Pre-offer Appraisals

[Deleted member 130081]

I'd rather cut grass for $100.

I cut grass as my first business when I was 20. You will not make nearly as much per hour and will come home smelling of gas every day. The $100 appraisal option can yield $100 an hour.

 

[Deleted member 130081]

Just completed an appraisal @ $155k that the owner paid $230k cash in 2009. Out of town buyer with no knowledge of local values gave away $75k.

That's what I am talking about. That cash buyer should have had an appraisal done. In fact, savvy cash buyers are the #1 client type for Pre-Offer Appraisals so far. I saved a guy $65k this spring (though he was not a cash buyer and financed the sale). It would have gone through the mortgage appraisal had he made the high offer and he would not have been the wiser - I charged him $350 for a Duplex Restricted Use report that took me less than a day to produce. He said it was the best $350 he ever spent.

 

[Deleted member 130081]

Idk there. You know I cherish your position because I have heard it so long and it has merit in some ways.

But, I can see how on both buyer and seller side, an independent appraisal with the buyer or seller as client would help things too.

I wonder if somebody other than the bank (lender) shouldn't be the client on mortgage purpose appraisals sometimes.

I look at VA and their success rate and how they operate and it tells me who is client is important to independence. HUD is that way too but a lesser degree imo. Anyway, you get my point I hope.

Your issue is sewed in USPAP. I don't know even if it wasn't, if the appraiser wouldn't find out through the normal course of business.

Ok, so you talk about a couple of things here. In terms of the comment about adding the borrower/buyer as a client to the report (or maybe you meant user? - whatever, I think I see your point), I think the thing to keep in mind is context. A mortgage appraisal is not designed to be 100% "accurate" meaning, the bank knows darn well that an appraisal can and will only be so accurate. However, for the purpose of a lending decision, where the loan will be 80/20, and if the borrower wants to borrow more than 80% they will also need PMI, the mortgage appraisal is just fine. The context I just defined does not extend to the buyer. Note I did not say borrower, I said buyer. The expectation of buyers is different than the expectation of lenders, in terms of the appraisal results. The lender is knowledgeable about markets and appraisals and will only rely on 80% of the appraised value. A buyer will typically not be knowledgeable about markets and appraisals and as such, the mortgage appraisal is not in any way appropriate for use as a sale contingency appraisal. Yet, they are used for just that all the time. THAT, is the problem. Appraisers understand intended user, intended use, credibility in the context of the intended use, etc. All a typical buyer understands is that they paid for an appraisal and therefore they ought to be able to rely on it for anything and everything.

 

[Deleted member 130081]

And why would anyone be offering to do appraisals for only $100??

Longer answer is because a) per hour the money can be great, far better than a mortgage appraisal and b) it creates options for a market that will in some cases (many at first) be weary of spending any money and c) it creates options for buyers who are interested in multiple properties

And aside from the purpose of this thread, if we as appraisers can/could offer a more affordable option to potential clients, no matter the client type, why wouldn't we? Why would we be stubborn and say the only type of appraisal option is the whole enchilada, when sometimes all the client needs and wants is a taco and we know how to make awesome tacos too?

 

[Deleted member 130081]

why would the party lending the money not be the client? that's absurd.

I believe Eli is just suggesting that the borrower has no skin in the appraisal because they are only part of the appraisal in a limited capacity. I don't think he meant the client should not be the lender, just that in the current model, the borrower is not considered the client and with that sub-status, the report that the borrower also relies on is not geared towards them. (Did I get that right Eli?)

 

[Deleted member 130081]

I agree appraisers could not come up with the large $ or organization to come out with a Zillow type site.

But perhaps if enough appraisers could be convinced it would be beneficial to spend $100 a year or so for a professional public oriented website with links from mortgage lenders/other RE sources, educating about what appraisers do and recommending some various products to contact local appraisers ( and then the names of contributors can be listed ) for products such as pre list or pre offer short form appraisals or consultations.

