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Redlining? Where Do I Begin?

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M SIR

Thread Starter
Freshman Member
Joined
Mar 17, 2007
Professional Status
Appraiser Trainee
State
Florida
THIS IS WHAT A REVIEWER /UNDERWRITER OF A RECENT APPRAISAL WROTE:

"Unacceptable Appraisal. Report fails to address declining market conditions in Miami and excessive number of similar units in the building that are listed at asking prices below the appraised value. The subject is located in a four year old high rise condominium project that was converted to condominiums from rental apartments in 2005. There are 608 total units of which the developer still owns 106 units. 72 units were sold to investors according to the appraiser. A Realtor.com search of the area found 8 current listings of 2 bedroom, 2 bath units in the project listed at between $360,000 and $389,988. I spoke to two brokers whose office have listings in the condominium. Josie at Chipmonk Realty (786-zzz-XXXX) reported a large and growing oversupply of condominium listing in Miami and a large concentration of foreign (mainly Venezuelan) in this condominium project. They purchased units at lower prices with the intent of flipping the properties at a profit. The market has deteriorated and they cannot rent them at a profit or sell them at a profit so they are being dumped on the market at ever declining asking prices. In addition I spoke to Josie at My Realty (305-zzz-zzz) who reported a high level of Equity Stripping schemes being done in this condominium project. 3 of the four sales are developer sales and cannot be trusted considering the distressed market conditions. We cannot know when these units went under contract. It was probably when the prices were higher. Comparable #4 is a resale according to the appraiser but it could not be verified on Realquest and it is located on the 7th floor. The subject is a less desirable first floor unit with no views. See Realtor.com listing data uploaded in CMS."

NAMES AND NUMBERS HAVE BEEN CHANGED TO PROTECT THE GUILTY. I'M PRETTY MUCH OK ABOUT ANSWERING EVERYTHING EXCEPT THE BIT ABOUT THE MANY VENZUELANS PURCHASING IN THIS PROJECT AND FLIPPING. TECHNICALLY, THE NUT WHO WROTE THE ABOVE IS QUOTING ANOTHER NUT BUT WHY EVEN REPEAT SUCH A THING? I WOULD LIKE TO HEAR SOME OPINIONS ON HOW TO ANSWER THIS. ANY USPAP QUOTES OR FAIRHOUSING VERBAGE / SOURCES WOULD HELP.
 

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
I think you need to drop back and take a second look. If the facts stated by the reviewer are even remotely true, the reviewer is absolutely right, IMO.

It's not about plugging in three sales, two from inside the project and one from outside the project, that closed within six months and within one mile.

It's about ANALYZING ALL THE MARKET DATA. It appears the reviewer has a handle on the market, so my question is, what did you miss?

Do you know what redlining means?
 
Last edited:
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Other than naming the nationality of the speculator purchasers/owners, I don't see anything wrong with everything else the reviewer/underwriter used to decide the appraisal in question is 'unacceptable'. Would you like to have the original appraisal reviewed by a Florida Peer Review Committee?
 

bfriendly

Junior Member
Joined
Oct 14, 2007
Professional Status
Certified Residential Appraiser
State
Georgia
hhhmmmm.....if I am reading this correctly, this is what a reviewer/UW has said about YOUR appraisal?

If it is, then you may want to focus on defending your appraisal, rather than trying to redirect the issues at hand(Your appraisal) towards nailing an agent for the obvious poor judgement. Am I reading this right?
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
This does not appear to be red lining but could be construed as racial and ethnic bias and possible discrimination. I would suggest to you that you simply state to this underwriter that you cannot address the issues raised as the information contained in the inquiry may violate fair housing laws and you would like the input of a fair housing official before you respond. i don't know who investigates fair housing complaints in your state. In mine it is the Real Estate Board(State Board, not Realtors) that has been given this job. You should have a local office that you can talk to.
 

bfriendly

Junior Member
Joined
Oct 14, 2007
Professional Status
Certified Residential Appraiser
State
Georgia
Looking forward to seeing how this one turns out! I thought I was going to be the first reply but Pamela and Joyce beat me to it......

Welcome to the forum!:flowers:
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Lets start by asking you to break up your paragraphs for easier reading. This holds true of your reports too. Long, rambling paragraphs (especially if in all caps) are very difficult to read.

The data cited is important to the appraisal process. Analyzing the market is a part of our job that is often glossed over. In good times underwriters (reviewers) have little time to spend on individual reports. Now that the market has slowed, look for them to "justify" their jobs by picking EVERY appraisal apart.

Lastly, there is nothing wrong with identifying a particular group or nationality purchasing properties IF the information is factual and is not used to maximize or minimize property values.

USPAP 2006 says (page 7, line 250) "an appraiser must not use or rely on unsupported conclusions relating to characteristics such as race, color, religion, nation origin, gender, marital status, familial status, age, receipt of public assistance income, or an unsupported conclusion that conclusion that homogeneity of such characteristics is necessary to maximize value"
 

Liz Mura

Member
Joined
Oct 20, 2004
Professional Status
Certified Residential Appraiser
State
Arizona
Would "foreign investors" been acceptable?
 

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
I'm sorry, but if the condo project is predominately owned by foreign investors, more specifically, non-owner occupied, is that suggesting that any loans that are rejected meets the definition of redlining?

In many sectors of my market you can actually track the UK buyers as paying substantially more for some properties.
 

Karl

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Arizona
Who signed the report? Evidently someone is signing you reports without reading them. Apears to me your a Trainee NOT getting good training.

PS Foriegn Investors is VERY acceoptable in this rapidly changing world.
 
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