Proposed Regulations Would Allow the Majority of US Homes To Be Bought and Sold Without Being Appraised by a Human (wsj.com) 182
Federal regulators have proposed loosening real-estate appraisal requirements to enable a majority of U.S. homes to be bought and sold without being evaluated by a licensed human appraiser [the link may be paywalled; alternative source]. That potentially opens the door for cheaper, faster, but largely untested property valuations based on computer algorithms. From a report:
The proposal was made earlier this month by the Office of the Comptroller of the Currency, the Federal Deposit Insurance. and the Federal Reserve. It would increase to $400,000, from $250,000, the value of homes that can be bought and sold without a tape-measure-toting appraiser visiting a property.
More than two-thirds of U.S. homes sell for $400,000 or less, according to U.S. Census data and the National Association of Realtors. If the regulators' proposal had been in force last year, about 214,000 additional home sales, or some $68 billion worth, could have been made without an appraisal, regulators said in their 69-page proposal.
Some worry, though, that dropping appraisal requirements would introduce new risks into the $10.7 trillion market for home loans. "We still would prefer a human being doing the appraisal," said Lima Ekram, a mortgage-backed securities analyst at Moody's Investors Service. One issue: Automated valuations done by computers are largely unregulated. The 2010 Dodd-Frank financial overhaul required regulators to propose quality control standards for so-called automated valuation models, but they have yet to do so.
More than two-thirds of U.S. homes sell for $400,000 or less, according to U.S. Census data and the National Association of Realtors. If the regulators' proposal had been in force last year, about 214,000 additional home sales, or some $68 billion worth, could have been made without an appraisal, regulators said in their 69-page proposal.
Some worry, though, that dropping appraisal requirements would introduce new risks into the $10.7 trillion market for home loans. "We still would prefer a human being doing the appraisal," said Lima Ekram, a mortgage-backed securities analyst at Moody's Investors Service. One issue: Automated valuations done by computers are largely unregulated. The 2010 Dodd-Frank financial overhaul required regulators to propose quality control standards for so-called automated valuation models, but they have yet to do so.
Can someone explain (Score:2)
Can someone explain how this works in the US? Presumably people don't buy houses without getting them checked out first, to make sure they are sound and not on top of a disused mine shaft or something.
Is that what this person does? And if so how will the computer do it? Or will the buyer have to get their own human to check?
Re:Can someone explain (Score:4, Informative)
You can buy a house without appraisal, but if you're getting a mortgage loan, the bank wants to know that the deal makes sense (the house it worth what the buyer and seller are saying it is worth).
Inspection is a different issue, but generally also required by banks and/or cities.
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Generally not required. I've sold real estate in 3 cities across 2 states. Never had an inspection requested by the buyer. Of course you're an idiot if you don't, but there's no general legal requirement.
Re:Can someone explain (Score:5, Informative)
A home inspection is generally worth the cost. An appraisal is different, and usually a waste of money.
The appraiser will walk through the house and make sure nothing obvious is wrong (which the inspector already does much more thoroughly), measure the size of the rooms (which is already a matter of public record, and also easy to do yourself), and then calculate a price based on comparable recent sales nearby.
Since the sale prices of the nearby comparables is public information, and available online, why do you need a human to calculate it, rather than a computer program? Answer: You don't.
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They more or less work for the Realtors, whose sole concern is making sure the house gets sold.
What state is this in? Everywhere I have been, they buyer selects the inspector, not the realtor.
Go online and pick someone with good reviews.
like the wall full of mold, and the lack of working power in most outlets in the upper floor.
I have had much better luck with inspectors. They certainly checked all the power outlets. I don't think they would have found mold inside a wall, but they do use a moisture sensor so they would find the underlying issue.
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Oh, one other piece of free advice: Don't use a realtor to buy a house.
If you use a realtor, you will get about a 5% higher sales price. But the buyer agent and seller agent commissions are typically about 3% each, or 6% total.
So if you are a seller, using a realtor is a wash. You get a slightly higher price, but lose it all again on the commissions.
