Open Letter to the Washington Post part 2 Re: New Appraisal Rules

27 Jun 2009 at 12:47

Chuck

Well, the post did it again! I opened up the real estate section to read another article written by Elizabeth that was so thinly written with facts that I almost feel like asking for a refund for the time I spent reading it! I know I shouldn't pick a fight with someone who buys ink by the 50 gallon drum. Oh well, here is my post to Elizabeth's article on her blog. Enjoy the food fight!

"Elizabeth, Another great article…NOT… I am glad to see you are now speaking with more then one bitter agent and you are now also driving around a bit. Good for you!
Here are the issues you left out of your article this morning;
1.    Inexperienced out of the area (sometimes out of state) appraisers are bidding on jobs in areas that they are unfamiliar with. They (out of town appraisers) are now bidding on batches of work (say 70 appraisal in the metro area). The lowest bidder wins even if the bidder has never done an appraisal in our area. Try driving 3 hours any direction and put a value on the first single-family house you see.
2.    The appraiser must use two closed comps and two active comps within 90 days of closing. This is very difficult if the neighborhood doesn’t have a lot of closings. Areas like Great Falls and McLean are very difficult areas to close a deal in because they’re so few recent normal sales (appraisers will use distressed homes as comps!).
3.    Cost and time! It used to cost $300 to $400 and 3 to 5 business days to complete an appraisal. I am now seeing it cost as much as $1,000 and up to 3 weeks to complete.
4.    Banks are now using desktop appraisals as bases for approving loans. If you want to know how accurate a desktop appraisal is just go to zillow and plug in your home address. In my neighborhood alone (I live in Loudoun County) there are houses next to each other that are $100,000 off in price!
5.    Lenders now have the right to do a field spot check on any appraiser. This means that they will send out another appraiser (without the first knowing) to double check the first report. Depending on how much love exists between the first and second appraiser this can become contentious as each is bidding for more jobs!
6.    Finally, appraisers now have to report if an area is in decline or has over supply. This report can lead to the lender dropping the loan amount down by as much as 10%!
I don’t mean to be too hard on you Elizabeth but I can’t tell you how many times I’ve had clients read your reporting (also the reporting of others) and come away with only half the facts. The Washington Post is a national treasure and one that I’ve been reading regularly for 20 years. Facts Elizabeth more Facts!