I have blogged about appraisal problems many times in the past. I am not going to repeat those posts. Maybe the data below will carry more weight than my opinion, because it is fresh out of a thorough and expensive study that I have cited on this blog recently. I will cut and past comments directly from the study that quotes Realtors, and I will let their comments speak for themselves. As a mortgage consumer, the below should be plenty to tell you where you need to go for a mortgage. Mortgage brokers, large banks, online lenders and credit unions, many of whom the consumer thinks is working in their best interest are actually setup to fail the consumer by design. Just because you bank at a big bank or a credit union does not mean they are setup to provide you the best service. I worked at a big bank before, and unless you had millions of dollars in that bank, you got no special treatment. And even with millions of dollars, the ‘special treatment’ was marginal. The extensive report was done by a research, marketing and communications firm based in Washington, DC. The firm has more than 30 years in the field of research with deep experience in the fields of financial services, housing and technology. Here are the comments that were culled from thousands of Realtors who have been through tens of thousands of transactions, read and learn:
• APPRAISALS COMING IN FAR BELOW COMPARABLE SALES.
• APPRAISERS ARE FROM OTHER STATES.
• Appraisals take too long to complete with knit picking reinspection requirements which are designed to get the appraiser added income.
• Out of area appraisers with little to no knowledge of local market impacting appraisals and home prices.
• Almost all appraisers were sent to appraise properties in an area they were not familiar with and therefore many come in with lower appraisals than the area could support.
• We have local mortgage lenders who do what they say they will do, but if our clients insist on using one of the big banks because they think their banks will work well with them because they bank there, then we have had problems getting the banks to close anywhere near the proposed closing dates–often more than a month or 2 months later.
• Supposed consumer protection has turned into consumer being hit with higher rates and fees. Inexperienced appraisers that do not know the neighborhood or market are also a result of “consumer protection”. In order to prove the appraiser wrong, many times the buyer is forced to pay for a 2nd appraisal or an appraisal review.
• Two major problems the past 12 months. Appraisals are between 5% and 25% below the agreed to sale price. WHY, since appraisers, buyers and sales are looking at the same inventory? An appraiser told me the banks are pressuring for lowball appraisals.
• Last nanosecond underwriting requirements that have
little to do with reality and everything to do with the new appraisal requirements. They are a complete joke when they result, as they frequently do, in the work going to the low bidder when that appraiser has little or no knowledge of the sub-market they are appraising.
• ZERO appraiser accountability and review. Lenders won’t do anything about an obviously bad appraisal.
• The way appraisals are done is contributing to the devaluation of homes and communities. This problem could be fixed.
• Appraisers are not familiar with the area they are appraising.
• Out of area appraisers hired who have never seen any of the comps and aren’t familiar with town, amenities, neighborhood differences, etc.
I will blog about big banks soon, using the same extensive report I am citing from for this blog. Big banks seem to do a lot of loans, but don’t provide a lot of service! Clients assume big = good, or big = safe, or that big = reputable, but in the mortgage world that is simply not so. Read the next blog to find out why.