But for a buyer, it is just a dead loss. Your realtor has NO interest in negotiating a lower price on your behalf, since her commission is a percentage of t
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Some buyer realtors now offer to split the commission with you. Since the commission is baked into the price of the house already (paid by the seller), it amounts to a 1.5% decrease. Even if you could get a selling realtor to return your calls (which tehy tend not to do cause it's a cabal), they're not going to split the commission with you.
Now, you're right that you're not going to want to let your realtor do the negotiating. They may offer advise and arguments however, and I would consider them.
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Even if you could get a selling realtor to return your calls (which tehy tend not to do cause it's a cabal), they're not going to split the commission with you.
They will return your phone calls because realtors love dual-agency transactions. They work directly with buyer and seller, with one less layer of miscommunication. And they do not "split" the commission. They get the full selling commission. You only ask them to give up the buying commission, which they wouldn't get in a normal sale anyway.
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Negotiations w
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Home inspector just wants to get payed. Mine missed the hidden termite damage , now I am replacing two walls, one is an exterior.
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If you think about it, there's no way an inspector can give you an accu
Re:Can someone explain (Score:5, Informative)
An appraisal generally isn't for you, its for the bank. The bank wants it to make sure you aren't paying more than the place is worth, and they aren't lending you too much. Otherwise I have a 100K condo I could sell you for 1M. You declare bankruptcy, the bank takes the property, I make a 900K profit and split it with you later on. With the appraisal they make sure that they don't lend more then the appraised value, and possibly make you take out PMI or refuse the loan.
Inspections are a good idea, and cheap enough you're stupid not to get one. But they aren't legally required (although a bank may require you to get one as a condition of a loan. I believe VA loans require termite inspections).
Re:Can someone explain (Score:4, Interesting)
We sold a house in the UK 5 years ago - put it on the market for X, got an offer for X and then the prospective buyers mortgage provider wanted an appraisal.
The appraiser appraised the property at X-£14,000.
Buyers wanted us to drop the price, we refused and the mortgage provider withdrew.
We put the house back on the market and it sold two weeks later for X+£10,000.
Appraisals are very much in the eye of the appraiser.
Re:Can someone explain (Score:4, Insightful)
Not only are appraisals a waste of time but they get completed negated when the realtors "pull the comps" which is when they look at the sales of homes in the same area over the last 30-60 days and use those as baseline prices. The appraisal can easily be 15-40k below that, or if the market is under water, above it.
Real estate is such a sleazy market in general I pray I live long and die in my current house just to avoid dealing with that cluster fuck again.
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The appraiser will walk through the house and make sure nothing obvious is wrong (which the inspector already does much more thoroughly), measure the size of the rooms (which is already a matter of public record, and also easy to do yourself), and then calculate a price based on comparable recent sales nearby.
I agree with you that too many appraisers don't do their jobs. I constantly hear stories about appraisers doing just the above, or even less. I've seen them not even go inside, or completely miss rooms, list basements as unfinished when they aren't, or not know the rules for when a room counts toward the total square footage. I don't understand, because the job seems really easy to me. I have seen mirror image houses, with the same level of finish in the basement areas, showing significantly different s
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Depends on the knowledge and experience of the person doing the appraising. My house is probably worth 2/3rds what some houses a few doors down are worth. If all you are doing is looking at the publicly available sales prices, you may be missing a bit.
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Yeah, inspections make sense on paper but in practice they're kind of worthless.
My wife and I actually took what amounted to a "home inspection" class before we bought our house. Taught by a home inspector, even, and the class was a lot of useful information about various problems you can find in a house. The guy was ASHI certified and our realtor even knew him by association with other sales.
Anyway, we hire this same guy to do the inspection on the house we bought. As it turns out, he totally misses the
Re:Can Shanghai Bill get a clue? Open question (Score:4, Informative)
You're asserting "all rooms in an area of similar size are worth the same" without looking at any of the details that an appraiser would. Ceilings, doors, glass, light, materials, all kinds of things factor in.
They factor in far less than you think. Many sellers spend a small fortune on new countertops and carpets only to find they make little difference to buyers.
