BluefoxToday blog : Real estate appraisers continue to feel the heat

Real estate appraisers continue to feel the heat

Very little appears to have changed with appraisers over the last several months when it comes to the value they establish on a home that's up for sale or refinance. Many of them feel pressured by someone involved in the transaction to come up with the right price, or hit the number, usually meaning it should be inflated to satisfy their needs, says the Appraisal Institute. It could be a mortgage originator doing it, a real estate agent or even the nice lady whose flower beds are immaculate. Or another source. Anyone who could benefit from a higher valuation.

Inflated appraisals are one reason to the current housing and mortgage turmoil currently sweeping the land. As a result of that discovery, Washington recently established new regulations to combat bribes, interference and intimidation in the business, but obviously its impact so far has been less than desired. The pressure is still there, although, as some say, it has assumed a softer tone.

It's a tough environment to work in now anyway as home prices have dropped quite a bit in this city, like Las Vegas, and maybe a little less in that town, like Mesquite, Nevada. Whether values are stabilizing or not is hard to figure out in this volatile landscape. There can even be clear differences between adjoining neighborhoods within a city when recent comps are looked at. It's hard on the appraisers.

Everybody involved in a purchase would like the appraisal to arrive at the contract price and then there would be a relatively quick close. But today lenders are often challenging the figures they see and refuse to approve loans. They were burned badly when the famous bubble burst and are now extra cautious. So, frequently, hitting the number doesn't work. Sellers in these cases, of course, fume. Buyers, on the other hand, probably wouldn't mind grabbing homes at discounted pricing like this. And mortgage providers and real estate agents would succumb into rolling their eyes sensing promising deals about to fall through.   




Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst - syndicated mortgage, housing and property management blog
My cell: 702-499-1006

Comment balloon 16 commentsEsko Kiuru • August 23 2008 11:07PM


Esko, been there done that and it's not nice when it happens. I've lost one and the sellers came down on the other to the appraisal price, so I'm 50/50. I try to tell the buyer they can come up to the asking price with more cash and they walked away, even though I didn't think the appraisal was right.

He left out many upgrades to the new construction and even used a comp that was 14 years old. Missed it by $6k and I know we all have to change the way we are doing business. It's just hard to have a qualified buyer walk away.

Posted by Bob Cosby (One Source Realty) about 10 years ago

Esko I am seeing more and more review appraisals being done prior to loan approval. The lenders don't trust the appraisals. I am also seeing a lot of appraisers hitting the banned list.

Posted by Fred Chamberlin, Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant (Guild Mortgage Co - Oak Harbor WA) about 10 years ago

One of our good friends is struggling. He has been a appraiser for 11 years and now seems to be just barely making it. Its tough for them.

Posted by Chip Jefferson (Gibbs Realty and Auction Company) about 10 years ago

Appraisers have a tough job to do and we just plain need to educate our clients and allow them to do their job unscathed.

Posted by Renée Donohue, Las Vegas Real Estate Broker - (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) about 10 years ago

Too many appraisers in my area used to give the amount that the seller asked...too many foreclosures now.

Posted by Tracy Soussi, NC & SC Broker - Large Bank Foreclosures about 10 years ago

Esko, inflated appraisals have slowed down but they still exist.  A couple of months ago I had a house under appraise by $12,000.  The Realtor took the Buyers to another Lender and who had an appraiser appraise the house at the selling price.

Nehemiah and AmeriDream were another source of fudged appraisals, and a major reason why FHA fought as hard as they did to do away with them.  But those involved in the pressure tactics that go around crediting it to their creativity and expertise are not happy about that.  In my book the word are not expertise and creativity, it is FRAUD.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) about 10 years ago


It's tough out there right now.

Posted by Esko Kiuru about 10 years ago


Reviews are pretty common nowadays.

Posted by Esko Kiuru about 10 years ago


Appraisers and the entire industry is struggling now.

Posted by Esko Kiuru about 10 years ago


This type of a market is really challenging for them.

Posted by Esko Kiuru about 10 years ago


Some of that was going on, too.

Posted by Esko Kiuru about 10 years ago


Couldn't agree with you more on the creativity part.


Posted by Esko Kiuru about 10 years ago

They are even feeling the heat here in Maryland too!  I have not had one yet not appraise, because I do my comps before preparing an offer for my clients!!!

Posted by Mike Klijanowicz, Associate Broker @ Cummings & Co. Realtors (Cummings & Co. Realtors) about 10 years ago


Unfortunately it's still pretty common.

Posted by Esko Kiuru about 10 years ago

There was a group of people working here that were working together to get loans through on homes. The lender, the appraiser and the investor were working together to put some 150+ home loans together for the purpose of lease options falsifying the value of the home by $15,000 and having the seller pay the closing costs, then the appraiser, the lender and the investor splitting the $15,000 that got paid to them after the sale.

Todd Clark, Helping Families Home -

Posted by Respect Realty LLC, Brokers - Oregon / SW Washington Real Estate (Respect Realty LLC) about 10 years ago


That's a good example of how the system can be undermined and abused.

Posted by Esko Kiuru about 10 years ago