Welcome to the Blog

Welcome to the Appraisal Insight blog. The goal of this blog is to keep you updated on current appraisal issues and to find out how they affect you. I will be one of the wrtiers of this blog. My background is more commercial than residential. I also have a background in Appraisal Education and in the regulatory side. I am NAR’s representative to the Appraisal Foundation Board of Trustees. I am also the chairman of the Indiana Real Estate Appraiser LIcensure and Certification Board.

I will most likely deal more with the regulatory comments. The bigs ones that I see right now are the Fannie/Freddie Cuomo Agreement and the various issues with the ASC. There are also issues with the legilsation that just got signed into law.

How is this going to affect us all. Stay Tuned!

Joe Traynor

  1. Will Granger

    Inflation has always covered up the “sins” of all appraisers inflated appraisals. What fuels inflation? Could it be easy credit? Perhaps the federal government is the worst offender. Appraisers may eventually end up with all the power in the transaction by making the decision for all parties concerned. Is this a good thing?
    Maybe we should rethink what “Market Value” is. I have an old book that says it is the most probably price paid on the open market without undue influence. That seems strange based on the last ten years of runaway buying and borrowing.
    Interesting times! Enjoy your day.

  2. The proposed Cuoma (HVCC) agreement will not stop the problem. In my opinion, it will only get worse. Since the AMC’S are involved it is now more about greed and their taking the larger portion of the fee. Although not spoken the pressure to “satisfy” an AMC is greater for fear that you will be removed from the list to receive orders.
    Real experienced appraisers, I have 42 years of experience, will not deal with that pressure so only the less experienced will and subsequently will succomd to the silent pressure of the AMC’S.
    As usual the pendulum is swinging way to far the other way. Having a central place, that is not a part of the lending institution, to report any undue pressure on an appraiser woould be a good start. Since Fannie & Freddie are the biggest players in this fiasco let this central place be monitored & funded by them.
    No communication with loan officers and processors is not the proper way to conduct business with a client. What kind of business is this when you can’t discuss things with your client anyway. No other business is run that way, communication is the key. Integrity is a must and appraisers need to grow a spine and know when to say no or fire a client.

  3. NAR has an Appraisal Section, membership is reserved for Realtor appraisers, and offers the RAA and GAA designations. As Realtor members, this group is under-represented, but this will probably improve over time. Join up!

  4. Michelle Palys

    Previewing your Comment
    A few items come to mind with the ‘appraisal challenges’.
    First I want to say that there are some appraisers who have consistently done their job fairly in spite of influences placed upon them in the market. They don’t talk much because they don’t want to be swayed – they focus on the job at hand. They listen and calculate their home values & information fairly. I find their integrity refreshing.
    Can we fix these things??
    1.) Appraisers are not always familiar with the ‘comps’ they are using. They haven’t been in each home and don’t know if the price it sold for was high or low.
    2.) Appraisers are more effective when they work ‘market areas’they know – maybe within a radius of 25-30 miles -and not come from 70 miles away.
    I had an appraiser once who came from 50+ miles west, Keene, to do an appraisal in Goffstown. He used comps from a town 50+ miles east, Newmarket, 100 miles away from his base! His appraisal & reasoning of comps was unlike anything I’ve seen before. He didn’t know the market area.
    3.) What if the appraiser didn’t know the sale price?
    Once they know what the sale price is – they go for that number. Sure it will be uncomfortable for many, but it would be less biased.
    I find it odd that if an appraiser finds a home is worth $25K less than the sale price– that the appraiser will give the true figure to the lender. However if an appraiser finds a home is worth $25K more than asking price – he/she won’t state it in the appraisal and ‘will only go to the sale price and then stop’ – WHY??
    Wouldn’t the true appraised value be the real number & not the price the home is selling for??? The buyer is paying for the appraisal – the buyer should get the true number…no?
    One reason I was given was that there might be ‘equity’ in the home and the lender can’t use that equity –say there was instant 5% equity & the buyer only needed to put 15% down to get rid of PMI – the lender didn’t want the buyer to do that so they rarely over value property except by maybe $2-3K.
    4.) What if appraisals were done by licensed, certified appraisers -working in a specific market area, selected ‘by chance’ – (meaning the lender doesn’t pick the appraiser – but is assigned an appraiser in that market area – based on whose name comes up next in line)?
    A lot of the unscrupulous acts in the market came from appraisers – who don’t want to ‘upset’ the company who gave them the work,for fear of not getting more work.
    I’m not saying it’s happening with every one – there are many with integrity out there, but it happens often, and sometimes in a slow month, integrity gets blindsided by the need to pay bills.
    If there was a whole different business model for appraisers – like a central ‘company’ that handled all appraisal requests, and then sent out the appraisers to the jobs, based on the market area they served.
    It would level the playing field so that appraisers could do their job, be recertified each year, get consistent work and do the right thing.
    This could mean more realistic home, unbiased, home pricing in the market.
    If this market was realistically priced all along, the crash would not have been so severe. Even if agents put crazy numbers on homes and if buyers were willing to pay crazy numbers – appraisers could help keep things in check if they didn’t have to worry about future work depending on ‘how the appraisal came out’.
    There should not be a realtor influence, nor a lender influence, nor a price influence in an appraisal. It should just be a separate part of the process that stands on it’s own.
    Consider this, the market fell in the toilet because some people in these industries wanted to make a killing and some just needed to pay the bills.
    Money makes people do things they wouldn’t normally do. It’s kind of like a family with 12 kids – everyone has to fight for their fair share – some are better at it than others – some are more fair, some are less inclined to do the right thing. These industries – appraisal, lending, real estate, home inspection -are built like that -it’s dog eat dog, some care, some don’t.
    And a chain is only as strong as it’s weakest link. The unscrupulous ones are going to bring everybody down to their level – eventually. So how can we make the unscrupulous ones more fair? Let’s start there and build a solid foundation this time.

  5. Paul Stagner

    Appraisers are licensed, Real Estate Agents are licensed, Home Inspectors are licensed, and so on. Perhaps if the feds required each state license the Loan Officers as they do these other professions, there would be some consequences for the very individuals who are applying all this pressure to the appraisers in the first place. Many of these loan officers skip around from company to company and have no long-term interest in the viability of the loan package they put together, nor are they concerned about the appraiser’s liability at some future date.

  6. kevin litchke

    Hello, I am currently FHA approved and hold a regular residential appraisal license. The new legislation for the increase for FHA appraisers to be “certified” has passed? For current FHA appraisers that are not certified, does this mean they have to upgrade their license?

  7. Sandra Henriquez

    I primarily work short-sales. The Appraisers that are hired by the short-sale lender to determine value, have told me on numerous occassions that they were instructed not to use REO, probate or short-sale properties as comps. This doesn’t make any sense, particulary when these properties are driving the market.
    Is there a particular code or guideline that is being violated, and if so what is it?

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  9. Justin Morton

    I believe HUD is still working on determining how to apply the new rules. Whether the rules apply to only NEW FHA approved appraisers or to all appraisers. We will keep you informed as to their decision.