Posted by Jonathan J. Miller -Monday, January 23, 2012, 12:47 PM
Last week’s post on the “hole in the house” was picked up by Business Insider and the crossfire of coherent comments and righteous indignation ensued. I largely stayed out of it until today.
Some observations and feedback as a result of my post were fascinating:
- One appraiser in Michigan who commented on the Business Insider repost tweeted me to say he was blacklisted by Rels, the firm cited in my original post.
- I was entertained by the diatribe of a couple of people who rambled about things that weren’t in or inferred by the post.
- One commenter “Ken” knew of the property so well I can only assume by his arrogance he was the appraiser or review appraiser on the assignment in question and was saving his bacon by reframing the conversation.
- It was interesting to see people respond to the post as if they were reviewing this as some sort of appraisal when I was simply pointing out that an AMC appraiser used a “comp” that was an outlier from other data available, that was condemned, had a notice visible from the street and would have at the minimum, raised a flag to the condition of the interior of the property.
- The defensiveness of some of the comments inferred that the homeowner was unrealistic and the market had declined. Doh!
An appraiser friend of mine forwarded me this response from an AMC who saw the post to get a chuckle:
A couple of comments:
*There is no mention of what the subject collateral is, it’s condition, or if there is any improvement – or the relevance of this comp – in other words, what was the Scope of Work? An appraiser is supposed to select comps that are similar, proximate and timely.
*The article states that the borrower did get the loan – which at least on the surface might indicate that the comp was sufficient for the lender’s needs.
*There is no mention of what kind of appraisal product was ordered – drive-by or other.
*The author suggests that the siding had not been removed – does that mean the hole is newer than the appraisal?
*and sometimes there are lousy appraisers
[redacted]: As candidly as possible, I receive an anecdote similar to this periodically and in almost all cases, after full review, it is an optics issue – the appraiser performed the work properly based on client instructions and the Scope of Work. Not always – but almost always.
Two final points:
*There continue to be complaints about quality but it nearly always ties back to someone not getting the value assigned that was hoped for. The market continues to slide and by nearly all estimates will continue to do so in 2012. The messenger continues to be shot and will be for another 1-2 years….
*Did you know that Freddie and Fannie have both stated publicly that appraisals that go through AMCs statistically are “better” than not going through AMCs?
Other than appraisers causing you misery, I hope all else is well in your world.
Thank you for checking in.
My favorite point made here was the comment:
As candidly as possible, I receive an anecdote similar to this periodically and in almost all cases, after full review, it is an optics issue – the appraiser performed the work properly based on client instructions and the Scope of Work. Not always – but almost always.
In other words, depending on the scope of the assignment, the appraisal may be meaningless and this type of quality would be reasonable. Throw comps denoted as “condemned” onto the report because it is a recent sale even though as a drive-by, the sale would be suspect.
Why go through the appraisal exercise if you can’t rely on it? Those entrenched in the AMC world, in terms of their business practices or quality say its just as good as non-AMC work. Given the decimated ranks of the good appraisers, it’s become a self fulfilling prophecy.