The idea that you're going to get a realistic valuation of all of that from a housing inspector or a public county recorder-assessor is just retarded.
Inspectors don't do valuations. That is obviously not their job. But they WILL find major problems, such as structural insect damage, that can influence the valuation.
NOBODY uses tax assessments to do valuations. They use the sale price of comparable properties.
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An appraisal isn't done for the seller. That's what comps are for. You generally don't get an appraisal until after its sold. The appraisal is for the lending bank to make sure they aren't loaning them too much on the property, in case they buyers default and the bank takes ownership.
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Pretty sure that "BS" is well within the definition of profane. Could even be listed as an example if the dictionary had one.
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The appraiser is is primarily for the Mortgage company. The lender wants to be certain that they are not providing a $1M loan for a 500K valued house.
Re:Can someone explain (Score:4, Informative)
Private home sales in the US usually come with lots of inspections of various things:
1) Most buyers demand a physical home inspection by a professional home inspector, looking at physical condition of the property and the mechanical systems. But, no one is an expert at everything, and most home inspection agreements disclaim liability for missing major issues.
2) Most mortgage companies/banks require an appraisal of value before agreeing to the loan. Ironically, most appraisals find the value of the home is just slightly higher than the agreed upon sale price. This is the issue being discussed here.
3) The mortgage company can also demand its own on-site inspections, including such things as radon inspection, pest inspection (termites, carpenter ants, etc), lead paint certification, asbestos certification, etc.
4) The mortgage company will also demand a number of legal investigations: deep historical inspection of title, liens, outstanding permit issues, etc. They'll also demand associated title insurance to protect them if the title search misses something. Most buyers also purchase their own title insurance.
5) Mortgagers also demand that you pay for home insurance for at least the duration of the mortgage.
6) Often, the local municipality requires homes to have a certificate of occupancy, and will demand their own inspection of the home and property at sale for code and safety issues which must be fixed before occupancy by the new owners is permitted.
7) In some jurisdictions, there can be additional legal issues that need to be investigated, such as mineral rights, flood inspections, etc.
There are probably a few others that I'm forgetting.
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Thanks, similar to the UK then. It's often driven by the bank's requirements, and often kinda useless.
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Having lived in both places (US and UK) and brought and sold houses in both places - It's much simpler in the UK. The extremely long queue of rent seeking low-life in the house transfer business in the US is something to behold.
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And much less costly. No 6% Realtor fees -- typical fee is 2%.
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There is another factor here which drives regulations: in the USA, the lender for many mortgages is effectively the Federal Government.
https://www.pennymacusa.com/bl... [pennymacusa.com]
Re:Can someone explain (Score:5, Interesting)
2) Most mortgage companies/banks require an appraisal of value before agreeing to the loan. Ironically, most appraisals find the value of the home is just slightly higher than the agreed upon sale price. This is the issue being discussed here.
I really don't know why an appraiser is even told what the contract price is.
I've purchased 7 properties and only one appraisal has failed to meet the price. My agent said that she and the mortgage broker would get it fixed - which made me angry because it meant I would be paying $300 for a useless valuation.
I backed out of that deal. I consider the $300 to be money well spent.
Agreed price is the best indicator of price (Score:2)
The appraiser is trying to determine how much someone would likely pay for the property, if the new owner or the bank wanted to sell it.
Supposed you see in one my posts I'm trying to sell a computer. BeauHD says he'll give me $1,000 for it. Nukenerd says he'll give me $1,100 and I agree to sell it to him for $1,100.
Roughly how much do you think someone might be willing to pay for that computer if Nukenerd decides to sell it somewhere else?
The amount someone IS paying for it, and the amount someone is sel
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Trust me many experts, economists, risk analysts, etc have screamed bloody murder about how telling the appraiser the contract price creates a rubber-stamp system around price.
