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Value of An Honest Appraisal

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Randy Beigh

Thread Starter
Senior Member
Joined
Jan 16, 2002
Last week, I was sent a field review. No problem, as I have done 1,000's.
I spent over 5 years for a company and my job was to review appraisals from around the country. I learned long ago to separate myself and my personal feelings from appraisals, until last week.

The appraisal was on a rancher style home that was larger than typical and in a 70's, suburban neighborhood that was built on a hillside. The subject was one of the older homes at the bottom of the hill with no view. It had been appraised for $280,000 and when I glanced at the report, I noticed there were 9 comparables. That made me curious. Why in this typical area would one have to provide 9 comparables.

I did my usual first steps. I pulled up Metroscan and MLS on the subject
and all sales. Up popped a current listing on the subject for $225,000 and
it had been on the market since before Christmas. It is listed by one of
the more reputable and better saleswomen in town. I called her and she
started off by telling a very sad story.

The owner re-financed her home. She took the money, built 5 bedrooms, a kitchen, and a dining room IN THE BASEMENT. There were 3 bedrooms, a kitchen, and dining room on the main floor, already. The agent said her
intent was to start an adult care center. She promptly went broke.

Then things really went bad. She had 2 hip replacements, came down with
something called Cushing's disease(makes her head swollen), and cancer. The home is now in pre-foreclosure and there is no money. The agent said she felt the home would sell for between $205,000 and 210,000. But much more money is owed on it than that. Because of a wide variety of quirks with the home, I arrived at $200,000.

I have no doubt the homeowner wanted the $280,000(no proof, just guessing) and I'm sure the loan officer did. The appraiser had the ability and the obligation to put a stop to this, but failed. Instead, he set out to prove with 9 sales, the value was there. Now, this homeowner, who is going to die, will die broke and without a home to die in. It is not the appraiser's fault that she is going to die, but it his fault that she will die without her home.

This review made me sick. Appraisers' could and should provide a valuable service to their communities and their country. Instead, many of us have sunk to the lowest levels of society and for sure, can't be trusted.

I lost my objectivity over this. I tried looking for the appraiser's phone
number and he's not in the book, anymore. I called the local MLS office and they said, he has dropped off the list. I called the state and his license comes up for renewal this month, but he hasn't submitted for renewal. Maybe, he is gone.

Yesterday, the state asked me to submit the appraisal for action. But, I
told them that I will decline as that is a waste of time. We talked about
an appraisal that I sent to them in March of 2000. I was the 5th person to
turn him in and FannieMae has since reported him and the case is still
pending. Meanwhile, he is still doing what he does.

Just thought we all should see an example of the value of an honest
appraisal and how one dishonest appraisal has affected one homeowner and one appraiser.
 

Ray Ohler

Sophomore Member
Joined
Jan 15, 2002
now, times that appraisal by 300 (excluding the impending "death") all IN your marketing area where you are virtually 99.99999% sure of the "true" value and see it "pushed" anywhere from 25-500%. Tends to "jade" one after a while.
 

Karl

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Arizona
Multiply it by 50 states by pick a percentage of appraisal. Very scary
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
......And I have always wanted to believe that those in the underwriting process used their wealth of experience, familiarity with what constitutes and good and a bad appraisal, and just a lick of common sense to act as either the first line of defense, or the last line of defense, you decide which one it is..........to be sure things looked o.k. before the investor went deep into his pocket to fork out the cash. Is that not at least half of their role ?
 
B

Bemis Pownall

Guest
did an REO couple weeks ago

HO's story..
First appraiser came up with $165,000..LO said "your house must be worth much more" LO's office is 100 miles from subject.
LO tells HO, my good apprasier will be back i n town next week I'll have him do your home.

Bingo he hits $185

HO goes to closing and surprise her payment is $1600/mth+/-
she takes second job to make he new mortgagshe wanted $10,000 out for home improvement, she got $5,000. Lender failed to pay all debts they orginally agreed to.
Shortly after closing HO was laid off, and she lost her other job.
6 payments behind, its on the market for $165,000.
Dont you know the difference between the two appraisals is what the LO walked away with...
Home was not and is not now worth the $185, many clone sales listings etc. Her refy was only 6 months ago.
So now the HO single mother of 2 will soon be out on the street, has no family in town who will help them out, has no rental credit as she has been a home owner for 13 years(WITH NO EQUITY)..thanks to the LO's GOOD APPRAISER.

Like Randy why waste the time to turn the jerk in the commission is over loaded and under staffed. Id like to call him up and tell him this story, I'm sure he has a good excuse...
 
B

Bemis Pownall

Guest
ROSS
dont forget the preditory lending cycle

Refi with the high pre-payment penalty, they make the money on the penalty, points fees. So while the loan balance goes up, equity goes down HO never knows, or is smart enough to know what is happening. Lender houses the paper no underwritter invloved, eventhough the HO may be upside down on the house the Lender still comes out rosey. Plus they can always sue the appraiser or HO for the difference.
If the lender/bank was loosing $ on deals like this appraisal review/under writter would be a lot tougher
 

graindart

Junior Member
Joined
Jan 20, 2002
Professional Status
Certified Residential Appraiser
State
Montana
Don't really feel like typing much right now, but I'm getting a little tired of reading the number of people writing about the bad situations that home owners are getting into because of unethical appraisers. First my disclaimer.....of course I'm not in support of any unethical appraisers or the way that they can magically hit any number, no matter how high. However, I don't agree with the recently popular trend of calling home owners who are over-extended......VICTIMS! Most of these type home owners that I've dealt with are just irresponsible and/or lazy. By this I mean that they don't take the time to learn, plan, or think for themselves. They're impulse driven and always want what their neighbor has and more. Of course when something goes wrong, a lazy irresponsible person never looks to themself as the cause of their predicament. They always have to find someone else to blame, so that they're the victim and it wasn't their fault.....it was that evil person making them borrow extra money to buy that 3rd Jetski. Sorry for the short rant, but I'm sick of the sob stories of the single parents with 15 children that have worked hard their whole life, only to have their whole lives and dreams smashed to pieces by the evil trio.....appraiser, loan officer, and underwriter. People need to realize that it doesn't matter how much their home is worth if they can't comfortably make their proposed loan payment, maybe they shouldn't be taking out a new loan. The extra addition, new deck, 3rd Jetski, or 1 year newer vehicle can all usually wait until the homeowner is more financially secure. The term "predatory lending" has been used recently to cover anyone who ever defaults on a loan. There are instances that you hear about from time to time which are obviously criminal and should be prosecuted, however I'd say that 95% of the people defaulting on a loan and crying "victim" lately, are just to lazy to do some research.....and heaven forbid......partake in delayed gratification! My rant's over......it ends as quickly as it starts.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
graindart,

I agree with you. In most of the cases that I've bowed out of 'pushing' the value on a home the HO was already in over their head and the refi was a last ditch effort to extend their problems just a little longer. More often than not their ultimate demise is not due to job loss or illness, it's because they lived beyond their means to begin with.
The majority of homeowners are much more aware of the true market value of their home than what they let on. Some just want to keep rolling the dice and eventually they lose the game. Granted, they are playing right into the hands of unethical lenders and appraisers, but they are gamblers at heart and nearly all are poor losers.

Dee Dee
 
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