Comment Re:How hard is it to have something like this in U (Score 1) 491
Have you ever had an appraisal done?
Better. I was an appraiser in the early to mid 1990's.
proceeded to tell the appraiser the value my house needed to be
There are a lot of rubber-stamp appraisers out there. OTOH, the appraiser needs to know the loan-to-value ratio. If the value looks like it is coming in low, the appraiser tries to give the loan originator a heads-up. Also, appraisal is as much art as it is science. There is a certain legitimate amount of discretion (about 5%) in writing the appraisal and arriving at a value, especially in an area where properties are not homogeneous
this is the kind of thing that got us into this foreclosure crisis
Meh. I wouldn't be so quick to blame the appraisers, even the bad ones. The appraiser's job is to determine what a given property would sell for given the current and recent market, which means that he/she is trying to predict the future based on the past. Anyone who has read a prospectus should recognize the phrase "past performance is no guarantee of future returns", which is apropos here as well. Done properly, even the best appraisal is nothing more than a point-in-time snapshot of a constantly moving target. If the market has soared, the appraiser has to appraise accordingly.
Prices rise because that's what people are willing to spend, which is what appraisers are trying to estimate. I remember seeing a property that sold for $390k that was only worth $370k by my appraisal and I know my number was dead on, based on the recent (at the time) local market. The low appraisal didn't kill the sale because the borrower was putting a lot of money down. Guess what? That sale helped benchmark the next appraisal values in that neighborhood.
I'm not defending the poor practices of those appraisers who take shortcuts or just try to hit a number, but it's unfair to blame the barometer for the storm. I have a whole big rant about how artificially low interest rates created artificially high real estate prices by boosting buying power and shifting the demand curve, but don't really feel like digging it out.
If you want to find a good appraiser, look for one that does work for relocation companies. They actually get graded on accuracy by the companies they do work for. They aren't given a number to start with. If they come in to high, the relocation company loses money when it goes to sell the property. If they come in to low, the relocation company loses the deal, because the homeowner isn't willing to sell.