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Voice of Appraisal

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Dale Floyd said:
I wasn't questioning your article Terrel - Just stating a fact. That was one big boar to do that.
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Didn't say you were questioning it, but yes it was a big boar. I've encountered them on property inspections. And I keep a gun in my truck when on the farm. Never seen one here but they have been seen within a couple miles. Last year I was with a guy in a Gator when we found a site that had been uprooted during the night. He said he had been there the day before, so it had to have been that night. Looked like plowed ground for about an acre. This was south of Joplin, MO just inside the Oklahoma border.
 
alebrewer said:
The other end of the spectrum is first payment default. The value of an appraisal, then, depends on where along that spectrum the risk of default falls.
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The value is in the decision to lend. Over-stating values has consequences for the bank and the reserves it needs to hold. SITG. Skin in the game. If the borrower has to put down 20 or 30%, then they have skin in the game. They are much less likely to default. The appraisal is just a spot price, but the number serves to calculate the LTV which determines how much the borrower needs to put up and how much the bank should loan. I am one who believes that no loan should be 100% of appraised value. That is no SITG. And therefore, the borrower has much incentive to default if values drop or the property is more problematic that first believed.
 
Terrel L. Shields said:
The value is in the decision to lend. Over-stating values has consequences for the bank and the reserves it needs to hold. SITG. Skin in the game. If the borrower has to put down 20 or 30%, then they have skin in the game. They are much less likely to default. The appraisal is just a spot price, but the number serves to calculate the LTV which determines how much the borrower needs to put up and how much the bank should loan. I am one who believes that no loan should be 100% of appraised value. That is no SITG. And therefore, the borrower has much incentive to default if values drop or the property is more problematic that first believed.
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It's interesting how the different ratios evolve over time. Whether DTI, back end, front end, LTV - whatever the risk assessment ratio is, they weren't just pulled from the air. They are the results of LOTS of analysis into default drivers and indicators.
 
How do normal human beings buy a home? Do they look at two houses and say this one has a nice screen porch and an updated kitchen so I’ll offer 50 K less? Or do they pull out their laptop and start punching **** into spreadsheets? The answer to that question will give you the answer of how appraisals should be done.
 
glenn walker said:
Ya mean giving a 99 year old a 30 year Fannie loan may have a problem...lol
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In 1978 I made a 30 year mortgage to an 88 year old gentleman. He worked 13 hour days, 7 days a week mid-May to Mid-September captaining tourist ferries from Mackinaw City to Mackinac Island for the Arnold Line.
 
chad hampton said:
How do normal human beings buy a home? Do they look at two houses and say this one has a nice screen porch and an updated kitchen so I’ll offer 50 K less? Or do they pull out their laptop and start punching **** into spreadsheets? The answer to that question will give you the answer of how appraisals should be done.
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The majority of appraisals are refis....
 
ucbruin said:
The majority of appraisals are refis....
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What difference does that make? An appraiser who is doing his job looks at his local market through the eyes of an area buyer. And should apply the same principles and procedures that the typical buyer in the market would.

Whatever fancy app the latest tech bro in his extra small T-shirt has come up with really shouldn’t factor into the equation
 
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