Appraisers' Free Forum

I had lunch with a friend last week who's a loan officer (I know...I know...that's illegal on the other forum).

He told me he had an appraisal "shredded" the other day for a loan with a 47% LTV!!! The appraiser has more than 2 decades experience.

He also said the appraiser told him, "appraiser's are at each others throats."

I was wondering if any of you are experiencing similar happenings? Are the alligators turning on each other as the pools dry up?

I cannot imagine the situation has worsened over the last five years. I didn't think it could get any worse.

Personally . . . no. But there are a few in my area. I am willing to bet that many appraisers in my area have never experienced the current market that we are dealing with. We just had the mortgage division of a large lender got sold a bill of goods and is going with an AMC. Their fee schedule is significally lower than my fee schedule and I made the decision we will have to go our separate ways. While I worked hard at developing a relationship with them I only performed mayde a dozen appraisals per year for them so it's not a huge loss. I know several fellas who did receive quite a bit of work from them and they are now smarting. They say they will refuse to work for the reduced fee but we will see. I told them that the newer appraisers who have been spun off by the sweatshops will gladly do the work.

I understand the thought process coming from the loan officer but I would imagine the L/V really should not matter. If the report is a P.O.S. then the report is a P.O.S.

Shredded?

You mean he had a report reviewed and the review only came back with a lower EMV or did every little check box get a "no" plus a lower EMV? Either way, I don't know if that means "appraisers are at each others throats". I "shred" lots of reports by low license number appraisers. Lots don't get shreaded too. Meanwhile, I remain a calm, happy fellow nowhere near anybody's throat. The appraiser's comments sound to me like a cop out. If the review was bullshit, he probably would have said that instead. I know there are plenty of bullshit reviews out there too.

Most of what I review gets torn apart. It is the nature of my business (they don't come to me unless they are questionable to say the least). It is never ever done with malice and I always feel a huge responsibility to be fair in the review. I agree with Skibs that if the review itself wasn't trashed by the LO, that perhaps the appraisal actually deserved it. Personally I always try to point out the good as well as the bad.

That said, I do believe appraisers are trash talking each other way more than they used to. But I have seen an increase in this back biting since at least 1995 when we started getting a lot of out of area appraisers treading into a traditionally more closed area (at least used to be mostly locals doing the work before then). There has been a lot of anger associated with people coming in from out of the area, undercutting in price, and then doing a sloppy inept job. Also, now that it is slow, appraisers have a lot of time on their hands and are getting worked up about things.

It sounds like you are saying that the loan officer had the appraisal reviewed and it got "shredded," Mako. It also sounds like the LO was surprised by that. It also sounds like the LO believes, incorrectly, that LTV has something to do with appraisal standards. And. it sounds like the LO believes that someone who has been in business a long time is necessarily a good appraiser... also fallacious.

Are appraisers at each others throats? If they are, I have not seen any evidence of it here locally. In fact, it seems to me that, in recent months, appraisers are more willing to help each other out than had been the case in the past. There have always been some bad appraisers and the rest of us have always bad-mouthed them when speaking among ourselves. That has not changed.

Looks like I should clarify a few things.

I know the appraiser & his reputation. He's always been competent & ethical to the best of my knowledge, and must have performed 25,000-30,000 reports at this stage of his career (small fee shop w/a handful of long term associates).

Based on my own exprerience (and shared experience of colleagues from my region) I find TOO MANY appraisers in this area to be HIGHLY competitive - hinging on the verge of ruthless.

I've experienced more absurd reviews myself than I can recount here. However[;-)], on no less than 3 occasions I've had reviews agree with my estimate of value, but give me such poor marks on my methodology that I was required to respond (petty). I've had a review appraiser (from a large O.O.B. bank) say I must have arrived at my opinion of value via "sleeping with the selling agent" (I forgot to unplug the iron in my haste to get to my attorney's office). I've had a former employer give me the 2nd worse rating possible--under the old FHA standard--just to have the rating raised to the 2nd best rating by FHA themselves...TWICE! (scale 1-5).

I could write chapters on the callousness of SOME of this region's appraisers.

I guess I was wondering if this was/is the case in other states as well. I envy those of you who haven't had the pleasure of experiencing this type of 'professional' bloodletting.

And I must say, I understand my mortgage broker/friend's frustration.

The trouble is we find questionable items in almost every report we review. Just yesterday I reviewed a report with a 1,200 SF Workshop that was valued at $24,000 to build in the cost approach and adjusted $24,000 across the board in the sales comparison. Typically, in this market you might get 50% contributory value for this type improvement and sales supported this assumption. $12,000 is alot in this market.

That is more than just a questionable item, IMHO... unless your market is very different from mine.

Daffy wrote:The trouble is we find questionable items in almost every report we review.

Not knowing your market...I wonder if this isn't a consequence of "The Race To The Bottom?"

Clients want more for less...they're getting the less.

