The Sales Agents Derailed This Deal!
What is the ROV for? The answer is the listing agents pricing strategy and the buyers agents buying strategy. The lender will go through the appraisal with a fine tooth comb and microscope, while ignoring the fact the initial BPO and CMA which led to the listed price the contract was formed around, was totally inadequate and riddled with errors. Clearly off the page in relationship to existing market value indicators. I’ve seen numerous BPOs and CMAs. If they were appraisals, due to professional standards, I’d have to report half of them to the board.
The primary purpose of Appraisal Management Companies is to provide a control mechanism to pressure the appraiser since they have no control upstream of the valuation analysis process to effect price listings. Nor do they examine incompetent or high pressure sales agency. So the AMC pressures the appraiser, and advocates for sales based commissions instead, as a standard operational process. They have the power to override any appraiser who doesn’t comply, leading to unsuspecting buyers being matched with predatory loans and overpriced purchases.
The lender and the AMC could have applied that veto to the sales agents, using the appraisal as proof positive that the agents derailed this deal. They choose not to, and rather bow to pressure from the agents, which in turn results in pressure on the supposedly independent real estate appraiser. The appraisers hardly notice; AMC appraisers are clearly aware their job is to advocate for more closings, or risk being cut, like the majority of appraisers who don’t work for AMCs or do not get the disproportionate volume of assignments.
The entire game is rigged, the tables are tilted. It’s pointless to even order an appraisal under such a dishonest system. If the appraiser upsets even one person, they lose access to both the originating mortgage brokers and lenders workstream. Under the AMC model, appraisers who go against commission-based interests, will lose access to all current and future clients of the AMC. Sales agents understand this too, which is why they are no longer hesitant to file complaints against appraisers.
‘Appraisal modernization!’ Who’s still buying this?
Thanks for Posting!
Perhaps Helpful: While “confirming” The Sales Contract (documenting information for credible use) with the Seller’s Agent (SA) and even -maybe the Buyer’s Agent (BA), a Work File conversation can include: chat about: personal property, improvements, deferred items (never) , etc., did the Agency measure the property, etc., and also any (ding ding) “SALES” the “SA” may want to provide (that were used for ‘pricing’). GOAL: Necessary confirmations for the appraisal report BUT also Upfront Information on Agency Reasoning. Being open to receiving their “pricing information or sales” is Key. Gosh, in this Market, they may even say “I just listed it for what the seller wanted, cause with no inventory I know it will sell!” (but will it appraise within the lender’s criteria and After all, agents don’t have to answer to Appraiser’s Guidelines and Rules, right?)
In the Report, have a Report Section NAMED Accordingly and list those sale addresses and REPORT why they were not “considered as Best Sales” for use in the “Original Appraisal Report’s SCA Grid”. ** Even ask the “BA” if they would like to share any sales …In their best efforts representing the Buyer.
*Make sure it is easily findable in the Report ” PRIOR a REQUEST for an ROV”.
I realize this is Not a Cure-All; however, it does provide a huge Heads-Up. Maybe even an Unknown Sale.
Also this post is not intended to be a Brilliant NEW Idea.
We should always Be Scouts, now more than ever…ever!
Protect The Pubic is ever more difficult ! We are part of the Public. All others are ” in it For the Money. Modernization Protects WHO?
Thanks. Here is a fun appraisal reporting exercise; Detail the initial list price, then the final list price, then the actual sales price, of subject and all selected comps. Watch the numbers drop. Or as we observed in the covid years with increased ‘value acceptance waivers’, aka; no full service appraisal required; non stop price inflation which led to more non stop price inflation. The appraiser even when present was powerless to stop the domino effect, because value acceptance sales records were already on the books with the inflated figures.
The appraiser is among the final check and balance instruments in the origination chain. If agents do their job properly, it may appear the appraisal is not even necessary, because the appraisers job is rather simple; confirm the price number as valid pertaining to market value. When the essential check and balance function of full service human appraiser participation is absent; that’s when wildly over inflated sales happen, or alternatively when excessive liquidation discounts are assigned. Which in turn creates a domino effect, market bubbles which eventually pop.
Then again; What’s new? Years later in retrospect, I now consider the rising demins, which allowed all properties under $400k to not even require appraisal service, to be one of the initial predatory activities which eventually paved the way for modernization programs and excessive cost housing market we have now. The act of bypassing required appraisals on everything below a certain number basically meant entire populace segments on the low end were subjected to predatory lending practices first. As the program was so wildly successful, but the rising demins card was already played, a new way of bypassing checks and balances was necessary. Enter; Appraisal modernization programs and fictitious accusations of discriminatory appraisal practices.
The AI and their so called USPAP, or as I call the newest version uspoop is just that; fertilizer…it’s hilarious that no one in the property listing/selling/mortgage/lending process gets called out for inproprieties (spelled wrong) the way appraisers do, it’s been going on ever since 2008 and will continue until all of us either retire or give up out of frustration. But…make just ONE little typo or error and the State, Feds and AI are all over us…when borrowers ask why there is a different company than their lender collecting the fee and why that company is there I reply something like this; “it’s an appraisal management company, handling the appraisal process, liken it to when you need a plumber you call a plumbing management company (there are none) and they in turn try to find first of all the CHEAPEST plumber they can, then the FASTEST plumber, oh yes, the BEST plumber in the area is probably never reached because the CHEAPEST plumber takes the job first.” Their reply always is “that doesn’t make sense”, I say “that’s just how the government allowed things to progress since 2008”.
As I stated in past posts, I only do narrative reports. Referring to Baggins above, each of my comp. write ups include the initial list price, the final list price, days on the market including the listings history (all relisting as well), sales price to list price ratio.
Additionally I include the assessor’s land value estimate at the time of the sale. Also the assessor’s resulting land value percentage in relationship to the assessors total property value. The price per square foot of land size, or where appropriate the price per acre. This can assist in valuing the site especially when land sales are rare or non-existent. This also can assist with land size adjustments.
Assessment practices are identified by comparing the sales price to the assessed value at the year of the sale to see if properties are over or under assessed; and to determine if there are consistent trends of over or under assessing. Especially for income properties, the over-assessment likely negatively affects the NOI/value and actually may be counter productive to the municipality. Good info for tax appeals.
I am amazed that Realtors rarely report the sales price adjusted for seller’s concessions. Nor do most assessor’s in our area consider this.
Somewhat off topic, but worth pointing out.