Listen to this sales pitch?

[Tim Hicks (Texas)]

FSBO, $136,000. I do the inspection, the home owner asks me if I know the neighborhood. Yes, I do. I will only use sales from this neighborhood. I do the appraisal and the best I can do is $133,000. Sorry, but that is as high as I can stretch it. Homeowner, unhappy. A Realtor told her she could sell her home all day for $145,000. No they can't. The loan officer gives the appraisal to the buyer who gives it to the home owner. The dissection begins. My south neighborhood boundary should not be the highway, it should be two blocks north, she has 1,602 SF (per the tax office) not the 1,591 SF I reported. Why didn't you this sale and that sale. I explain to the loan officer,"who cares if my boundary is off by two streets, I have 1,591 SF because I use exact measurments not rounded like the tax office, I did not use those two sales because one has a 750 SF apartment that rents for $450 (sold for $130,000, but slightly smaller) and the other is 600 SF bigger. The home owner offers to pay for a new appraisal and recommends the two names I told the loan officer not to accept. They complain about paying a new appraisal fee. I suggest getting a field review, because they can probably get it cheaper and I know the appraisal is clean. The field reviewer says he estimates the value to be $134,000 (How can a reviewer who does not physically inspect the property raise it by $1,000). Here comes the sales pitch. the reviewer tells the loan officer, the true value is $133-134,000, but I can get you the $136,000 if you want to pay for a full appraisal. How about that? I told the loan officer to save the review, then if he does a full appraisal for $136,000 or more to let me have a copy. That will never happen, but somebody tell me that we appraisers are not our own worst enemies.


"You must resist the dark side of the force, not stornger only easier"-Yoda

 

[Pamela Crowley (Florida)]

Ah, Tim. These stories make flipping burgers sound pretty nice and easy, no stress. Then, I could spit in the burger of the 'make whatever value you want' appraisers. Might be the only satisfaction/recourse we have. :?

Chin up! The only real answer to this whole mess is take the ordering process away from the lenders, including any AMCs that are owned in any part by any lender. I really hate to say it because I do know how really screwed up any government agency will be but, it might be the only way to actually clear it up.

Lenders have to pay an up front amount to be kept in a form of escrow account to immediately pay for all appraisals ordered. Appraisers put in their name to receive orders when they need them and go into the rotation for the zip codes they will do. Appraisers can bid for the orders?? maybe or the lenders can make a fee offer??? If the lender doesn't like it, a full review is ordered and paid for. No one else involved in the deal or loan can contact the appraiser other than the agency handling the order or the Underwriter after the appraisal is delivered. Any reviews showing major errors are sent for a second review and any appraiser that has too many second review orders that agree with the first review regarding major errors goes for additional education the first time, suspension the second time and revocation on the third time. A fee is paid by each lender for each order they place to pay for the ordering service. I even wouldn't mind if the appraiser also paid a fee for each order they receive as long as the lenders also pay.

I'm still thinking about better ways to handle this and look forward to others ideas. This system is badly broken and needs fixing.

 

[jtrotta]

Tim

a bolstering of your Realtors comments; Perhaps they can Sell it for $145,000 - if there are no sales to support it (I know someone can run numbers) why would any UW accept it :?:

did one the other day and The Realtor did Sell it for more than I could support (his mistake was he told me-I appraise on the side when it's slow) - I said oh great, then you are very familiar with FNMA & USPAP requirements. I'm looking at a great little property, ready to go - but no good comps. to use, I makes my usual call to the parties of concern (the one who ordered the appraisal) and advised him it was time for him to sit down and make several calls and then I explained why. He understood my position and stated he would get back to me, that was a few days ago- no call backs yet. One of the comments from the lender was, hey maybe they'll just have to do some negotiating.

8)

 

[Paulette in Texas]

Dear Tim: Received a call from "major" national lender (meaning broker for outfit) who will be in Houston for one week and will have 10-15 FHA appraisals for us to do. I say no problem, after all we can work 24/7 with 3 certified appraisersf??? But he'll be calling us from each appointment to set the appointment. And OH, by the way, we'll need to make sure that you MAKE the value that we're gonna need to do the deal. All being refi's???? In the next lifetime. I then explained the violations. We will not accept his nor any other lender's assignments based on pre-determined values. He actually seemed surprised that anybody wouldn't jump to accept that volume and be paid "cash" on inspection. Seems the brokers are now trolling in areas expecting local appraiser to just jump for the chance to work for said "broker?" What do you want to bet they've already been turned down by the LOCAL good companies because they are already maxed out? Or this jerk is trying to dump $8-10k onto their loan balance. When will the laws protect the unsuspecting public from the BIGGER crooks, the loan officers MAKING unrealistic numbers and HUGE loan balances for the poor sucker paying...take both the number hitting appraiser and the greedy LO to the nearest #$%@$^^#...right there next to Enron and World Com. But don't hold your breath. Paulette in Tx
Rotts rule and Shih tzus fine...go w...

