90 percent of appraisers felt pressure in 2006 to restate, adjust, or change the values of their appraisals in 2006 according to the National Appraisal Survey for 2007.
Think about that. Look at this chart and wonder it shows what had happened.
The mess we are in with housing is partially that the checks and balances that were the glue that held together the delicate balance between the real estate agents, mortgage brokers, appraisers, and lenders broke down during the rush of 2005–2006. There is no other reason.
- Lenders just wanted to lend the money and wanted volume.
- Mortgage brokers were told to get the deal done, and scared to death that if they couldn’t “make it work” the person would go down the street.
- Appraiser were in the same boat, if they could not make the numbers work, the mortgage brokers would stop using them.
After reading the comments in this post by appraisers, I think that the return to tougher analysis is good for everyone. The appraisers can find their equilibrium and write honest appraisals without pressure. Mortgage brokers can get people into loans all feel comfortable with even if it leaves some money on the table. And real estate agents can work with buyers that they know will have long term success in a home, not work to get them into the biggest home they can qualify for.
Stories about pressure placed on home valuation experts by mortgage brokers struggling to make loan quotas appear in real estate columns and blogs in every state.
“It’s gotten so complicated to get into this business,” said Colorado Springs commercial and rural real estate appraiser Cheri Santi. “There’s so much liability if you don’t follow the letter of the law, and at the same time, there are mortgage brokers challenging your ethics to make a deal work.”
Claudia Klein, a certified residential appraiser and president of the Colorado chapter of the Appraisal Institute agreed. “Most (residential appraisers) have been reluctant to talk about the subject because they fear retaliation from mortgage brokers and Realtors,” she said. via Colorado Springs Business Journal.
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Sometimes appraisers do need a push, Tom.
Not often… but from time to time.
They do have some flexibility, as their craft is a professional opinion of value… not science.
Ultimately, if a buyer is willing – and the number isn't too far-fetched – the appraiser will try to justify the sales price. After all, market value is what the market is willing to pay.
Everyone's a genius when the market goes up… and we all look for scapegoats when the market goes down.
A majority felt pressure even in 2003.
And where were the state "regulators" who oversee licensed appraisers?
What happened to The USAP?
It's the old story, " He who has the gold, makes the rules."
BIll McInerney
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