Appraisals: Clear and Present Danger
July 9th, 2009 . by Jon Modene
Perrysburg House - Seen By Your Appraiser
The last time that I had a BIG problem with appraisals was many, many years ago with a condo project.
And I was trying to “step up” the value by using each new sale to get to a higher price – where the properties belonged – constrained by the paucity of comparable sales and valid appraisals. As each unit closed for just a little bit higher, we were able to move the value of the remaining condos up.
Well, things have changed.
And that is NOT what is happening now.
Values have been declining – rapidly. And now, finally, appraisers, bank CEO’s, the drones at the Fed, and our dear Federal Government have awakened from their long boom time slumber.
To demand that new rules and regulations be immediately enforced.
On loosey-goosey lenders?
On criminal mortgage brokers?
On zero interest rate issuing Fed Governors?
No.
On appraisers.
Somehow, New York Attorney General Andrew Cuomo has bludgeoned the ENTIRE REAL ESTATE FINANCE industry into following new rules.
And now the appraisal tsunami is approaching. The water has receded from shore and people are running onto the now dry sand to look at the fish flopping.
But disaster is approaching. New rules. New regulations. Properties will be “tagged” with non-appeal-able appraisals for 6 months. Appraisers will be selected at random.
“Call on line 5! Mr. Billy Hayseed from Podunk County gets to come to the big city to appraise a house for the first time and he needs directions to get to Perrysburg.” I kid you not.
Deals are just now starting to bust and burst.
This is not just my little old opinion. Read THIS.
“Complaints about lowballed appraisals — from builders, real estate agents, consumers and mortgage companies — have erupted since May 1, when government-backed Fannie Mae and Freddie Mac put their new appraisal rules into effect nationwide. Critics charge that the new system fosters the use of appraisers willing to work for low fees — sometimes 50 percent below previous standards — and who are willing to conduct home appraisals far outside their typical areas of activity”
The carnage is just beginning.
When I figure out what to do to minimize it . . . I will get back to you.
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