Friday morning I was invited to be a guest to talk about appraisers and how they are impacting the flow of housing sales. I was initially concerned that this would be an appraiser slam piece, blaming our industry for killing sales, causing global warming and low salaries of central bankers but it wasn’t and I think I covered the bases. Kinda surreal – met and spoke briefly to Dick Morris in the green room. Cavuto was very personable before the segment, we talked about the issue before we went on.
- Sellers are generally a year behind the market
- The ranks of good appraisers were decimated by the mortgage boom
- Appraisers have long been the “punching bag” of blown deals
- Lack of data is a huge issue
Connie De Groot, who was the Beverly Hills real estate agent who is a regular on FBN recommended that buyers get an appraisal when pricing their property for sale – as Cavuto commented on my neutraility point, a “Swiss Appraiser.”
Watch the clip here or you can watch it here.
Tags: Soapbox Blog, Appraisal Process, Jonathan Miller
Nice going Jonathan. You hit so many of the points we need to be aware of on the head…the loss of many appraisers, the lack of comps and the need for agents and sellers to take a serious “appraisal” of where the market is before putting themselves out there.
I agreed with your comment to Johathan. Surprisingly, he presented the interview accurately. (Not many understand appraising to his extent.) I thought that he should have mentioned the impact of the HVCC and AVM’s. Starting May 1st only Lenders will be able to order appraisals dirictly or through AVM’s. Some of the AVM’s take up to or more than 50% of the appraisal fee and some bid out to the lowest bidder. Now that is going to affect and has affected appraising. I won’t appraise at those low fee (Most AVM’s are thugs) which leads me to wonder the quality of appraiser that will accept those low fees.
Thanks Charlotte – Don’t get me started on AMCs 😉 I gave them my thoughts on this topic beforehand and AMC’s were front and center. But remember this is TV and you have very little time to get all your thoughts to fit in the allotted time. Still I think it covered their question which pertained to whether appraisers were screwing things up.
would it surprise anyone that mr. cuomo was on the advisory board of AMCO, an appriasal managment co. that is know part of valuation services. What a scumbag.
[…] One of the best “truth-tellers” in the industry is Jonathan Miller of Miller Samuels and author of Matrix blog and Soapbox. He was on FoxNews talking about these issues…check it out here […]
I am a certified residential, FHA approved appraiser in the states of TN and GA. Great interview and, surprisingly, factual! I would have liked to have a discussion on the HVCC that may go into affect May 1st. In my opionion, this has and will affect appraising. HVCC states that only the Lender will be able to order an appraisal either directly from the appraiser or through an Appraiser Management Company (AVM). Most appraisers do not support AVM’s (otherwise known as thugs)as their cut into the appraisal fee up to 50% to 60% or even more. (That’s like you never being able to give interviews or talk to anyone unless you hire a third party and that third party’s 50% fee comes out of YOUR salary) Some AVM’s bid until they locate an appraiser that will accept such a low fee. (And this give credibility and quality?) The HVCC came out of an agreement between NY Attorney General and an AMC. To me, this is questionable. Why are the AVM fees coming out of the Appraiser’s fee and not paid by the Lender, Fannie, Freddie or the borrower or even the NY Attorney General. I question the integrity of AVM’s and the motive behind the HVCC. In your next interview, please mention the impact of HVCC of the appraisal business, which will not guarantee better appraising. At those fees, most appraisals may be done by appraisers that do low quality appraising. Your comment will be greatly appreciated. I would like to forward you attachements that have been sent to me suggesting that there is more to the HVCC and AVMs that need to be questioned. Please send me an email address that I may attach this information for your viewing. Thanks, Charlotte
AVM is Automated Valuation Model or a computer generated valuation. AMC is Appraisal Management Company. I believe there is some confusion here!!