The problem is various appraiser lobby and oversight groups --> they have an incentive for the current system to continue, so they hide behind the law: "The appraiser is required to have all relevant pieces of information related to the sale." They have filed lawsuits claiming that the contract price is a vital piece of relevant i
The actual price is a good hint of the price (Score:2)
> Ironically, most appraisals find the value of the home is just slightly higher than the agreed upon sale price.
I don't see anything ironic surprising about that. The appraiser is trying to determine how much someone would likely pay for the property, if the new owner or the bank wanted to sell it.
Supposed you see in one my posts I'm trying to sell a computer. BeauHD says he'll give me $1,000 for it. Nukenerd says he'll give me $1,100 and I agree to sell it to him for $1,100.
Roughly how much do you
Re:Can someone explain (Score:4, Insightful)
Inspectors,appraisers, realtors are really just in for the money , they could care less if the house is about to fall over.
Re:Can someone explain (Score:5, Informative)
In most states, inspections are not required by law. I am a realtor, and I have never heard of a lender requiring an inspection, but I don’t think there is anything preventing them from doing so.
Appraisals are required by lenders, and I think they always will be, regardless of this law change.
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I see. Isn't the value of the property determined by how sound it is though? Or are they just saying "it would be worth this much assuming it wasn't full of termites so you had better get someone to check that assumption"?
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We're not generally talking overall condition of the property. That's easy to work out from just looking at it. The inspection is to cover the buyer's ass to uncover anything that would cost them a ton of money that the property owner hasn't disclosed (knowingly or unknowingly) prior to sale.
The last place I bought the inspector spot checked the voltage at a number of outlets, the furnace & AC, appliances to make sure they worked, sinks and tubs to make sure the water came out and that they drained, did
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I see. Isn't the value of the property determined by how sound it is though? Or are they just saying "it would be worth this much assuming it wasn't full of termites so you had better get someone to check that assumption"?
It sounds like you haven't purchased many houses.
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Property inspections are basically in-depth appraisals without the actual appraising of value.
Appraisals are very superficial, they just come and make sure that the property exists, that its description is relatively accurate and there is no visible damage that would reduce the value outright (typically blight and damage that makes the property or portions of it uninhabitable). They also do a check of records to make sure the seller is not scamming anyone and there are no liens against the property.
In the U
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Not always. In my street, a property with a good house on it was sold for $1.2M; the buyers then tore the house down and cleared the site in order to build a new house.
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Got a 1980's look with bright color artwork fixed to walls that will have to be considered in the price?
Stone stuck all over walls in another room?
Does the kitchen still work? As in layout, look, location of water, gas, power. Size. Style expected after 2018?
Stair railings and handrails exist and are ok?
Does the government have more tax to collect and will see any "property" as the one thing everyone can agree on as
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Appraisals are required by lenders, and I think they always will be, regardless of this law change.
Of course appraisals will always be required. The only question is whether they will be done by humans.
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An "appraisal" is a supposedly independent valuation of the home and is required by the mortgage lender. They want to make sure that if the loan ends up in default they can get their money back out of it. It might be a stretch to call value appraisals a scam but it is a kind of financial voodoo; the appraiser tries to guess what the open market value of a home is. Markets float up and down, and a home is only worth what someone is willing to pay. I don't see anything wrong with pulling the human out o
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The way it works is, if there is a problem you're required to disclose it, but unless the value of the home is really high there isn't any requirement to hire a professional to check for that stuff. If you knew there was a problem with the roof, or plumbing, or whatever, you're required to disclose that.
So the headline is a lie; the majority of houses in the US have always been bought and sold without requiring an appraisal by a human. They simply haven't updated the dividing line between what is required a
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TFA is misleading. You don't need an inspection to buy a home. You do need an inspection to get a mortgage on the property. Banks are probably going to still want inspections. It's in their interests.
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apprasials are used to tell your lender that you are buying a house for X and it should be worth around X so they dont loan 500,000$ for a double wide in meth country, its mostly looking at the value of the building and property and comparing it to recent data from the area (a radius of a few miles).
