I used to be able to pick my appraiser at one time, but that is long since gone. The broker I am using now does a round-robin across 5 appraisers to keep a level playing field.
Previous posters have it right. We are getting to the point where a certified appraisal doesn’t have the power that it used to, let me give you an example:
Bought a 3BR SFH for $45k , did some moderate rehab for 6 months, and went to my broker for an 80% LTV cash out re-fi. Appraisal came back at $105k, great news. The next day my broker calls me & says that the appraisal just came back from their “internal review process” & that they were dropping the loan amount from $84k to 60k. Note that they didn’t lower the LTV percentage they just decided they didn’t want to lend that much even after their selected appraiser ran the numbers. It was pretty much “take it or leave it”.
I am wondering what I need to do to go about hooking up with an “aggressive appraiser”.
What do I mean by an aggressive appraiser?
Let’s say I have a 3 bedroom bungalow w/garage and basement. Fixed up nice. Very nice.
When the appraiser pulls his comps I need him to pick the TOP THREE in the area! I’m not saying compare the house with a brick home, or one on a double lot or anything.
It seems that appraisals are coming in weak right now. Michigan market sucks, yes, but why would someone pick middle-of-the-road comps instead of the high ones?
How do I find the guy that is aggressive but isn’t known for “inflating” appraisals?
Re: Aggressive Appraiser vs. Weak Appraiser - Posted by Kristine-CA
Posted by Kristine-CA on May 18, 2007 at 15:08:59:
Why would an appraiser pick middle of the road comps instead of the
high ones? Hmm, let me see. Maybe because he would like to
continue working as an appraiser? Maybe because the lender has
guidelines?
Can you put yourself in the appraiser and lender’s shoes for just one
minute? If you are the lender, you want to know what you’re loaning
on. Middle of the road comps are more likely to be accurate as to what
they are lending on. Declining markets are everywhere right now. Why
would the lender look at high comps?
Appraisers who only uses the high comps in the current lending
environment know that they risk being associated with loan fraud and
collusion, even if no such thing is going on.
IMO, using only high comps is inflating the appraisal. Kristine
It’s my understanding that the lender chooses the appraiser. If you work with a lender that lets you choose, that’s great. In my area, the lender chooses the appraiser. When he contacts me for access, I fax him the comps that I used to arrive at our price. He is usually appreciative of that effort.
The appraiser isn’t going to look for the lowest or highest comps. He looks for the most recent comps that will have the LEAST adjustments to be compared to the subject property. If he has two comps and one requires a $2000 adjustment to be compared to the subject and the other requires a $6000 adjustment, he will choose the comp with the $2000 adjustment. I hope this makes sense.
Lenders are in the business of getting paid on their loans. With the losses from the sub prime market affecting many non sub prime lenders because they were the financial backers of these risky loans, lenders are being much more cautious. Add this to the fact there are a number of once booming markets that are seeing significant drops in price, lenders also need to make sure you will not end up with the property being worth less than the mortgage balance.
Appraisers have to produce appraisals that conform to the expectations of the lenders or (1) the appraisal gets rejected, (2) the appraiser gets black listed as “unreliable” or “inaccurate” (this effectively puts the appraiser out of business).
Many of the formerly most active markets are showing price declines, not increases. The job of the appraiser is to take into account near term changes in the market. If its headed down, it is not reasonable to expect appraisals at the high end of the range.
It’s not the appraiser but the lender. Aggressive appraisal is useless if the lender will not accept it or scrutinize it the way they want it. Time have changed and since there are not many loans coming in to the lenders pipe line they have all the time scrutinize the files.
Used to be value is between buyers and sellers, now lenders dictate the deals specially the high LTV loans. Dont’ spend the money until you see it in your bank account.Hopefully things get better soon.