When The Party Is Over

[Pamela Crowley (Florida)]

:rainfro: Good one, Eric!

 

[eric cogswell]

Come-on I'm just being optimistic :blink: :blink:

 

[Terrel L. Shields]

When that day comes, some homeowners who are going to lose everything they got would file law suite against anyone they could for their own negligent and one of them could be an appraiser.

What would be the appraiser’s defense in this situation?

None

Today appraisers are most commonly sued over appraisals because the homeowner has went belly up or a problem with the house, undetectable during inspection (or not even present), causes major expense.

To prevent foreclosure, many homeowners file bankruptcy thinking this will save their house. When it does not, the only way to delay things are to choose a scapegoat...Realtor-who lied about the property, appraiser-who inflated the value, home inspector-who ignored the problems; bank-who "inticed" the borrower by using the fraudulent appraisal, home inspection, and in cahoots with the realtor.

The fact that none of these things happens is no problem...the lawyer hopes to uncover some problem during discovery-the phase of the suit where your files are rifled...files unrelated to the appraisal, including every other appraisal you ever did for the bank being sued, the realtor being sued...etc. Like Dave Barry sez, "I'm not making this up." This is experience based.

Rule 11 sanctions do not apply until the plaintiff alledges something that cannot POSSIBLY be true. If I say you inflated the report, that could be true. Your report will not see the light of day before a judge for months to come. Meanwhile anything else remotely possible, will be added to an amended complaint.

most people will want to sue folks with deep pockets

$500,000 E & O is deep enough pockets for 99% of folks.

I disagree with your comment that in real estate markets "what goes up comes down."

I don't disagree with Moh at all. I personally have seen property crash big time. Some places are more susceptible than others. When inflation was running 10% back in the late 70's, merely a flat market was actually losing money on an annual basis. In Elk City, OK 1981, houses were selling for $70,000 a piece....in 1983 they were being auctioned off for $10,000 or less apiece. Today they have returned to $70K or so for the same houses.

In mid 70's I could have bought some lots near Summit Lake in Montezuma Co., CO for $30,000 for 15 ac. tracts. By 1980 with interest at 15%, I had a cousin offer to sell me his for $1,500/acre. Interest was eating him up. Now the lot is worth $100,000 or maybe more.

The long term trend is always up to keep up with inflation. Stock market, car prices, land prices, up. But that does not mean Real Estate will not fall below the historic trend line just as far as it bubbles above it.

Come-on I'm just being optimistic

We all are or we would run for the exits. I personally believe few appraisers will not be sued, whether they are skippies or very conservative, if the existing bubbles do not deflate slowly.

 

[Bryan Kubiak]

Good topic... I was thinking about this early today when I was driving some comps.

The market I work in can be best described as being 100% out of control. At least in my opinion why anyone would buy a house right now is down right crazy. We have been in a very low inventory situation for almost 15 months and right now I see no end in sight.

About 6 months ago we took an area off our list in the primary county we cover. The irrational behavior and unjustifiable increases made the risk of appraising that city not worth the fee. AKA Davis, CA. – AKA most liberal (no intent to offend anyone here) and sue happy people.

So earlier I was trying to think of a way I could make some comment about the pretty apparent irrational market in the marketing section. I obviously cannot predict the future but like others said above... It’s not about if, it’s about when.

I want to make some sort of comment about the irrational market or what appears at least in my opinion to be. The thing is I don't want to overstep my bounds as I am not an economist, just an observer. I also don't want to make a comment that may never come true.

Do any of you put comments if your marking section if your in an irrational market? Should we add something about it? We are just observing off past and present data. Maybe a “the market is at all time high levels and some economists believe it will level out” have some sources to back you up. The thing is, for every expert that says its gonna burst you can find another that says its not going to slow anytime soon.

 

[Rich Heyn]

Bryan,

In addition to your "irrational market" comments, consider placing a price-bubble disclaimer in your scope of work discussion.