Now a home inpsection is where you as the buyer have a professional check the place over so you can make an informed decision and or leverage in negioations
Buying and selling... (Score:2)
Homes can always be bought and sold without appraisal. The question is whether we should allow banks to loan on a property without looking at it, especially if the loans are subsidized by public money. If the property is in much worse condition than its neighbors, then the bank/government lose out, since the property is likely worth less than its electronic appraisal. If the property has renovations that aren't accounted for in the appraisal, then the bank/buyer/seller need to pay for a human appraisal a
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... especially if the loans are subsidized by public money.
Maybe we should just stop subsidizing loans with taxpayer money.
The subsidies are justified because home ownership is a "Good Thing", but is it? In most big cities, it is way more cost effective to rent. Home ownership makes it harder for people to move to where the jobs are, and this "geo-stickiness" is one of the reasons for the slow recovery from the financial crisis, which itself was caused by people pushed into securitized mortgages that they couldn't afford, with much of the risk dumped onto the tax
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Left to their own devices consumers chase interest. Chasing interest with uninsured banking means bankruns, deflationary spirals and misery. No insurance in banking will work without the absolute guarantee of the printing press as a backstop and providing that backstop is an implicit subsidy.
So to stop subsidizing loans government would have to regulate to make all deposit banking full reserve, with a hugely painful transition process. Banks would be stuck with an infrastructure and workforce fundamentally
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Sure, but banks need to know that what they're paying (loaning out) makes sense. Thus a requirement for an appraisal. This is even more important if it's a government-backed loan -- i.e. public money.
But appraisals are somewhat worthless. The buyer and the seller both obviously think that the house is worth X or they wouldn't be doing the transaction. The only thing the appraisal does is shows that the last few buyers and sellers of similar properties came to the same conclusion. At the end of the day, a house is only worth what someone is willing to pay for it and averaging out the last few dozen sales to come up with an appraisal value does nothing to prevent bubbles or bad investments.
Re:The value of anything is what someone will pay. (Score:5, Informative)
Appraisals have nothing to do with investments or bubbles. Your lender does not care what you are willing to pay for a house, they care what someone else will pay if you default on the loan. The appraisal process is supposed to help determine that.
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The buyer and the seller both obviously think that the house is worth X or they wouldn't be doing the transaction.
But that particular buyer might be an idiot. The bank needs to know if there are any *other* buyers out there who would pay X for the house.
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But that particular buyer might be an idiot.
Or worse, in collusion with the seller. Team gets $2 million from bank for $500K home, buyer then declares bankruptcy, bank eats $1.5 million loss unless tax payers are forced into the deal.
I say its fine to remove the appraisal requirement so long as the tax payer is also removed from the equation. Otherwise the bank may also like the fraud.
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But that particular buyer might be an idiot. The bank needs to know if there are any *other* buyers out there who would pay X for the house.
A computerized appraisal with a simple home inspection that shows the condition of the house would be more than enough to catch this. I've seen appraisals and comparative market analysis reports done and honestly, I think a computer algorithm would likely be just as accurate if not more accurate. There is no reason for a manual $400+ appraisal for most properties when a computer appraisal and a 5 minute walk thru to make sure the house is in the condition claimed would be enough.
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But appraisals are somewhat worthless. The buyer and the seller both obviously think that the house is worth X or they wouldn't be doing the transaction.
Are you sure about that? I've personally seen someone attempt this scenario: Buyer and seller are in cahoots, "agree" on a price that is roughly 3x what the house would fetch on an open market. Bank provides the agreed-upon money as a mortgage on the property, seller default, bankrupt, bank repossesses, buy/seller split the cash and bank is left trying to sell a house at 3x the actual open-market value.
The only reason the idiots in the story failed is because repeated appraisals made by various banks automatically stopped the loan being made.
That is the real purpose of the appraisal..
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That is not an appraiser, that is a assessor. Assessors look for major changes to the property since the last assessment. Appraisers look for much more than that.
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anecdote != data
Might help take fraud out of the system (Score:4, Informative)
Calling it flexible is being generous - there was outright and rampant fraud in the system. Appraisers who didn't play ball weren't used in future work, creating a perverse incentive to go along even for those who wouldn't otherwise be predisposed to break the rules.