Your are correct AMC are what we are talking about and need to brought to the media’s, lenders’ and gov’t officials’ attention.!
bigest c rime is that the fox is now guarding the hen house. One of the worst Bank Of America who owns the biggest HVC called Rel will be orering the apprasails. Theyare black listing appraisers who don’t obey them ome claim illegal request.If they are blacked listed no other company will hire them. Where is the underwritiers and review appraers who work for Bank America. They approved all these bad loans and now blaming it on the apprasail industry. I am not an appraiser but a loan officer for 20 years and never had a problem with my appsraers nor Have I ever told them to do thier best. I do have commitements to them that if they feel value is not coming in they will call me to see if its okay or they will cancell the order and not charge my customer for thier resarch. Some time the borrowers will find the cash to buy or do a mortgage refinance it. Many times they have come up with 15,000 to 30,000 to get out of a bad mortgage. In hardship cases of forcloseuer or no cash and need a reverse mortgage they will wait for the loan to cloe and some times if there is no money they will do it for free. Tell what HVcompany will do this for cutomers?.
And yet the media does not see this of interest??!! It appears to be more to HVCC and AMV’s that needs to be investigated. How the HVCC developed is questionable. I don’t get it. Then to take a huge cut in the appraiser’s normal fee is upsetting. No appraiser’s should work for an AVM that does not pay normal fees. I am discovering that some Lenders are just ordering directly from the appraiser and skipping the AVM’s. If I was a Lender, that would be my choice and not support thugs!
Good going Jonathan.
Thanks Jonathan for your willingness to do the interview and state some truths that needed to be said, albeit that these formats of shows only allow a 10 second talking point. The comments about “lack of sales” is something that all appraisers should be addressing as this is giving lenders an opportunity to drive markets down. I’m not an advocate for anyone nor the markets for that matter, but this is a growing problem.
This video is dead, can it be refreshed please?
I just tested the video and it works fine – I provided 2 different links – try the other?
Great reporting. “Is that what the realtor is supposed to do?” Oftentimes the tools used by varied non-appraisers to find value can be widely varied and therefore unreliable or biased. Usually it’s an AVM (automatic valuation model).
The term “Appraiser independence” comes to mind. In the recent past, preference towards appraisal assignment was sometimes given to those that made the deal work more often than not. Now appraisal assignment preference is often given to the absolutely lowest priced appraiser. Neither model works to support appraiser independence.
There is still a mass of good, honest appraisers out there like myself. The new problem is intense downward appraisal fee pressure by AMC’s, often taking over 50% of the appraisal fee (in secret!) as a “order processing expense”. This seriously hinders an appraisers ability to spend the time necessary to seriously analyze important market findings & find sound conclusions to support an appraised value. Also making continuing education less affordable.
Selling agents have no idea in a lot of cases, that the appraiser is not experienced, or potentially underpaid.
It feels good to make deals work, but an appraisers job is to tell the truth about actual prices & values in a specific marketplace. In proper appraisal practice, the final value is determined by the buyers who have purchased in that area in the given time frame, for the given type of home. An appraiser is supposed to be impartial & provide an independent opinion of value.
Working video link: http://www.foxbusiness.com/video/index.html?playerId=videolandingpage&streamingFormat=FLASH&referralObject=4033276&referralPlaylistId=1292d14d0e3afdcf0b31500afefb92724c08f046
What is needed is a change on the HUD-1 closing statement where the Fee that is actually paid to the Appraiser is listed on a separate line from the Fee taken by the AMC/AVM. Borrowers think we are getting paid $500+ for a few hours work when that is not the case.
Appraisers have a real bad position to be in. For one the banks are looking for forward leaning appraisals. This is tough. The problem I see right now is there are two markets, the crammed down foreclosure market and everyone else. The foreclosure market is running about 10% below everything else. When you factor in those sales you have a big problem. It not only the sales, but the list prices just before they pop. The Idea is this, once the bank finally decides to let it go they get very aggressive. Instead of using top Realtors and running a good program, they are too spread out. I see listing for banks by out of area brokers who just cram the prices. A good agent could get so much more money. They have the contacts and the potential buyer pool. The banks end up with outside representation and it dives down prices. Lack of property information, every thing as is without disclosure packages have lower land values on some deals I see by 15%. It limits who will figure out the property particulars on their own. So few offers are truly gotten, and many are put in and withdrawn due to lack of information.
So, as you look at the appraiser’s job, how do they consider all this in to hard facts?