Ann Arbor sellers, yes we have had some tough times with appraisals. One of our recent homes the appraiser drove out from Grand Rapids.
Ridiculous
I sure hope these new appraisal rules help the Ann Arbor market.
Homes for Sale in Washtenaw County
Fannie Mae Tightens Up on Appraisals
Since the new appraisal rules went into effect last year there has been a noticeable decline in the quality of some of the work that has been turned out by appraisers. This has been largely due to the fact that local knowledge of the market has been put on the back burner and, in its place, has been the goal of getting the job done as cheaply as possible.
The net effect has been third party companies hiring appraisers from up to 100 miles away. This, of course, negates any chance of their being familiar with the neighborhood that the property is actually in.
Now it appears as though Fannie Mae has taken notice and has not liked the looks of some of the appraisals on mortgage loans sold to it by lenders. As a result, they have just issued some new, more stringent requirements.
The new language specifies that appraisers must have the "requisite knowledge" along with experience and the correct data to perform an appraisal. This, after much concern has been expressed by industry professionals as to exactly how appraisers are currently being selected. More detail on this via the Chicago Tribune.
Fannie has also said that appraisal reports must now include more photos, including interior shots of the kitchen, main living area, all baths and any examples of physical deterioration and or updating that have taken place in the home.
The tightening up of standards is definitely a step in the right direction. Appraisals should not be compromised in an attempt to get them done cheaply.
We all know that far too much is riding on the accuracy of the residential appraisal.
Copyright 2010 "Fannie Mae Tightens Up on Appraisals"
Claudette Millette, Broker, Owner, The Buyers' Counsel - (508) 881-6230
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Amen sista! I sure hope this helps. The appraisers from out of the area are the worst.
Missy - thanks for reblogging; on one of our recently "failed" appraisals, the appraiser was from AZ. Noything wrong with being from there, but that puts a big doubt on the appraisal, when the property was in California and all the pictures were from the MLS system - the comps were out of the neighborhood - we appealed - the appealed failed too! The final analysis, the owner occupant buyer ended up losing the home to a cash investor. So the new rukes are going to help buyers .... how?!
Missy - I hope the new rules help. Without local knowledge the appraisers don't know which neighborhoods to use for comps. I had one recently where all of the comps the appraiser used were from a nonwarrantable condo project.
Missy,
Please don't get to encouraged.
"The new language specifies that appraisers must have the "requisite knowledge" along with experience and the correct data to perform an appraisal. This, after much concern has been expressed by industry professionals as to exactly how appraisers are currently being selected."
It may sound good, but it doesn't say any thing! The Fed' mandated the states license appraisers about twenty years ago. They are all ready suppose to have "the "requisite knowledge" along with experience and the correct data to perform an appraisal."
It was the same people that switched how appraisers were selected, that replaced the rare crook with the common incompetent!
This is the second reform by the same shysters that caused the problems.
Bill
Hi Missy, I recalled this post. Along these lines I received an e-mail from a lender for a couple VA Buyers. The appraisal seemed to be taking an inordinate amount of time and when I inquired about it, this is what I received as a reply to my inquiry. We are living in changing times.
"The appraiser has 15 days to do it. You cannot
call or they can push it back to another 15 days from the time you call.
That is what VA told us. The date the case # was issued was the day it
was ordered."
Tell me about this one. I have heard more agents bitching about appraisers than home inspectors here lately. Nice to see someone else get the burning of venom...
I have been fortunate that I have never had an appraisal come in under the contract price. Knock on wood:)
Hopefully this will help!
Missy, in my experience things have been way worse with large national banks/lenders where they now have some uninvolved desk person in another part of the country order the appraisal. They tap into databases that are somehow geographically organized (rather than by any local "requisite" knowledge). In an area like ours, where price/value differences can be enormous from neighborhood to neighborhood, let alone zipcodes or larger areas, this can be devastating because they often have no clue on how to choose their comps.
Small, local lenders, however, seem to have maintained the quality of their appraisals, and there still seems to be some communication between lenders and appraisers--not sure how they handle the third-party thing but it works.
Missy, lets hope this does some good, the whole appraisal process has become a much bigger problem then the industry wants to admit, thanks for the heads up
Hope all is well with you Missy! I have been meeting the appraisers at the homes and handing them the comps that I used and talking/educating them about the area if they are not from our local area. Crazy!
Hi Missy, I do help this helps. Personally, I think they need to get rid of the whole 3rd party thing, it's just a scam for someone else to profit on someone's hard work. I have felt so bad for our local appraisers who have been in the business 20+ years. This has had a horrible effect on their livelihood and trust me, they were and are all tough appraisers. They were very honest and they were not the problem of the market taking a dump!!! Anyhow, that's just my little rant!!!
I would love for VA and FHA to require more out of their appraisers. We have more closings held up by our local VA appraiser than anything.
As if we weren't having ENOUGH difficulty with appraisals...I'm beginning to feel that this is a conspiracy!
Poor appraisals are the number one reason for our continued issues in the real estate industry. It's just unacceptable that appraisers with no real knowledge of an area come in and evaluate a home. And because they're running scared, they purposefully under-evaluate the home. People can't refinance and they can't sell.
Just had an appraisal done by a appraiser who lived 60 miles away in a completely different market. He asked me if there was anything I could tell him about the neighborhood or the home being appraised that could help him with the appraisal! I knew I was in trouble. The appraisal came in about $40,000 low and the comps he used were a mile out. There were three homes within a stone's throw he could have used. Go figure.