much the pool contributes to price. If, after adjusting for all other physical difference including size, the sale with the pool is $5,000 higher than the trend line, then it is obvious that the pool is contributing $5,000 or less. No extra charge for this service. It helps me keep up with what is going on.
Now, most of the time this process of mine means not using comparable sales that would appear to be a much better indication of price for the subject. Why didn’t I use the closer and more similar comps? I did use them. I just didn’t use them in the marketing grid for reasons just explained. Why didn’t I explain all of this detailed process in the addenda? Because I am doing, most of the time, a summary report of limited appraisal. If I explained every detail, it wouldn’t be a summary report; it would be a full narrative.
Now be have come full circle. How can or could any one know or suspect that I am not picking the wrong comps to inflate prices? The only answer is a standard 3 review. What is the official position on standard 3 reviews by appraisal boards? Answer: Insufficient funds and time to do that much detail, so we are suspending due process and constitutional rights to speed up the process.” What is the end result? Answer: Appraising for the state boards instead of the needs of the client and sacrificing appraisal theory better technique and methodology to state enforced legalistic conformity.
You are right. We are in trouble!
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
What is this? Spring depression?

OK, I've got it too. Ever since I started appraising seven years ago I've been beat up for being honest. I feel so dumb that I spent all those years more on the outskirts of real estate, always wanting to be an appraiser and thinking that appraising was the one part of the business that was honest. I didn't know. I feel really dumb that I didn't know how bad it was... is.

I get bribed. I get threatened. I'm blackballed by most mortgage brokers, Realtors, loan officers. I agonize over and spend a lot of extra time on the orders that don't make the inflated value someone else wants. There aren't very many that don't but, it just takes one to get blackballed. I'm thrilled with the unique properties that make me dig, research and really use my brain and talents. I know I'm good and that I will always have more to learn about appraising. I've fought so hard to build my business and these past 2 years have been more of a struggle than it was at the beginning, even more so now. The lender pressure is higher now that ever before.

I'm absolutely sickened by what I hear about and from some appraisers and tend to think this profession has sunken to well over 50% are doing whatever they are told to do. This past Thursday night I attended the Jacksonville Real Estate Investors Association monthly meeting. I watched an appraiser stand up and tell this group of over 100 people that they can call him any time and he will give them an estimate of what a property is worth. He also owns (or is part owner of) a mortgage company where he and his list of trainees do the appraisals for his own mortgage company and makes the values that these investors want. The couple of other appraisers there were trainees from another company that does whatever they are told to do and are blatantly marketing this fact.

Seven years now I've been doing what I'd wanted to do for over 20 years. I don't know how much longer I can hold on financially and I'm very tired of fighting for what's right. I will not compromise myself and am thinking I'm going to have to search for something else to not only support myself but, something that I can build on so that I don't retire old and broke.

I'm so very, very dissapointed in so many appraisers. I have a stack of bad appraisals here that do need a Standard 3 review and need to be sent in to the State Board. Most of them I am doing free of charge as they have been provided to me because someone hoped I would do something, not as a review order. I DO NOT do reviews lightly or pick apart simple mistakes. I'm not perfect either. BUT, you all KNOW when you see one that is beyond a simple mistake or two. You all KNOW the appraisers in your market that are unethical.

WHO is going to clean up this profession??? If the few of us left that are ethical and struggling to stay alive don't try to fix it, just who else will???
 

J. Parker Graham

Freshman Member
Joined
Jan 19, 2002
We are in touble,

In the 1980's and 1990's we we regulated. We got the ASC, Title XI, and FIRREA. We got licensed and we got USPAP. New forms for reporting too.

In the 2000's we have another form of controll - obsolescence.

The Office of Federal Housing Enterprise Oversite will bring "risk based capital regulation"

We as a group have helped with the proliferation of the sub prime market. A market that generats the most risk for all parties envolved and pays the appraiser with sub prime wages. The wages only attract the most compliant. "when you lie down with dogs, you get flee's."

Appraisal groups only offer discount con-ed classes, with no political clout.

There will be no unity between appraisers and realtors utill proposed banking laws changes are in affect to allow bank to sell, appraise, and finance real estate. But will the realtors go for this ?

We are on are own and we have no political friends in high places.

