John Preston

A 21st Century Lend-Lease Plan

If housing stability and the feel-good result, leads to prudent stimulation of consumption, and this leads to positive jobs growth, isn't this and other programs which share similar objectives worthy of consideration and implementaion

Bad Appraisers or Flawed System?

Let me share some background.....

I have held, or hold, all of the licenses available in the housing industry...Real Estate, Mortgage Broker, and Appraisal....

Of the licenses, appraisal was by far the most demanding to get....real estate was the easiest...

The appraisal license is also the most easily lost...as the state appraisal boards are fairly aggressive on "bad" work....

I say this because I know appraisers who were "ok" who got nicked and dinged...had to do extra education and submit new work to the AZ state board to get off of the probation-like lists....the first step in the de-licensing process....And, I am aware of some who lost licenses....

Many appraisers are "bent over" by the market place....and they do write bad reports....

I was appraising in CA during the early to mid 90's...for a solid firm....all bank clients....Reports took 8-10 hours a piece to complete in total...minimum...while a report may contain on 6-9 comps (as ours did), the file may have contained 2-3 dozen properties that were considered....

It is not the number presented...it is the clarity in the communication to the reader...usually the lender....and the completeness of the research, anaylsis and conclusions that count.

Remember, the "number" you cite...the value... is what the lenders want to make the process easier...for years, the Appraisal Institute has lobbied for a "range of value"...which is what really results from the report....

Every appraisal report, included in every loan file, submitted to every lender, was subject to the lenders review....every time. Once the lender "accepted" the report....and the file....and closed the deal...whose problem was it. Perhaps bad lenders didn't care....

If lenders accept bad files from bad brokers....and bad appraisals from bad appraisers...????? You will get bad results....lenders (including the agencies) ultimately set the tone and tenor of the market place....and had the responsiblity for policing the process....

Bad work has no place in the industry...but bad work should be expected, guarded against and culled out....and it wasn't! The originate to distribut model was a parent-child relationship...the parents just did't care, at least not when it counted.

On Jul 03 10:55 AM Accuriz wrote:

> Again, nail being hit on the head.
>
> The current system reguires a minimum of three sales, three listings.
> This is amazing with the technology and databases available today.
>
>
> There is no reason why at least 25 sales can not be presented with
> a statistical coorelation presented. Not every house is the best
> house in the neighborhood.
>
> When the market is increasing ethical appraiser loose out, when it
> decline they also loose out because they are lumped in with the bad
> appraisers.
>
> In the end, those who survive tend to be the more legitmate, professional
> firms. But that is only my opinion.
>
> The realtors have to much influence on the process and laws. In an
> ideal world the appraisal would be conducted without influence, but
> that is an ideal world. We live in a different world.

Bad Appraisers or Flawed System?

This was written toungue-in-cheek...rig...


On Jul 02 04:24 PM Cold Reality wrote:

> This very informative article identifies a at least two egregious
> flaws in the way that appraisals are conducted and used.
>
> First, note that the article emphasizes that the appraiser is using
> real estate transaction data almost exclusively--never mind the attributes
> of the property itself, such as age, construction quality or condition.
> In my own experience, appraisers never set foot on the property or
> enter the buildings, so their "appraisal" of the actual value of
> the house based on its merits (or demerits) is thereby inherently
> flawed.
>
> Second, in the event of a situation (and in fact precisely this situation
> exists in my own neighborhood right now) where the last three sales
> all occurred in the last three years, and all closed at the peak
> of the price hysteria in early 2006, "appraisals" predicated upon
> these artificially elevated values will thereby skew current appraisals.
>
>
> This is precisely why the real estate agents want to continue to
> manipulate and control appraisals. If they can only get one or two
> ridiculously high-priced sales closed in any defined area, then it
> makes it all the easier to not only bamboozle new sellers and buyers,
> but to get the deals closed at the inflated prices.
>
> Now you might argue that in a free market, there would be no "ridiculously
> high priced sales" but that makes my point that residential real
> estate is not a free market, because of these pernicious influences
> that artificially manipulate key components of nearly every transaction
> in every particular.
>
> The real property sale, embodied by the principals to the transaction,
> is the perfect host to the real estate agent parasite as it feeds
> on encouraging and facilitating the setting of a high asking price
> by a manipulable seller who is pre-conditioned to believe that he
> or she is entitled to and should get an unrealistically high price.
>
>
> The property is then touted to a susceptible buyer who wants the
> property and is willing to buy into the real estate agent's litany
> of claptrap about its very high value. The buyer, under the strict
> coaching of the real estate agent, makes an offer that meets with
> the real estate agent's approval, and the real estate agent submits
> the offer to the seller, who is encouraged to accept it. Poof! There
> is a deal, if only it can get financed!
>
> This is where the ability to manipulate the real estate appraiser,
> even if through the lender, is so essential to a successfully hyper-inflated
> real estate transaction. In fact, the faulty appraisal becomes the
> sine qua non of progressively inflated real estate transactions.
> Without this key mechanism of control, the free market would prevail,
> and there would not be--never would be--real estate booms and busts
> like what we are experiencing today.
>