Reconsideration of Value: How to respond?

[J Grant]

Where was the general public's "recourse" during the boom market, when too many appraisals were overvalued? Same thing today, the number hitters have not changed, and they are back at it again, pushing every SC price through. These appraisals don't get flagged for ROV, but they need it the most...more buyers are hurt by buying too high then buying too low, same with people maxing out their equity in a refi. They "like" the high LTV and take out the money, only to be underwater later, unable to sell, and then homeless and bankrupt. Did the eager to please high value appraiser "help" these people?

Caterina, I've heard this unsuported nonsense before , that yesterday's number hitters switched gears and stared appraising "low"...they never changed and are still number hitting, I reviewed two reports last month on purchase appraisals that could have been done in year 2006 with the cherry picked comps, comps that were not used that were more similar but lower priced, undisclosed adverse issues, etc.

The ROV is problematical, esp when generated by a realtor. It is the lender's responsiblity to use competent appraisers who opine MV, and a ROV is no cure for "bad" appraising. It does encourage number hitting, as any appraiser who meets SC price learns they will not be burdened by a time consuming and unpaid ROV. Skippy figured that one out pretty quickly.

 

[J Grant]

SPutman, why is a ROV only ordered whan an appraisal is "low"?

Maybe the general public needs more protection from the "high" appraisal, and those are the reports the lender should order an ROV on...the public won't ask for it, but an overvalued purchase is going to hurt them, and the lender, a lot more than someone getting a fair deal and actually having some equity in their home. Wow, the people who dont' buy overpriced homes actually have some equity and can afford to stay in them...what a concept!

 

[JBTAppraisal]

the ROV i got today.

Home was listed on MLS for $435,000. Multiple offers sold for $465,000. Appraisal came in at $445,000.

gave me two comps for ROV. a active that has been on the market over the typical marketing time because it is listed way over price

and a home that sold for $450,000 (still wouldnt make value) that has 5 bedrooms (subject has 3) and a swimming pool and spa (subject does not).

what i wanted to do was add that comp and bring the value down...LOL

great way to waste 30 minutes of my morning ;(

 

[NORTON]

AMC....hello Mr. Appraiser, we would like for u to consider a ROV

appraiser, sure, but you realize 1 of 3 things can occur,

the value could remain the same
the value could increase
or the value could decrease, would u like to go forward?

 

[residentialguy]

the ROV i got today.

Home was listed on MLS for $435,000. Multiple offers sold for $465,000. Appraisal came in at $445,000.

gave me two comps for ROV. a active that has been on the market over the typical marketing time because it is listed way over price

and a home that sold for $450,000 (still wouldnt make value) that has 5 bedrooms (subject has 3) and a swimming pool and spa (subject does not).

what i wanted to do was add that comp and bring the value down...LOL

great way to waste 30 minutes of my morning ;(

The multiple offers....did you see them? You might want to see their offer. Don't you think that if multiple market participants are saying it's worth $465k and will buy it at $465k, maybe the market is speaking? You say the active is "way over price"...what is it listed for? What are the other active and pending sales looking like?

Not saying you are "wrong". Far from it. But you are 4% off of the contract price. When you think you know better than the actual buyer and seller, you need to cover all bases and leave no stone unturned. That means talking to the listing and selling agent about motivations in play for the subject and comps alike. It is very easy to be 4% off. While the form likes a single point value, there is always a reasonable range. If the contract falls within that range, I would side with the market participants. The subject contract is an indicator of value.

 

[sputnam]

JGrant,

They are only requested when someone thinks the appraisal is low because the vast majority of appraisals that we do are because someone is trying to get a loan. If the appraisal is 'low', they can't accomplish the financial goal they were aiming for. I did see one time when there was an ROV that thought the appraiser was too high.

Norton,

Exactly right....and boy did it hit the fan when an appraiser reconsidered and came back with a lower value. I always enjoyed when that happened.

 

[sputnam]

One of these days I'll learn how to post correctly. To continue...with the AMC I worked for, the request had to come from the loan officer...but it was typically the borrower or Realtor that really initiated it.

Norton...I agree. And did it ever hit the fan anytime an ROV came back with a lowered value. I always enjoyed those...long as it was supported and not just an appraiser being spiteful

 

[J Grant]

If only "low" appraisals get a ROV there is a clear bias ...either all appraisals get an ROV or none... Skippy is once again rewarded by hitting sc price and avoiding an ROV . I am aware of why they are ordered. Since lenders order them 99 percent of time if an appraisal can't meet a financial goal one really sees the point of this to pressure value upward.

 

[sputnam]

There is a bias....of course. The Lender is in business to make loans. If the appraised value is 'low', they can't close the particular transaction.

 

[Riick]

What?!! Abuse of the ROV system to attempt push values UP?
I am shocked — shocked— to find that gambling is going on in here!

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