If you have been a seller or are selling in Ann Arbor Michigan, I am sure you have had or are nervous about an appraiser on your home.
If so...
Read this post by Larry Bettig, a good lender in the Chicago area, who is also experiencing this.
I know in my business being a Ann Arbor Real Estate Realtor, we have had to grit our teeth and bear this for 2 years. Like Larry, I can only think of one, that actually did admit they used the wrong comparables. This was when it was so blatant that they couldn't deny the wrong information.
Local banks are not using HVCC, use a local bank if you are refinancing.
Buyers work with local banks that have their own appraisers, they know our Ann Arbor Area Market.
If what I was about to tell you were isolated incidents, then I wouldn't write this. Unfortunately, it's business as usual!!!!
I can't tell you how frustrating HVCC is. I can go on and on with this issue. But I'm finally convinced that the top realtors that I work with are so much better than the appraisers that are in the cycle.
I really want to call out the appraisers by name because their work has turn into such schlock since the invent of HVCC. But, alas discretion prevails. A couple of points, a couple of examples and a couple of thoughts.
HVCC has created a couple of major issues that affect appraisal quality;
HVCC STINKS (AND I'M BEING NICE HERE!)
The Welfare System
When creating HVCC, the undo influence from the lender to the appraiser has left the appraiser with little accountability. What's happened is that when an appraiser gets in the cycle for being on some bank rotation or some independent random selection, the appraiser is being fed consistently. They're being spoon fed and really, as a result, I've seen appraisal qualities decline as appraisal orders get pumped to the appraisers.
The Licensing Penalty
This one is so true. I have appraisers that are so afraid of making a mistep, that they're afraid to give a fair market value. Therefore, they undervalue the appraisal in order that they're not accused of "overinflating values." This keeps their license safe because while they feel they can justify the higher value, they don't want to grow eyes in the back of their heads defending themselves against their licensing authority.
NO B.S.....Give me Some Examples!!!!
So, I'm refinancing my #1 realtor. Bottom line is that she tells me that her house isn't anywhere she would like, but it's around X dollars. I say, OK, let's work off of those numbers. Now this realtor is in the top 10 in Illinois so it's not like she doesn't know what she's doing. She calls me after the appraiser goes out there and says, "Larry do you work with this guy a lot?" I say, "I see him in the rotation, why?". "Because this guy spent very little time in the house, was in a rush, and acted cocky and arrogant." She said that she feels like she's gonna get hosed with this guy. Needless to say, the appraisal comes back and Wha-----La! Appraisal is even lower than what she predicted. So what's the beef? She provides better comps, more details for rebuttal and the appraiser says "NO." Bottom line is that the realtor goes into homes, meausures every aspect and detail about them for listings. The appraiser is in and out of a home sometimes in less than 5 minutes. In this case, the realtor was so much more qualified that the appraiser.
One More Example Please!!!
So, I have another appraisal that comes in for a borrower at $200,000. Last year when he refi'd it was $300,000. So??? Just one more example of a borrower not getting what he wants. He gives me another appraisal that was done at another mortgage company just prior to him applying with me (he left the other company b/c of poor service). That appraisal was for $250,000. When it comes time for a rebuttal, the appraiser looks at the other, mind you CURRENT APPRAISAL, and says "yeah, but I don't agree with anything the other appraiser says and I'm going to leave it at $200,000. THAT WAS IT!!!! I know this appraiser. He's afraid of every kind of liability in the industry. The BOTTOM LINE is that he would rather have a pissed off client, than worry about over appraising the property and getting his license in trouble. All of the comps were $250,000 and above. $210,000 would have worked perfectly. Wow!!!! I just don't get it!!! If you're gonna practice scared, then get out of the business.
The Wall Street Collapse was in part due to crooked appraisers overvaluing properties. I really believe that a lot of the economic crisis will be caused by Welfare appraisers and appraisers working in complete fear of reprisal.
It's a shame.....HVCC was sent to protect us. I'll tell you this Mr. Government Senator, Representative or Big Wig....when a buyer can't lower his payment b/c some appraiser is lazy or running scared, it's a real possibility that the borrower may, in fact, lose his house. Who pays for this? I do, you do......
blah, blah, blah!!!
Photos provided by I Stock Photo!!!!!
Larry Bettag - Regional Vice President, Midwest Region
Illinois FHA Specialist
630-417-7172
An Illinois Residential Mortgage Licensee
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Thanks Missy for sharing this post. I'm been following the impact of HVCC on the market. I also see that you are using the bar code. I'm trying to decide whether I should.
Nice blog Missy. YOu do a wonderful blog always. What is the bar code thingee?
Missy,
A great choice for a re-post!
I'm going to go direct and say nice things to Larry.
Bill
Missy
Thanks for sharing the re-post, HVCC is flat out not work a little help from Chicago would help.
Good luck and success.
Lou Ludwig
I think appraisals are almost harder than inspections anymore...I have actually seen the lender I use be able to get drive by's...that's refreshing! FHA are still requiring the full appraisals though.
Cindy in Indy (sorry about the loss yesterday)
wow, this guy really knows his stuff, great post on his part and thanks for sharing it with the rest of us.
I agree :)
Hi Missy! The key here IS to use the local banks! Although Wells and BOA are considered local for us, they still use appraisers from all across the state--MOST of whom do not have a clue about the Charlotte market!
I wish I could say I couldn't relate to this, but that is not the case! I know, right! Like I encountered this appraiser-no one just like him...........
Missy appraisal is such an issue in this market. With the recent flurry of refinancing I think many dumped the big guys for their hometown banks.
Okay, so the debacle of the day was:
Wells Fargo buyer, Chase short seller. Got the short sale approved in under a month. They gave us a gracious 45-day Close time with no hassles. WF and Chase approved the HUD-1 far in advance and we were ready to Close on Friday. No docs on Friday--WF said that they needed an employment doc, last minute, and didn't get it until 4:00 and could not send the pkg to the attorney until Monday. Got everything signed on Monday (2nd flight to CLT for the buyer who is not quite ready to move so, he's just flying in to sign docs).
TODAY, the day after Closing, the bank notifies us that the appraiser had inadvertently checked that there was no power, gas or water in the home. There was but, now there isn't because the buyer hadn't transferred the utilities and my seller terminated all of them yesterday. WF won't fund the loan until the appraiser goes BACK to the home and confirms that there is power, water and gas. No problem but, the gas company refuses to add this to their emergency list and won't be able to have it back on until Thursday and the appraiser can't get back out until Friday. So a ONE week delay for NOTHING! And, of course, they're not considering that we have to get the seller's bank negotiator to agree to the extension AND re-sign ALL of the documents once again! Another appraiser debacle, another dissatisfied customer and several involved parties who will NEVER use WF again.
Calgon...