2 Responses to Appraisals: Still A Problem

1. Thomas Molinari says:

   May 5, 2011 at 8:05 am

   There are a many experienced, thorough appraisers available today who refuse to work for the fees being offered by appraisal management companies that are being contracted by the large banks and financial institutions to complete their appraisal assignments.

   Despite new requirements initiated in the Dodd-Frank Fin Regs bill requiring that appraisers be paid customary and reasonable fees, many, if not most, of the AMCs are offering appraisers anywhere from 30% to 60% of what is considered to be reasonable and/or customary appraisal fees. When experienced appraisers refuse to work under this fee structure, the appraisal work goes to less experienced people who are willing to work for less.

   Further, the appraiser selection process also gives preference to those who will guarantee the fastest turn times. This may be OK for cookie cutter appraisals but custom properties often require a deeper level of analysis and research that simply cannot be completed in 2 to 3 days. An experienced appraiser will not accept assignments with a short turn time when knowing that more detailed analysis is required. Unfortunately, the order processors for the large appraisal management firms are often located in another state with no direct knowledge of the local market area or the complexity level of an individual appraisal assignment. When the experienced appraiser knows that an assignment will take five to seven days, and informs the AMC of this fact they are passed by and the assignment is given to someone who is not going to take the time to do a thorough and complete analysis.

   Finally, Realtors need to know that lender and investor underwriting has been extremely restrictive over the last two years. They often require four closed sales, two of which are within 60 to 90 days of the appraisal date, and at least two pendings or active listings. In many instances good comps that meet these guidelines simply do not exist. Or, REO sales may be the only sales that meet the guidelines. A good experienced appraiser will analyze the market and take the time to explain, when warranted, why more dated sales are more comparable rather than just fill out the form as instructed. The key here is demanding that good, experienced appraisers with an appropriate skill set are selected to complete appraisals rather than appraisers who will work for the cheapest fee and guarantee a fast turn time.
2. Appraisals Still A Problem – NAR | Lexington Kentucky Real Estate News says:

   September 19, 2011 at 9:46 am

   [...] Appraisals: Still A Problem                 April 29, 2011  by Jed Smith, Managing Director, Quantitative Research · 1 Comment Filed under: Appraisals,  REALTORS® Confidence Index [...]