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  • coloneldebu...: 
  • Comments (479)
  •  • Instablog (4)
  Is it faulty appraisals or a faulty process?
  
  Twice I've had my home appraised. Someone came to the house, walked around took notes, then just averaged the price of recent sales of similar homes in the neighborhood. There was no point in someone coming to the house.

  Jun 23 01:12 PM | Link | Reply
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  • jacflash: 
  • Comments (41)
  The "fault" is that the appraisers are finding that the market doesn't support the seller's asking price. The NAR would like a return to a few years ago, when the "local" (eg friendly) appraiser would magically appraise the property at whatever the realtor said it was worth.
  
  Shame on you, Lawrence Yun.

  Jun 23 01:19 PM | Link | Reply
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  • Eokram: 
  • Comments (9)
  Hey 'NAR' -
  
  Thanks for ruining America.
  
  Anyway, how about an anti-trust lawsuit against NAR to break up their asymmetric control of real estate info? Maybe instead of going after Google?

  Jun 23 01:25 PM | Link | Reply
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  • Mr. Cynical: 
  • Comments (41)
  Actually, despite Mr. Yun's bias to inflate housing, this is very much true (Disclosure: I'm a Realtor). New appraisal conditions signify the bank must pick the appraiser, not the Mortgage Broker. Lots of good deals are falling apart because the appraisers are considering only distressed deals that went under contract in Oct/Nov and closed in Jan/Feb, despite seasonal conditions in many markets: most buyers and highest prices come in the spring. An unwillingness to allow for any price appreciation on the part of appraisers is killing the tepid recovery we're seeing.
  
  Whether this is accidental or intentional is hard to say from the street; however, it's clear that one of the purposes of the largest banks during this whole situation has been to destroy mortgage brokers: see the new law being sniffed in Congress that calls for the mortgage originator to hold a portion of the note.

  Jun 23 01:35 PM | Link | Reply
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  • Mr. Cynical: 
  • Comments (41)
  By the way, Eokram, 2 points:
  
  1. there is not a single piece of RE info. that cannot be acquired by the public without the assistance of a Realtor and just a small amount of effort.
  2. Any fool can become a Realtor for $1000 (and often does). We are just like any other industry: roughly 80% good, 20% not so good. Choose carefully and you will do well. Most realtors are out to protect the public and their clients, so please don't generalize against all Realtors.

  Jun 23 01:44 PM | Link | Reply
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  • elliotz: 
  • Comments (104)
  Ahh apraisals is in my opinion one of the biggest reasons that noone talks about of why we are in this mess. Appraiseres were pushed and often compensated by developers, realtors and mortgage brokers for giving the value that suited these parties. I was in the buisness and saw that certain appraisers were always used by certain realtors and MB. MY guess at the time was because they were giving them the values they needed to make the deal work. Appraising is not a science as much as it is an art. You can def play around with the figures and add or subtract thousands of dollars from a home value. Another problem was who was entering these fields. Folks who were HS janitors without a HS education were becoming MB and realtors. Obviously these folks were looking for the quick buck and what type of advice would you except from them? In my opinion the real estate and mortgage industry needs to be overhauled to create some ethical standards for the participants within those industries.

  Jun 23 03:02 PM | Link | Reply
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  • Eokram: 
  • Comments (9)
  Well, you are right Mr. Cynical - I shouldn't be so dramatic or make generalizations. However, I'm afraid I still think something is systemically wrong with buying and selling houses. The problem is so many people have a % stake in each transaction that Realtors (or brokers) are trained to encourage the parties to close the deal. I know this because I'm taking the RE classes just for my own foolish edification. In the principles class here in California - they teach how to pressure a seller to take an offer (explain to them how buyer's remorse works - scare them into saying yes), without teaching how to fundamentally determine if it is the right thing to do. There is also a lot of emphasis on how to make people think they need to use a broker instead of represent themselves. This bias is based on the fact that realtors and brokers don't get paid unless a transaction occurs.
  
  If this approach was taken in the used car market you have shady agents telling people that there is only so much aluminum left in the world and they don't want to get priced out of a V8 forever. And prices would go up and up, not because people are being "protected" by their agents but because they are being manipulated by them.
  
  The system is broke - in my humble opinion.

  Jun 23 04:53 PM | Link | Reply
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  • prudentinve...: 
  • Comments (715)
  In a free market economy, the appraisal issue would be moot, since banks that lend on overpriced property would fail and disappear.
  
  In an economy like ours, in which profits are private but losses are public, banks which lend on overpriced properties become a burden on the tax paying public, as their losses are socialised.
  
  Thus, the notion of a "willing buyer" and "willing seller" determining the price becomes questionnable, since when an overpriced property changes hands, it is the public that is at risk, not just the gullible buyer or the fraudulent banker.

  Jul 01 10:28 AM | Link | Reply