[SD Realtor]

I never said anything at all about where appraisals come in at. I said that lenders do not have contact with appraisers. The fact is that most appraisals now are coming at list price and some are coming in above. The facts of the matter is that appraisals are nothing but a subjective opinion based upon comparison analysis. While there is a cost to build component in all appraisals it is rarely if ever used. A home is for sale, a few comps are selected and then the appraiser adds or subtracts from each line item based on differences.

Let me ask you all this… Do any of you believe the appraiser actually visits the comps he uses and walks through them? How should the appraiser deal with a situation when the comps are not sufficient? An appraiser goes to the subject property and maybe drive by a few of the comps.

It is very easy to get all ruffled up about this but I hate to tell you all the reality of the situation is much different. You make it sound like an appraisal is easy to do when it really is an OPINION based on a few phone calls, maybe some drive bys and a study of comp analysis.

There are no realtor appraiser arrangements. In JPs case it was not here realtor it was her lender and as I said that is far from the norm.

Try to understand you are in a BUYER driven market.

[SD Realtor]

JP I believe yours was definitely the exception as was evidenced with the overall experience with the lender you were working with.

As far as the other appraiser asking you if you need it to come in at a certain amount, that is not the norm as well. Additionally that appraiser will still need to have his appraisal submitted to his management company and it still will need to be approved by them. Obviously the system is not perfect but it is what we have.

I would simply argue that pricing is driven by buyers and not appraisals. At least for now this is the case.

[SD Realtor]

Count me skeptical.

Things always can be traced to the secondary market. The one that used to exist was robust. The one of today is not, it is simply the GSEs. In order for a GSE to purchase a loan the originator must stick to some stringent guidelines including the hiring of an appraisal management company to get the appraiser.

It doesn’t matter if a broker knows a lender or not. Now an exception may be that the particular lender you are referring to will portfolio the loan and not sell it to a GSE. Then the rules do not apply however that is far from the norm these days.

Conceivably your broker may know the appraisal management company and can always insure they will use his appraisal pal for each listing and that the appraisal management company when they review the appraisal will always okay it then yes I guess it can happen. However your assertion is jumping through some fairly tricky hoops.

The bottom line is that it is not hard for properties to appraise anymore. Like I said the train has left the station and prices are up and moving higher faster. When the bottom fell out lenders were actually buffering in space on the low end of appraised values for many neighborhoods. Now it is opposite.

Also there is absolutely no incentive for an appraiser to make any broker happy. The appraiser gets paid no matter what. The broker CANNOT order an appraisal. The lender does and that is a phone call to an appraisal management company, that is it. The only contact is when the appraiser calls the listing agent to get access to the home. Sorry but there is no conspiracy here. Blame the policies of the government from 2007 on that prevented wholesale price reductions in real estate by manipulating the market. They won, the consumers lost. The market is running hot again with no signs of letting up.

As much as you want to push some appraisal/broker conspiracy it is not happening. At least not with loans being purchased by any GSEs.

[SD Realtor]

At the onset of the new law it was brutal. We were getting appraisers who were unfamiliar with neighborhoods coming in to do appraisals and it was a clusterfck… You cannot always rely on comps on the computer as every neighborhood has inconsistencies that can have dramatic effects on valuations in small geographical areas. Over the past year or two we have seen improvement in this arena and now it seems that the appraisal management companies are at least hiring appraisers who have more experience in the locations that they are performing appraisals in. The “conservative” nature of appraisals is not really in the pricing anymore. The comp wheel has already been grinding forward for a few years now so prices are steadily moving up. What bogs appraisers down now is that the guidelines for the appraisals are tight. That is, you have to have x number of recent sales to support the price conclusion or you must have y number of actives or pendings… In many cases the guidelines cannot be met and exceptions are needed. So the process can be pretty … gummy…

With all this said if anything, it seems to me we are getting closer to the good old days. Appraisals do for the most part now come in at sales price… The bottom line is… housing prices are going up and there is really nothing to stop them except interest rates.

[SD Realtor]

Appraisers are not hired by lenders anymore and have not been for the past few years. They are hired by appraisal management companies. There is no contact between an appraiser and a lender.

[SD Realtor]

underwater is pretty much meaningless now.

[SD Realtor]

That is the point I am trying to make as well cali. The flux of various factors, mainly demographics, employment opportunity, emerging nations, etc insure that the only thing we can count on, is change. Statistics of these variables make it clearly evident that you cannot provide programs for everything. You cannot just keep on the same path. I agree with the morality of having the wealthy pay more. That is fine, I am okay. Somehow, somewhere, you have to spend less. Be it the military or socially or both, you have to do that and you have to do it now.

[SD Realtor]

Spend less CAR.

No matter what you or anyone says, higher debt is a tax. I am fine with paying higher taxes but taxing more and spending more is ridiculous.

[SD Realtor]

SK the point you made is the same point I am trying to make. Nothing is static. Not economic performance and not demographics. So you cannot keep doing the same thing as those variables change. Spending habits need to adjust as those same demographics and economic performance changes.

[SD Realtor]

I can also view it as the senate has not passed any budget since 2009. The house may have passed a budget that is unacceptable to the president and senate but it did pass a budget.

[SD Realtor]

Well SK you paint a portrait that indeed everything is okay and perfectly acceptable. I guess we simply agree to disagree.

[SD Realtor]

Of course it is the economy.

Thus the senate is then justified in not passing a budget since 2009, and the govt in general is continuing to spend a trillion more then it takes in because it will all take care of itself when the economy heals.

In the meantime it is okay to spend more and tax more.

Because that is (speculation about the economy aside) exactly what we are doing.

[SD Realtor]

Yes SK we have heard the little tweaking and drops argument you have proposed before.

Seems like the government has been embracing that.

[SD Realtor]

The debt?

Let’s try getting the senate to pass a budget for first.

Then maybe just maybe you can start talking about a year without a trillion dollar deficit.

[SD Realtor]

Oh and finally let’s not pass any budget for the cost of that pie. We haven’t done that since 2009 anyways…. so ya know.

[Author]

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