Are appraisers helping investors?

ARE APPRAISERS HELPING INVESTORS?

I know that I tend to beat up appraisers so let me preface this post by saying that I know some very fine and professional appraisers that don’t deserve my comments.

That being said, I need to relay a story that happens all too often.  An FHA buyer submitted and had accepted an offer on a beautiful one story home in Summerlin.   His offer was equal to the last sold model match, which sold only 2 months earlier.  When he received his appraisal, it came in $21,000 light of the contracted price of $180,000.  The last sold model match sold for $180,000.  The appraiser felt it necessary to reduce the most recent sold comparable by 5%/month to accommodate what he said was a declining market.  The prices in this sub-division haven’t fallen at all in more than 15 months.  So the buyer, being stuck with this appraisal has no choice but to withdraw his offer and try to find another home that will appraise.  In the meantime, an investor that wrote a cash offer that doesn’t require an appraisal, will end up getting the home for $172,000.  That will help justify the appraiser’s work and force our market to slide again.

When an appraiser doesn’t do his job correctly, it impacts so much more than one deal.  This real estate transaction, could have served to help stabilize our values and put an owner occupant in a home, instead it de-stabilizes our market and created another rental.

There are some that believe the banks loaning money have implemented procedures to insure that appraisals come in low.  The ironic part of that is that the banks own most of the homes on the market and they are serving to keep the prices down on the very product they are selling!  I myself, don’t believe they are doing that, but I do believe they should be helping all of us to insure that appraisers can be held accountable for bringing in low appraisals.

I know that there may be people that believe that I’m just another Realtor complaining about appraisals because it’s hurting my commissions.  I can assure you that my rant is about what’s fair to regular home buyers versus investors.  I actually help many investors buy homes and I believe in real estate investment as part of anyone’s financial portfolio, but I also still believe in the American Dream.  I know it’s been a nightmare the last several years, but if we are going to go back to good times, we need to have an environment that promotes home ownership.  I’m not in favor of “no money down” or going back to the days of loaning money to anyone that can fog a mirror.  I’m in favor of giving families an opportunity to own their own home, instead of renting it.