Everybody seems to have an opinion including appraisers.
Written by James Frangella on July 17th, 2010 @ 6:00am

The appraisal process for a potential buyer and seller can be nerve-wracking. With the new rules set forth by the Housing Valuation Code of Conduct (HVCC) and the use of third-party appraisal management companies (AMCs), appraisers are coming from other counties (or countries?) to establish our local values. They just don’t know the intricacies or the desirability factor of our neighborhoods.

From a recent email newscast notice – “Between "geographical incompetence" and astronomical fees, appraisals are threatening real estate transactions. The National Association of REALTORS found that 71% of agents have seen appraisal management companies importing low-paid, inexperienced appraisers from faraway areas resulting in inaccurate appraisals. (Click HERE to read NAR's report.) Yet the AMCs often mark up that fee so severely that buyers spend far more than they would have for a knowledgeable local appraiser. And the deal killer? Transactions often suffer due to the outsider's lack of local market expertise.”

In the “good ol’ days” before HVCC and AMCs, there was a concept called market value based on a “ready, willing and able” buyer. In other words, if a buyer with cash is willing and ready to buy a seller’s home for a million bucks, then the seller’s property is worth a million bucks. If the seller received multiple offers then there is no question as to the property’s value. As a matter of fact, the Uniform Standards of Professional Appraisal Practice (USPAP) define market value as:
“The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.”

Today it is a whole new story. Market value is based on an appraiser’s opinion of value. And that opinion solely depends on that individual appraiser and how much they had to drink the night before. There is absolutely no standard of uniformity in the entire process.

I’ve written my tome on this subject and it’s much too long for my regular commentary. However, if you’re interested in reading my opinion on this appraisal fiasco then click HERE. You see, appraisers have their opinion and I have mine.

By the way, I also have an astute observation about BPO’s (Broker Price Opinion), which seems to be another thorn in the side of the current real estate market. Stay tuned for that future commentary.

NEWS FLASH!  Click HERE for updated stats as of  year-to-date for 2010.