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This Just In

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bobby jones

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Junior Member
Joined
Oct 28, 2003
Professional Status
Certified Residential Appraiser
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Minnesota
This article appeared in todays Minneapolis paper.


Eroding home appraisals latest blow to buyers, sellers
While equity evaporates, new values keep some out of the market.

By JIM BUCHTA, Star Tribune

Last update: January 12, 2008 - 6:39 AM

Rosita Fields hit a dead end when she tried to refinance the mortgage on her south Minneapolis house: The appraisal came in at less than what she owed.

Aaron Smith was equally stymied when he tried to buy a $180,000 house in St. Paul. The appraisal was $10,000 less than the asking price. The sellers refused to budge, sinking Smith's chances of getting financing.

Just a year ago, situations like theirs were less common. But with house prices falling and the mortgage markets in disarray, more consumers are feeling the effects of a crackdown on appraisals by lenders and regulators.

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Ross (CO)

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Certified Residential Appraiser
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Colorado
Man, does that article's author need a lesson in real estate, market cyclicity and the fundamentals of mortgage lending ! Right from the get-go, I'd betcha this author has a major disconnection with their understanding of the difference between price....and value.

What is an "eroding home appraisal" ? How would one be seen as a disadvantage to a buyer ? The seller might be frustrated, but such is life and such is that local market perhaps. Just because values (and prices) may be "coming down" in a certain market does NOT MEAN that every house in that market was over-valued at the time the last appraisal was done ! !

If the "new values" are less (i.e. a result of value "erosion") then that should allow more buyers to ENTER the market rather than "keep them out". If that potential buyer has their own BAD CREDIT issues to reconcile first, then THAT might keep them out of the market.....but not any fact that property offering prices are less.

This example of the Aaron Smith person does not effectively relate Aaron's true situation to ANY reader of the article. O.k., so the house appraised for $10K less than the seller's offering price, and the seller refuses to budge. Betcha.....the seller has NO EQUITY left with which to negotiate, and allowing for the realtor agents to still get their exorbitant commisions. It doesn't mean that Smith cannot get financing, necessarily, it just means that Smith is not going to get THAT house ! There is probably PLENTY of other inventory available.

And, I sure would love to know what that author means by...."crackdown on appraisals" ! The author is probably confronting the reality that some appraisals in the past were done with MUCH LESS scrutiny of true property conditions and realistic market forces......and NOW this "crackdown" is the emergence of a renewed concern for facts and the truth. I wonder which wire-service writers are going to have the courage to ever say that "some neighborhoods are simply nicer and more-appealing than others" !

What a shame that facts-and-truth should become a roadblock for returning some local and national realty markets to a position of stability and RATIONAL exuberance. The era of extreme hype.....is finally having its ice-bath. The vast appraiser community has the potential of being grossly mis-characterized with each newspaper article that emerges during the shake-out of the coming 2 to 3 years ! Buckle your chin-straps. It's becoming so much less favorable to mention one's occupation at social events, business functions and neighborhood bar-b-q parties......because the person you are chatting with has some friend, who cash-out re-fi'd 5 times between 2002 and 2005......and now they are in a world of hurt.

Ooo, that's not good news. What's their name ?, what's their address ?.......sorry, does not sound familiar. It wasn't me who appraised their house !
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Its LSIs fault, they think there are 'declining' markets
and expect appraisers to prove it with listings and
pendings. Always kill the messenger.
 

Ross (CO)

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Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
It's always better to read an entire article.....usually. Thanks, Pam.

Too bad that more comments and further interviewing of the representative from that St. Thomas University were not solicited. Don't they have a rather comprehensive and notable real estate AND appraisal curriculum there ?

There is something about those October Research surveys in past years that is unsettling. In a sense it is surely both some good, and some bad. While the "90% of appraisers" are stated as having been on the receiving end of "coercion and pressure" to inflate values, etc. etc. ......it leaves a false impression that the ills of the marketplace such as over-valued properties, people in over-their-head, can't sell today for what they paid, and whatever else......is ALSO the fault of "90% of (all) appraisers". Kind of like....they went ahead and did it, anyway.

While the author does relate to black-listing of those who would NOT graciously inflate (to keep a client happy) he also does NOT give credence to the dynamic shift and loss of valuation "quality" by way of the replacement of diligent appraisers with the numerous short-cut, abbreviated and literally CHEAP alternative valuation products that were employed to "save" time and money !

Within that massive transfer of appraisal quality and diligence we find the participation of the less-than-diligent individuals who were able to capture enormous amounts of market-share.....and it might be of equal importance to say that 90% of the "problem properties" today experiencing financial hardship were probably appraised by 10% of the nation's appraisers.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Find out who the players are at October Research... and who the other members are that pay for this 'research'.
 

Mike Kennedy

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Professional Status
Certified Residential Appraiser
State
New York
http://www.octoberresearch.com/about-corporate-overview.cfm



Founded in 1999 and located in Richfield, Ohio, October Research Corporation is the nation’s leading provider of market intelligence, business news and regulatory information for the real estate, settlement services and mortgage origination industry

Joe Casa. Founder


NEWS RELEASE 2007 : http://www.octoberresearch.com/about-news-releases-details.cfm?ID=100
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Additionally:

Questions:

* If October Research shows that mortgage brokers cannot be trusted to be involved with the appraisal process, who might they recommend handle it???

* When researching who pays for the research October Research does, do the proponents/enthusiasts/promoters for 'bundled (single fee) services' pop up???
 

Lawrence R.

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Joined
Mar 27, 2007
Professional Status
Certified General Appraiser
State
South Carolina
On the sunny side.

"It'll blow a lot of first-time home buyers out of the market, especially in the most vulnerable neighborhoods," said Kris Wilson, senior loan officer for Fairway Independent Mortgage. "I really believe that Fannie is going to cause more damage than good by doing this."

That is great for us slum lords...still don't think there is money to be mande in RE right now? Sounds like income properties will be heating up soon.
 

Caligirl

Senior Member
Joined
Jan 27, 2006
Professional Status
Certified General Appraiser
State
California
That is great for us slum lords...still don't think there is money to be mande in RE right now? Sounds like income properties will be heating up soon.

As long as the job numbers in the area surrounding your properties look solid.
 
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