I love this idea and am on-board myself, though it only works if enough other people get on board too. Not trying to be a downer here, but we (appraisers) generally don't organize efforts. But you are 100% right, a web presence that advocates for public education of appraisals is needed and could work as a lead generator too. (Any programmers reading this?) The current education available out there is so geared towards the mortgage side of appraisal, even the stuff you find at AI and other easily recognized sources. I have some educational content posted on my website but it is frankly a work in progress (shamefully). Most of the educational content on most appraiser websites is also geared towards mortgage or if not, very little is geared towards the Pre-Offer Appraisal. I use alamode/xsites that comes with all kinds of pre-written content (and so do many appraisers). This is all good stuff, but it needs to be much better. I have been working on it a long time, but it is hard stuff to write in a way that gets the word out in a manner the public understands or will take the time to read. This is one reason I am calling for each and every appraiser to start talking about this stuff. Once all of us start the conversation, the more people will get interested and eventually learn. You talk about all of us getting together and doing something pro-active to help ourselves. Well, this is an opportunity for all of us to do just that, collectively without a coordinated effort. All we need is a meeting of the minds and I have yet to hear an appraiser state a Pre-Offer Appraisal is a bad idea for the public!

 

[Mike Kennedy]

"There are a lot of good reasons for a buyer to get an appraisal before they write an offer. We need to educate them on the reason of insanity, and all the other reasons will be bonus."


Agreed..............and I've been doing pre-purchase potential buyer independent and objective appraisals for decades - few hundred$ now can (and has) often save them THOU$AND$.

 

[Deleted member 130081]

Problem with the tag line, it doesn't no live in reality. It's an amazing tagline for textbooks. Fictional ones.

In reality, people gotta eat, and usually the more volume appraisers eat a lot more than the holdouts like me up at $400 minimum.

I've received $0 of my $400 pre-listing product. The OP has received $10k. Who eats more in reality?

I'm the smart one in textbooks. Reason why? Textbooks get food brought to them.

Pre-Offer baby, Pre-Offer - I could care less about the seller (though I am happy doing Pre-List Appraisals too!)

 

[J Grant]

I love this idea and am on-board myself, though it only works if enough other people get on board too. Not trying to be a downer here, but we (appraisers) generally don't organize efforts. But you are 100% right, a web presence that advocates for public education of appraisals is needed and could work as a lead generator too. (Any programmers reading this?) The current education available out there is so geared towards the mortgage side of appraisal, even the stuff you find at AI and other easily recognized sources. I have some educational content posted on my website but it is frankly a work in progress (shamefully). Most of the educational content on most appraiser websites is also geared towards mortgage or if not, very little is geared towards the Pre-Offer Appraisal. I use alamode/xsites that comes with all kinds of pre-written content (and so do many appraisers). This is all good stuff, but it needs to be much better. I have been working on it a long time, but it is hard stuff to write in a way that gets the word out in a manner the public understands or will take the time to read. This is one reason I am calling for each and every appraiser to start talking about this stuff. Once all of us start the conversation, the more people will get interested and eventually learn. You talk about all of us getting together and doing something pro-active to help ourselves. Well, this is an opportunity for all of us to do just that, collectively without a coordinated effort. All we need is a meeting of the minds and I have yet to hear an appraiser state a Pre-Offer Appraisal is a bad idea for the public!

I am not the point person for it but would contribute time to it...imo a group of us need to ( when we can make the time) explore the idea and find a PR firm that does websites and outreach to media links etc...find out who NAR uses lol...then we would need to get the email addresses of all appraisers from the ASC and email them to see how many would participate, perhaps spread the word here on board etc. It would be a long term undertaking and not happen overnight and I doubt all appraisers would jump on it initially, but even if it started small a public outreach website could be made...written in plain, not techno jargon or nerdy, that the public understands and can relate to.

 

[Deleted member 130081]

I am not the point person for it but would contribute time to it...imo a group of us need to ( when we can make the time) explore the idea and find a PR firm that does websites and outreach to media links etc...find out who NAR uses lol...then we would need to get the email addresses of all appraisers from the ASC and email them to see how many would participate, perhaps spread the word here on board etc. It would be a long term undertaking and not happen overnight and I doubt all appraisers would jump on it initially, but even if it started small a public outreach website could be made...written in plain, not techno jargon or nerdy, that the public understands and can relate to.

LOL. Don't take me in the weeds J. This thread is called Pre-Offer Appraisals. I want to change the world and you keep yelling squirrel! (Which is even more amusing to me because I pull that on others all the time - HA!) Just trying to keep focus here. What you are talking about deserves its own thread.