Solution to contract dilema

[Artemis Fowl]

<...>The phased release of contract would not hurt the honest, competent appraiser in any way, shape or form. They could still have it to review in the reconciliation phase.

It would create havoc however for the number hitter , <...>.

It would create havoc for the client who engaged you to answer a question related to contract price in the first place.

We weed out bad clients...let them weed out bad contractors...or sleep with them.

 

[J Grant]

I do weed out my clients, and have some great ones who appreciate my work, never push for value. I feel, as you do, that value pushy clients end up with value hitters.

I suppose it's idealstic on my part to attempt a solution to the problem. While the bad clients and appraisers deserve each other, the innocent buyers are the ones that pay the price. When they end up with a value hitter appraiser, they easily end up over paying and never know it . If someone wants to pay above MV, that is their option, but they should be aware of it so they can make an informed decision.

 

[CANative]

I suppose it's idealstic on my part to attempt a solution to the problem.

What problem?

 

[J Grant]

A reading comprehension issue?

I outlined the problem numerous times. One more time: The problem is that that a large % of appraisers in practice appraise to hit a SC price. I'd estimate the number to be as high as 50% of working appraisers. Do you disagree that that is a problem? Or is that okay with you? If that is fine with you, then you are right, there is no problem!

 

[CANative]

A reading comprehension issue?

I outlined the problem numerous times. One more time: The problem is that that a large % of appraisers in practice appraise to hit a SC price. I'd estimate the number to be as high as 50% of working appraisers. Do you disagree that that is a problem? Or is that okay with you? If that is fine with you, then you are right, there is no problem!

I'd like to know where you get your "information."

 

[J Grant]

From years of reviewing, comparing notes with other appraisers who review, from being handed terrible over value hit the number reports by homeowners recently done on their houses. Just handed one last week a classic.

The fact that 40% of American homeowners are underwater (gee, they all appraised at SC price when they sold!) , and the housing market collapse with numerous media reports regarding inflated value appraisals might be a clue

Were do you get your rosy view that there is no problem?

 

[Peter LeQuire]

... regarding time constraints and whether lenders would actually do this...this is what happens in a reconsideration of value. Somehow, lenders and AMC's find plenty of time to send an appraiser additional data for a report that already was provided to them with a market value opinion when the SC price was not met!

Having a "two step process" built in would be a significant time suck. Granted, if an appraisal's MV is less than that needed to support the proposed loan (and sometimes to meet an appraisal contingency) it may trigger a reconsideration request. But why bother. If the proposed SP is within some negligible amount of what an appraiser determines is the MV, and that MV opinion is somewhere toward the median (or mean) (or somewhere in the thickest part of the "foam") of indicated values, and that price does not appear to be bloated by non-realty items or seller-paid concessions, it is - IMO - as valid an indicator of the value of the property as the MV expressed, as the latter is, or ought to be, appropriately rounded to head off any appearance of precision that isn't warranted.

What a waste of time it would be to do a well supported, well documented, well presented appraisal, only to be asked to, after doing so, reconsider the appraisal after "considering" the contract. If anything, a well supported, well documented, well presented appraisal ought to discourage requests for reconsideration.

 

[SutnNC]

The phased providing contract is to prevent the legions of number hitters/deal facilitators from being able to do what they do undetected.

It would create havoc however for the number hitter.

Another symptom of the real problem IMO.

 

[Artemis Fowl]

Incompetents, liars and cheats, buyers, sellers, lenders...pretty much any market participant including us contributes to chaos within the market that exists. Note the difference from; they contribute to the chaos that exists in the market. We are expected to analyze the market that exists, not attempt normalization to a "market" which magically exists independant from its inherent nature. To me, that implies regulation...and when people ask what I do I don't respond "Regulator".

Oh God I'm quoting myself...is there some sort of penalty for that?:blush:

I had made changes while everyone moved on to page 2.

 

[J Grant]

Peter, I agree it would add an extra layer of time. The benefit of it would be weighed against the additional time added.

The benefit of it is that it would put number hitters, and pushy clients, at a severe disadvantage. The ethical and competent would have a more level playing field to compete. Over time, the agenda drive appraisers would be much easier to track and expose with this system. Right now, they slip along, year after year, under the radar, unless an old ugly report catches up with them.

If the phased assignment added time, it would be even across the board. Right now, the only one spending any extra time is the honest appraiser who dares not make a SC price. Meanwhile, Mr and Mrs number hitter are churning them out at a rapid clip.

I think it would benefit the good guys and the small trade off of time would be worth it. The number hitters would be the ones that would be seriously bogged down in a time suck, as they frantically try to pull 100k out of the air to add to their previous MV when they see the inflated SC price! Dang, they could have fudged in that 100k right from the get go if only they had the contract to start with!

IF the extra layer of time is accepted across the board in purchase appraisals, it would be customary to include it in fee upfront. (I find many appraisals come back for a second pass these days anyway, for one reason or another)