So where do we go from here. WE got AVM's we got 2055, both interior and exterior. We got partial form reporting, we got pre comping, we got must have value need, "...click that computer mouse just once for complete economic freedom. We will send an appraiser a loan officer and and notary to your home now."

Hang on kids this could be a bumpy ride.

Living Large In Detroit

J. Parker Graham
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Wow, you guys need to take a deep breath and think about this.
It doesn't matter what profession you choose, there are going to be low times and a purging process will occur. The cream will rise to the top and the crap will sink. It's basic economics, the laws of supply and demand.
If you KNOW that you're good and your work is ethical, then just keep doing what you are now. You will be able to stand accountable for your work while the 'number hitters' will drop like flies.
Call me arrogant, but I'm ready for the challenge. IT'S ABOUT TIME!
Your honesty and integrity will get you through it. I refuse to believe that appraisers with integrity will become obsolete.
Pam, the appraisers at that meeting will eat your dirt. Those trained lap dogs will, one by one, be black-balled, then the work will start coming your way. I'm staking my future on that belief, and you should too!
Confidence, my friend.
 

Brad Pack

Junior Member
Joined
Jan 15, 2002
Professional Status
General Public
State
California
Quark,

I too, reside and work in the Inland Empire. I've performed many AQA reviews for HUD over the past xx months. The poor work product that I have seen is mind-blowing. Cherry picking comparables and failing to disclose/identify property deficiencies is rampant in our area - not to mention the blatant disregard/ignorance of USPAP.

I was recently contacted by one of OREA's Real Property Investigators in regards to an appraiser/appraisal that I reviewed for HUD. You may find it interesting to know that our state has a mere 7 investigators to oversee all 11,000 active appraisers. So as you can imagine, the "dozens and dozens" of disciplined appraisers that you mentioned in your post, only represents the worst of the worst.

Ciao
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Okay Pamela Crowley (and the rest of the nation's good appraisers).

Don't you dare fold up on me now! I'm relatively new at this and after a disheartening first supervisor (and I use that term in its loosest sense) experience, I'm just now discovering there are honest, ethical appraisers out there after all. (Thanks once again to Wayne for providing this forum so I could make that discovery.) The system can be changed. But it won't happen soon or easily. It'll only happen one report at a time. It'll only happen by just saying no to one sleazy lender at a time. It'll only happen with the positive influence of just one professional appraiser on one trainee at a time.

Hang in there. You're my heroines and heroes.
 

Blue1

Elite Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
California
Let's face it, we appraisers are the policemen/women of the lending industry. We are expected to regulate the lending process by submitting an unbiased opinion of value. Reminds me of the old west. Give a guy a gun and a badge and VOOLA, you got yerself a sheriff! Only we don't even get a badge!
 

bobburnitt

Junior Member
Joined
Jan 16, 2002
ded the Jacksonville Real Estate Investors Association monthly meeting. ************ I watched an appraiser stand up and tell this group of over 100 people that they can call him any time and he will give them an estimate of what a property is worth. He also owns (or is part owner of) a mortgage company where he and his list of trainees do the appraisals for his own mortgage company and makes the values that these investors want. The couple of other appraisers there were trainees from another company that does whatever they are told to do and are blatantly marketing this fact.**************

Seven years now I've been doing what I'd wanted to do for over 20 years. I don't know how much longer I can hold on financially and I'm very tired of fighting for what's right. I will not compromise myself and am thinking I'm going to have to search for something else to not only support myself but, something that I can build on so that I don't retire old and broke.

I'm so very, very dissapointed in so many appraisers. I have a stack of bad appraisals here that do need a Standard 3 review and need to be sent in to the State Board. Most of them I am doing free of charge as *****they have been provided to me because someone hoped I would do something, not as a review order. I DO NOT do reviews lightly or pick apart simple mistakes. I'm not perfect either. BUT, you all KNOW when you see one that is beyond a simple mistake or two. You all KNOW the appraisers in your market that are unethical.

WHO is going to clean up this profession??? If the few of us left that are ethical and struggling to stay alive don't try to fix it, just who else will???*********[/quote]
Pam,
Do You file Complaints????????????? If you don't, then you are part of the problem as well. I file complaints on lenders, agents, and appraisers whenever I catch them. Most people I know in this business in any form are afraid to file compalints. I wonder if it has anything to do with a guilty conscience???

BB in Texas
 
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