On the issue of reviews, I've learned that, if I get a report to review sent to me, then it's probably pretty obvious that it has some seriously deficient issue to begin with. I've had two out of dozens where the reports were well written, explained and logical, the UW simply didn't have a clue due to the report being on an oddball property to begin with.
Just finished one a month ago where the original appraiser was obviously hitting a number. Completely ignored that one of the comps basement had been finished and converted to living area, and the thing was rented as a duplex, and has been for years. Yeah, even two separate mail boxes.
Reviews don't pay well for the amount of work, but they are challenging, and I like doing them. Always looking for those assignments just because it is about the only true pressure free work one can get in the current environment. (Hey, CL!! Shoot me an email!)

benluby wrote:On the issue of reviews, I've learned that, if I get a report to review sent to me, then it's probably pretty obvious that it has some seriously deficient issue to begin with. I've had two out of dozens where the reports were well written, explained and logical, the UW simply didn't have a clue due to the report being on an oddball property to begin with.
Just finished one a month ago where the original appraiser was obviously hitting a number. Completely ignored that one of the comps basement had been finished and converted to living area, and the thing was rented as a duplex, and has been for years. Yeah, even two separate mail boxes.
Reviews don't pay well for the amount of work, but they are challenging, and I like doing them. Always looking for those assignments just because it is about the only true pressure free work one can get in the current environment. (Hey, CL!! Shoot me an email!)

Would you believe I use to get $400-$600 for reviews back in the day?

You made a point; "if you get a report to review...then it's probably pretty obvious that it has some seriously deficient issue to begin with."

Two topics here;

#1. It USE TO BE that a certain percentage of a lender's appraisals were reviewed - regardless of "obvious serious deficiencies."

#2. If I'm going to review a report, disagree with it, and arrive at my own (different) opinion...that's a hell of a lot of work. Requires me to review - THEN go into the field & basically do what amounts to a whole new appraisal.

I quit doing them when my sweatshop trained competition started offering their services for $150 & rubber stamping the damn things without ever leaving their office (Where the hell have the regulators been the past 15 years anyway?).

I quit appraising altogether when the client quit asking my fee & started telling me what they'd pay (must be nice).

Hopefully this economic disaster will eliminate a lot of appraisers...maybe then we'll be able to run a business. As it stands appraisers are nothing more than employees of AMC's - minus employee bennies - plus business expenses.

STUPID.

Don't remind me, Mako. Skippy is running me and others OUT of business because we try to do it the right way. I do reviews backwards, according to one appraiser I've known for a while. I get the address, get the effective date, then I look at the photo's and the information on the subject page one.
Then I pull my comps and build that portion of the report, as if I am doing it from the ground up, as of the effective date.
After I finish, then I go through the other report. I have changed a comp before because the original appraiser had used a better one. Not often, but it is possible.
Of course, Skippy pulls his comps and the data out of some deep dark recesses that only a proctologist can love.

John "Corky" wrote:I am willing to bet that many appraisers in my area have never experienced the current market that we are dealing with.

I wanted to consider and cogitate on this point for a moment. It is slightly off topic, because it is not along the same line of thought that I believe John was having when he posted it. But, IMHO, there is no appraiser anywhere who has experienced the current market that we are dealing with. I know that I certainly have not, and I had at least some experience with the super-high interest rates in the 1980's.

This market condition is truly unique to the United States. However, Japan did experience something similar... and our advice to them was basically not to do what we are doing right now.

See my comment here:

how-did-we-let-this-happen-t4135.html?hilit=Japan#p32847

You would be correct Steve. But notice I said "many" and I did not refer to myself. I only got started full time in 1988.

What I was attempting to do was to give my answer/opinion to Mako's two questions (next to last sentence of original post) and based on the statement that "appraisers are at each other's throats". Because of the this statement I figured that the report of his appraiser friend with decades of experience was "shredded" by another appraiser. So . . . I answered no that I have not been "shredded" by another appraiser and that yes there are appraisers are turning into alligators. Some say there are complaints being made over mickey-mouse mistakes on reports (with the notion of killing the competition) and it is well-known that some appraisers are panicking over lack of work and performing appraisals for significantly-reduced fees (and killing the competition).

John "Corky" wrote:You would be correct Steve. But notice I said "many" and I did not refer to myself. I only got started full time in 1988.

What I was attempting to do was to give my answer/opinion to Mako's two questions (next to last sentence of original post) and based on the statement that "appraisers are at each other's throats". Because of the this statement I figured that the report of his appraiser friend with decades of experience was "shredded" by another appraiser. So . . . I answered no that I have not been "shredded" by another appraiser and that yes there are appraisers are turning into alligators. Some say there are complaints being made over mickey-mouse mistakes on reports (with the notion of killing the competition) and it is well-known that some appraisers are panicking over lack of work and performing appraisals for significantly-reduced fees (and killing the competition).

Great points John.

For whatever reason; Appraisers in my region are the biggest collection of snakes I've ever encountered (and that's saying something). I could bore you for hours with stories of childish behavior I've had visited upon me, and seen done to and by others.

Speaking with a software vendor recently...a fella said, he's "hearing the same thing - backstabbing is on the rise as the economy worsens & orders diminish and clients disappear."

If it's true, and this kind of behavior is increasing...I don't see how anyone could get any work done. Taking time to address petty reviews, writting needless addenda, and talking with lawyers over a possible slander suit was such a waste of valuable time and money.