In a perfect world….  The sellers will just relist and make it someone elses problem.  Buyer will have to hit the road again.  Buyers agent wants that commission too.  The only rule for a buyer navigating the real property purchasing process is; Caveat Emptor.  If the buyer had effective negotiation position and representation, the appraiser would have never been in that position in the first place. Real estate is financial warfare, and especially in volatile or quickly moving markets, there are winners and there are losers.  The deal with many appraisal rules and structures regarding well informed buyers is just a necessary label.  The real deal for many buyers is a roller coaster, and they just wait for the ride to stop.

The train wreck is rooted in simple concepts;  If every loan was no more than 80% LTV, buyers would be better positioned with more skin in the game to make more critical purchase decisions.  And they’d have cash leeway to negotiate if necessary. You sort of lose your negotiating power when your first step is based on a 98% LTV position, and every commission based person in the mix knows it. We are normally appraising in a credit debt based market. Many real estate participators of the day cannot perform cash equivalent analysis based on exact term, nor could they analyze a silver based real property transaction. The three forms of value, and the 3 million billion trillion forms of price…. In our grandparents time, there were no less than 3 forms of greenback, and silver contracts were only then finally being busted out by the fiat based system. My grandpops bought his first home on a 10 year note, because the 5 was just a little too aggressive of payments. There is talk out there of 60’s coming soon. I’m refusing to appraise any term over 30. They all ask about my coverage area, tat and fee, but I wish they’d ask about my coverage terms. I’d only appraise 15’s or less if that option existed.

Just my opinion…but if you are feeding the AMCs you are the problem!

I’ll continue to question the allowability of these services. Like any industry, the question of personal ethic has profound and lasting connotations regarding the future path the appraiser may take. Some go the hard way, others go the easy way, some are strictly in it for cash and gamble risk vs volume. It’s long since overdue that lenders be asked the specific question of what type of appraiser they really want to work with. Then again, as long as they don’t take risk, minimum standards will continue to take first place. I’d like to imagine that FNMA CU will eventually expel the appraisers whom use these services. How can you say there has been quality review applied to what is otherwise a completely generic automatic report with minimum appraiser influence? XML review gained tremendous speed in terms of efficiency and quota of reviews with these systems. But at what other expense? How far have the unintended consequences of this business modeling gone? As a group, would we all rather outsource everything possible, or train quality staff and have an internal support network? I’ll remain mystified why appraisers would even consider these services.

(tried to link an ieimpact solicitation pic. aka typing services.)

My response is that Gee….I do not want your client to pay for an appraisal that has come in lower than what they need to refinance. Please… just disregard my invoice and order another appraisal! (what they do NOT know is that it will be a very cold day in HELL before I ever accept another assignment from that bank). This particular bank already has a bitch of a time finding any appraiser who will work with them. Adios! to those stupid SOB’s!…Hopefully my competitors will grab this wonderful client! LOL

Most of the guys I knew with integrity clocked out of the residential side of the “profession” years ago. They now do commercial work, brokerage, home inspection, remodeling, construction, banking, etc. because they refused to compromise their ethics.

Good points. What I’m seeing is the appraisal itself is being in essence eliminated by way of promising to pay the contract price regardless of the independent value (the appraised value). This requires cash on hand but people have no problem legally agreeing to it by signing their name on the contract. I had one the other day, although a lower percentage of the total price, where the market value was nearly $50,000 less than the purchase contract. The issue becomes the appearance of a true market value sale (MLS, arms length transaction, bank loan, etc.), while in reality the sales price was significantly inflated over market value. Agents often like to put sassy comments in their MLS listings (low appraisal, appraiser issues, etc.) when market value is below the contract price, but in all my dealings I have NEVER seen an agent explain it when the opposite is true.

My go to line is this;  It is not the lenders responsibility to provide additional lending credit over regular market value, so a particular buyer can best the other buyer competition. The lender only loans current to the day market value, and if buyers want to beat the regular competition whom is also relying on lending extension, they need to bring cash contribution to the table. In Colorado, competition is high. In many instances, the market valuation ceiling and high sale points keep climbing, due to cash contribution clauses in contract. “Buyer agrees to pay X cash amount over appraised value, to the contract price or in the maximum amount of X”. Something like that. Cash contribution is the legitimate mechanism by which market pricing increases. It is not appropriate for lending credit alone to drive increasing market valuations and pricing. When buyers starting watching offer after offer fall flat, and markets continue to rise, they draw the simple line from A to C, A being yesterdays price, B being today’s price, and C being the expected market price only a half year or less from now, and the buyer offers C, not A, Not B, they offer C. But the appraiser cannot credit them a value in the future, they can only credit them a value now.  o if they fail to bring cash the appraiser ‘kills the deal’, because the appraiser says; I’m instructing the lender that fair market value as of today is B. Buyers end up being in a position where if they would have just offered high yesterday, they’d be paying less than today. But irregardless of that, many buyers fail to secure purchase opportunities, because they are competing on credit alone, no cash contribution to best the competition of note. Additional downpayment does not count as offer strength to the seller dealing with multiple competing offers. To the seller, walking cash is walking cash, irregardless of the buyers position. Buyer needs to borrow more, and provide contingency to go cash over market value, if they want to beat the competition in a competitive purchasing environment. 

Don’t get me started on pricing via predictive movement of pricing in the near future, and trying to explain caps and bracketing to aggressive agents.

Although it was expressed to the BBB that the borrower is not my customer, they were not the intended user, they did not pay me directly, dictate what product they needed, give me a due date, provide me with a scope of work, nor could I give them a copy of the report, nor discuss at length in great detail the value componets of the appraisal, their top council said it didn’t matter as it was considered a “market place interaction”.

Our enemies are many.

I will be sending off an appraisal this morning (08/17/2016 – $370,000) where a $50,000 remodel has pushed the value out to the $480,000 range. The problem is the borrowers contractor I met did not like my general responses to his interrogation, and in fact called the loan officer to complain while I was still on site. He informed me he always calls appraisers after the report has been submitted so he can ask direct value related questions. Was he lying? Have other appraisers freely discussed value with him without directing him back to the borrower and lender? Stop it.

My point is, the contractor has sold other parties on the belief the property is worth $70,000 more than it really is. The owner, their agent, the loan officer, and the contractor have already moved forward with their next flip plans, but with my value, the next down payment will not be there. Its funny how all of these other parties can clear tens of thousands of dollars in these situations, but yet the appraiser has the power and makes a few hundred. I look forward to the avalanche of activity post submittal, and the 2nd meeting with the contractor (1004D).