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I'm not sure if you're talking about appraisers since appraisers don't get hired by the agent but by the bank.
Appraiser should be hired by you (Score:3)
The whole point of the appraisal
I don't think the solution to the problem (Score:2)
Also something that came out after the crash was that most of the defaults were from rental and investment properties. e.g. house flippers and retirees who didn't have enough to live on but had enough to gamble on. The problem wasn't so much that they paid too much. It was that when the economy tanked they either couldn't get renters (since they renters
Re: Might help take fraud out of the system (Score:2)
After the 2008 crash, yes we learned lenders would do anything for the next sale. People went to jail for this.
Appraisals ... (Score:1)
In BC, Canada house "appraisals" are already often calculated by computer algorithms. I say "appraisal" because actual human appraisals are rare.
Computed value is based on market activity in neighbouring areas (sales are public knowledge), age of house, type of dwelling, land size, house size, bathrooms, etc.
When we asked for a line of credit secured by home equity, the bank said "we might send someone to drive by and have a look" and they asked us to self-assess our own house value, nobody came and we got
We used to have this (Score:2)
It worked great for money laundring, where you buy a house and sell it the same day for double the price. This is why they put humans bavk in the process...
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When did we used to have this? The 1920s? Because that hasn't been true for at least 30-40 years. Even without a human it would not be possible to launder money in most states in the US this way.
Real estate sales are generally public information and reported to the government. And that has nothing to do with a human doing an appraisal. All the appraisal does is help the bank ensure that the property is worth the amount they're lending for it. Since defaulting on your mortgage means that they own the propert
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I guess you have an american education, so its not really your fault. But there are other countries in the world too. Nowhere did i state i was american.
Hmmmm (Score:3)
Homes are already typically appraised ( guesstimates ) every year so the local government knows how to calculate your taxes so I don't quite understand why this is an issue. ( Well, Texas anyway. Is likely a different story in other States where taxes on homes are capped at the purchase price. )
Unless you're paying cash for the home, banks will typically only lend up to X amount of the appraised value of a home. ( Loan type, credit score and whatnot taken into account ) Why would they loan you an asking price of $500k for a home only worth $250k simply because the sellers think they can get it ? If you walked away from it, the bank would now be stuck with a home only worth $250k. Bad for the bank.
In that situation, the bank has no issues loaning you the $250k that the home is appraised at, but it will be on you to come up with the other $250k.
Finally, if you're about to commit to a $500k home, why would you cheap out on a third party* appraiser and / or inspector ?
( Yeah, I'm sure the real estate agent knows who to call, but it would be in your best interests to call someone they DON'T know to ensure a fair inspection )
That's just nuts.
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In Maryland, the property values are computed every year, but the taxes only go up every three years (I think it is three). I actually saw the value go down after the Great Recession when the Bush administration decided to not regulate the banks, or Wall Street, or just about anything that could screw us.
re: Maryland (Score:2)
I'm a homeowner in Maryland too, but as I understand things? The increased taxes are set up in advance. So even though they "only go up every 3 years", they're based on a planned increase in the 3 year period before the new rate is charged.
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The government office that does this, the assessor, doesn't come out and look at your property. I could keep my house in top condition, or let it rot. The assessed value wouldn't be any different unless I did something that got their attention, like build a permitted addition or demolish it. Doing things that require a permit without actually getting one can lead you down a whole different rabbit hole. The appraiser may or may not catch the fact that the county thinks you have a two bedroom when you actu
TIFTFY (Score:2)
Federal regulators have proposed loosening real-estate appraisal requirements to enable a majority of U.S. homes to be bought and sold without being evaluated by a licensed human appraiser [the link may be paywalled; alternative source]. That potentially opens the door for cheaper, faster, but largely untested property valuations based on computer algorithms.
Federal regulators have proposed loosening real-estate appraisal requirements to enable a majority of U.S. homes to be bought and sold without being evaluated by a licensed human appraiser [the link may be paywalled; alternative source]. This opens the door to realtors being able to defraud the consumer on a scale hitherto unseen in the continental US.