 

[Paul Ness MAI]

IMHO, I don't think there will be a nation-wide bubble burst as some Chicken Little's fear, but there certainly may be pockets of depreciation (as I stated previously). Take a look at the past 30 years of the FreddieMac Home Price Index (rate of home appreciation). Although there were a few periods of depreciation in sporadic regions, the index has never gone negative on a national level.

 

[Austin]

Paul:
There is another element to this bubble that I didn't see until that Town Hall Program on real estate last night on CNBC. The bubble is being driven by non-cash non -traditional mortgage easy money credit lending. You can literally create your own terms. This is what is causing the bubble not bad appraising. If that practice alone were to stop we would see a huge price decline. The whole system does not to collapse to cause a big time national problem. Ten percent nationally from isolated pockets could bring the housing loan business to its knees. FNMA is already on the ropes.
Question for you Paul: Is there any regulations for mortgage companies? How can our regulators not see what is driving this problem. You can't cure this problem with appraisal regulation. I could buy the Empire State building if I can get it with no money down and create my own financing terms. That is the spark that will ignite the powder keg. The sky ain't going to fall, the ground is going to rise up into the sky this time.
In my mind two events taking place or that have taken place make Enron and Ken Lay look like a Sunday School picnic. This lack of mortgage regulations that has allowed this bubble to happen and the 1994 OCC directive that created evaluations in place of appraisals that literally destroyed the spirit and purpose of appraisal regulation and title XI effords in that regard. If Ken Lay goes to jail then the people responsible for these two events I just mentioned should go in front of the proverbial wall.

 

[Elliott]

Austin has given me a good idea....I recorded the
Town Hall meeting and I'll keep it on the recorder.
If I am ever sued I'll show it as an example of
how the realtor, lender, builder, and investor
types all said, "Bubble, what bubble? Things
are different this time....Real estate prices
have never gone down...Anyone can make a
$50,000 profit by flipping real estate if you buy
the right house and add value to it....I use to be
a computer programer and I quit my job to
spend full time investing in real estate."

All those experts should be good witnesses.

elliott

 

[Mike Garrett RAA]

Ya'll remember...."last one out of Seattle, turn out the lights". How about..."Colorado Springs, foreclosure capital of the United States"?

I bought a condo for $23,000 cash in 1989, lived in it for 13 years with no house payment, then sold it for nearly $80,000. My first house in Colorado Springs was purchased for $14,500 in 1963 and sold a couple of years ago for $165,000.

Sure there have been some down turns; however, the trend has always been up. Ya'll remember the great depression? Wasn't the end of the country. In 1964 I was working as a newscaster for a local radio station. The big news story was...."DOW breaks 1,000". Ya'll remember that...people said it could never be sustained. Just looked...DOW is at 10,523. The sky is not falling.

 

[george foster]

Originally posted by moh malekpour@Apr 7 2005, 01:28 PM
When the party is over, can a drunk in the party who drives drunk and causes accident sue the bartender and win?

Happens all the time here in MA. One restaurant owner just had his liscense suspended for 10 days, because a couple of 18 year old female with FAKE ID'S got caught when the mother who came to pick them up found one passed out in a snowbank.

Hold the parents and the kids with the fake ID's responsible? Not in this society.

I already posted a quote from what was ridiculed here as an OBSCURE SOURCE pertaining to what the attitude is becoming out on the street relative to an out control real estate market.

People in this country absolutely refuse to accept responsiblity for their own actions today. When they find themselves boxed in by financial calamity attendant to what is suppose to be the American Dream, they are gonna go looking for scapegoats. Politicians will have a field day. The great travesty is the good will suffer right along with the bad.

The 6 appraisal a day crowd better be runnin' scared. Right now I'm sending out letters to lawyers offering to become an "expert witness". 21 years in the biz just might have some sway with this group.

I'll be more than glad to expose the 24 hour turnaround, canned comment, sleazebag boiler room crowd for the frauds and incompentants that they are.