PRESSURE: MY STORY

In just 16 years as an appraiser, I’ve seen and heard many things. Some, I just want to forget and some I wish I never heard.

Appraiser pressures aren’t normal everyday life pressures, they’re different.Typically, when business is good, it’s for reasons like doing a great job and providing a great service. Or, it could be because one aims to keep the client happy by hitting value, which is not exactly a good thing. If business is slow it could be because the market slowed, the quality of service is poor, not providing obscure requests for updates, or maybe they removed you from their list of approved appraisers. Hell, we all know it could also be because your fees are reasonable but considered unreasonable to the AMC and they continue to shop for the cheapest. Truly sad days in this respect.

We became appraisers to do the best jobs possible for our customers, abide by laws and regulations, and uphold the public trust.

Today, too many AMCs are controlled by lender demands and if they can’t make the lender or client happy they risk losing the account. To leverage themselves, they’ve negotiated my time, my expertise, and my contribution to the process on my behalf and unfortunately, they’ve done a very poor job negotiating and it’s starting to show.

In this example of client pressure, a subject property appraised for $180k; the contract was for $225k. Five comparables were provided on the subject street including one across the street. All five were renovated like the subject and the sale across the street was an almost perfect match to the subject; it sold for $180k a month prior. Three others on the same street sold between $175 and $180, within 3 months of the appraisal. They were the same style of home and similar size, too. The last one was around the corner and sold for $195k and a little larger in size.

When I submitted the appraisal, I was BOMBARDED with requests to consider other sales that were larger, sold several months back, and one had a basement. After I addressed as to why they weren’t used, I resubmitted the report. They sent it back again with two more sales to consider that were also less relevant than the comparables provided. In total, this happened three times. So basically, what they were saying is that all of research and verification of recent sales on the same street were insufficient compared to cherry picked sales from around the market area. This is what value pressure looks like. Pressure to change the value to meet everyone’s expectations to make the deal work, not what is right or correct to protect the public trust.

I did not succumb to the pressure and for that, my assignments went from several to zero.

In another example, a subject appraised for $370k, the contract was for $385k, the list price was $400k (this is important). I used sales in the immediate subdivision, three of which had finished basements, that ranged from $350k to $385k. Once the report was submitted, I was immediately contacted by the selling agent claiming I failed to do my job and failed to consider chandeliers and drapes and two Tupperware containers that were claimed to be rain collection systems (I’m not joking). I was then supplied with two new sales to use; both from other subdivisions down the road. I was also provided a prior appraisal that was completed three weeks earlier. Upon review, I see this is not an appraisal report at all, it was a desktop report and the appraiser picked the top 3 sales from other areas instead of using the comparables in the immediate neighborhood. The desktop value of $400k is the (same as the list price). An interior inspection was not completed and relevant adjustments for differences in basement area and finishes weren’t considered. I received three messages from the agent threatening to turn me into the state. The lender asked to reconsider value three times.

I did not fall for this pressure and continue to uphold the public trust to do what is right for everyone, not my wallet.

THIS IS WHAT PRESSURE is like for appraisers. Hit value, get paid. Don’t hit value, get fired or quit.

I work hard and do the best I can possibly do, yet some who have never understood appraising, have the education or credentials to appraise, are suddenly somehow now the experts.

Bill Black describes it perfectly as the Gresham’s Dynamic in valuation which simply means that bad ethics and practices push good ethics and practices out of business. No one cares until it’s too late and THEN want to cry wolf.

I am sounding the alarm for consumers, if you really want to know your net worth, hire an independent and trustworthy credentialed appraiser to serve YOUR best interest. This is about your home and the well-being of your family. I am the appraiser who does not fall for control fraud and neither should you.

ROUND AND ROUND

I’m a 43-year-old guy and I grew up in the 80’s when music was odd and fun. I had some favorite bands like Def Leppard, Guns N Roses, Bon Jovi (hello I’m from NJ) and Ratt. Yes, Ratt and one of my all-time favorite songs is Round and Round. Here’s the throwback: https://youtu.be0u8teXR8VE4

Funny, it’s relevant to me today in the valuation, regulatory and real estate appraisal sectors. One specific lyric offers so much insight into the Lender/ Real Estate Appraisal world…

“Round and Round

What comes around goes around

I’ll tell you why”

Here is where I tell you why

The real estate crash 10 years ago was due to lender pressure on consumers to buy property they could not afford and appraisers to inflate values. If appraisers didn’t fall in line and file to meet those inflated values, they were blacklisted or told you would get no more work. Lenders all over the US were pressuring appraisers to “make value” so that they could lend money; it was never about your biggest family investment as a consumer. Appraisers were giving their unbiased professional opinions of value only to have the lenders strike back with unreasonable demands and some going as far as blacklisting them. Many appraisers did not give into these pressures and eventually wouldn’t see any work. The appraiser was doing his or her job correctly and protecting the public trust only to have the lenders ultimately have the final say.

Round and Round, what comes around goes around and 10 years later it’s happening again.

Appraisers are once again vocalizing about the pressures of lenders and AMCS to make values, do what they say or suffer the consequences. Those consequences are once again blacklisting, removal from appraisal panels, limited work or nonpayment for their services. Isn’t the whole idea to have an appraisal to assist the lender to lend money or not? Assist in the risk? Seems like we are back to 2008 again when the warning shots were being fired but the regulators and public ignored those warnings. The question is, will they ignore them once again?

You don’t believe me, do you? Well here is a recent example from an appraiser this past year and the messages from the lender (shown in 1st pic below). The appraiser did a report, but the lender wasn’t happy with the results. So, they hired another appraiser who appraised it for a higher amount to make the deal work. As you can see the first appraiser was pressured and then removed from getting work. But it doesn’t stop there. In the second picture the lender basically told the appraiser that he knew this wasn’t going to go well and that he (the appraiser) should have said something if it wasn’t going to come in close to the Sales Price (SP) to stay in the GOOD GRACES of the lender. What??? So, I guess that means they would find someone out there to make the deal happen?

Round and round as we are now back to pre-crash pressures and taxpayers may get taken for another ride. To me it sounds like the lenders only care about making a deal work for them while the honest, unbiased appraisers are once again being forced to the side, being strong armed and the consumers are paying the price.

as the song says ” you put an arrow through my heart”.