There, I fixed that for you.
What about property tax? (Score:1)
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They should already do that. Some tax collectors will re-value the property based on sales price but that's an illegal assessment. They can only assess and increase taxes based on properties with like value.
Appraisals are a racket anyway .... (Score:3)
I have friends who worked for lenders, directly responsible for contacting the right appraisers and ensuring the appraisals were done properly and on-time, so as not to hold up loans in progress.
The concept might be good, but in practice? The whole thing seems like a sham to me.
The loan officers do their best to hand-pick the appraisers for given loans, to make sure they go through at the valuations they need to see. The law says, of course, that they're not allowed to do that. But the OWNERS of many of the lending institutions know that things have to work that way, for them to maximize profits and prevent a lot of angry customers who want to buy a property, but get turned down.
So what happens? The lenders opt to use specific software packages that automatically assign appraisers for loans entered into the system. But the software database still needs to be filled with the appraisers it's supposed to assign. Guess who gets to choose who gets put into the database when it's all configured?
Unlike actual inspectors, the appraisers don't even have to really take a close look at much of anything. They have to bring some photos back to the bank and give a guesstimate of the value based on comparable properties. In most cases, they're only required to do a "head and shoulders" look at the attic of a given home, for example. They're not required to climb up into an attic beyond that point.
Often times, the appraisers are even told they can't get hired to do appraisals for given lenders unless they charge below a certain price. If that is below the going rate for an appraisal in that zip code, you can be sure the appraiser is going to do only the bare minimum necessary ....
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Doubt you'd think so if you were looking at a house and the appraiser found a termite infestation. Or that much of the electrical work would have to be replaced because it wasn't installed to code. Etc, etc. But lets go ahead and say there are a large number of licensed appraisers who are little more than scammers. Okay. But that will be insignificant next to the number of scams that home buyers will be subjected to if home sellers and real estate agents can skip that process.
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That's what inspectors are for, not appraisers. Inspectors are people you hire to look for code violations, rotting wood, bugs, shifting foundations, leaks, etc... Appraisers are people the bank hires to make sure they can off-load the property near the mortgage price if you stop paying your mortgage. Appraisers are the bank's inspectors, though the bank bills you for them.
Appraisers are a dying profession. Most are nearing retirement age and there isn't near enough new ones to replace the old. Trainin
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Around here, truth in sale disclosures are required and also require a municipal housing inspector to check for significant code violations.
So serious problems that make the house fail housing codes will block the sale. IMHO, home inspectors are mostly a scam to find obvious problems that any informed person who has lived in a house might find.
If I was buying in an area with serious bug problems like termites, I'd hire an exterminator. "Home inspectors" cover too much ground to really offer serious expert
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Not where I live. A house where termites have devoured the foundation is going to see its value go in the crapper and doused with Montezuma's Revenge. So I guess if I move I'll have to rely on home inspectors if appraisers follow the Sherry Bobbins [youtu.be] method.
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In reality, I don't think it actually works that way. When we bought our house a few years back, we went to our regular bank and as part of the mortgage process, they used their appraiser. House was selling for 850k, got appraised for 730k. Bank said we'd need to pony up an additional 1
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There's a name for a buyer with no human appraiser (Score:2)
And that word is "sucker"
But, sure, let's not require it. I mean, 2008 was *so* much fun, and the banks got bailed out, anyway, let's do it again.
Need to contact my Congresscritter. And Senators. And the friend who works for the national homebuilders' std's body....
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Homes currently valued at $250K could go up to $400K?
No.
That $250K home will still be $250k, and will still not require any appraisal to sell it just like before.
That $400K home will still be $400k, however it will no longer require any appraisal to sell while currently it does require one.
Sounds great if you're a seller but the number of potential buyers has been reduced drastically.
No, the potential buyers in the victim category goes way up, while the rest of the potential buyers remains the same.
If someone was selling a house for $200K but it was falling apart inside and not worth $120K, a buyer could still go to a bank and ask for a $200K loan/mortg