 

[bobburnitt]

Paulette,

Did you turn them in to HUD??????

BB in Texas

 

[Paulette in Texas]

Dear BB in Tx: What's the point? They were looking for the number hitters and pre-determined value makers. Fortunately, they're actually are lenders EVEN national companies that truly want to know what they have in their portfolios. Of course, they know the risk of the buyer because of their background; But they DON"T know the risk for the homes...if they used the number hitters. But many lenders actually want to know the value. There is hope yet for all of us. And believe you me, the local brokers know who is "honest" and who is a number hitter.

Just last week our son sold house 5K over what value should appraise for because seller wouldn't negotiate. AFTER appraisal was done by "honest" appraiser, our client got the message and now they are looking for home at market value...BUT the broker offerred to "make" it happen with one of THEIR appraisers, if they wanted that house. NO, NO, NO we did not do the appraisal. But we had enough snap to make sure it was done by one of the "fair & honest" appraisers in the business. It never changes. Partins
Rotts rule and go w...

 

[bobburnitt]

Paulette,

I have filed complaints with HUD before regarding crooked lenders, HUD is about the only agency that will go after them, believe me, they will get their attention.

You gotta do something.

BB in Texas

 

[Tim Hicks (Texas)]

Today, I had an appraisal assignment for a different home for the original borrowers. They met me at the property because they wanted to see if they were throwing away another $325. The loan officer advised them to not get a new appraisal on the first property since the field review supported my value. The sellers were livid and refused to come down in price since they were assured by a realtor they could get $139,000 for their home (my value-$133,000,1602 SF home) and they wanted to get their appraiser to do an appraisal. The borrowers backed out of the contract and found a new listing on the next block the same day. This new listing was a 2,005 SF brick home with more updates, brick with vinyl siding, an attached garage, new bathrooms, bigger lot, etc. You get the idea. Their contract price on this home is $139,000. The borrowers want to bring the other home owners to see this home and ask them how there's could be worth the same price. The borrowers actually thanked me for looking out for them (although, they were believing I was worthless at first, too). They had never heard of a home not appraising for its asking price. They only concern was that Mr. Conserative was not going to validate this purchase price either. I quickly pointed out that this home had storm windows,the other one did not, this home was brick, the other was frame, this one had 400 SF more living area and two baths that were completely new. I pointed out that this home had vinyl siding on its trim for no exterior maintenance. I pointed out this home had a large wood deck and hot tub that was included that I was considering personal property. I pointed out the re-finished hard wood floors, a real laundry room and an attached two car garage. Then for good measure I pointed out they had a concrete drive and slab in their garage and the other home had gravel and dirt. I surpassed their contract price with no pushing or manipulation. They appreciate my "integrity and honesty", but also for helping them realize the home really wasn't worth it. The original home owners put their home back on the market for $139,000 and will wait for another sucker to use their appraiser.

 

[Pamela Crowley (Florida)]

Thanks for writing about a good one, Tim.

The FHA I wrote about earlier this week that the lender didn't want to pay for - the buyers bought it for $17,000 more than I appraised it for on a seller held mortgage because they had a Realtor (who is afriend of the seller) that told them I was crazy. All six sales in that town that could possibly be considered comps were used and all but one (that Realtor's listing and sale) came in real close at the botton line of $21,000 under the contract price on that place. I even asked that Realtor to send other comps to me that would help; she couldn't because they don't exist but she did tell me about some out in the country on acreage that would bring the value up.

Can't save them all.

 

[Tim Hicks (Texas)]

Some people refused to be saved. In that case they get what they deserve. Right now, one borrower owns two homes and two house payments because he refused to accept my appraised value. He agreed that my comps right on top of the home he bought were better, but those other sales the the new appraiser used support the value he wanted-$298,000 (900 SF bigger, 6 acres compared to 1.7 acres, 4,000 SF workshop to their 900 SF workshop). Now he has that $30,000 overpriced home and one around the corner from me listed for $279,000. Never mind the same size home two houses down with a pool (his doesn't) that sold for $230,000. Ninety days on the market and still counting with rarely a showing. I see him every week at my my daughters softball games and he snarls at me for being that idiot appraiser that knows nothing about house values. After all, 11+ years and over 4,000 appraisals doesn't validate my appraisal knowledge.