Wags,

I've heard you say some interesting things over the years, some I have agreed with, some I have disagreed with... But after reading what you have written I have to stop and ask....

What are you smoking this morning and where can I get some?

There is no reason why a lender should be responsible for the value of a home. They are not your business partner, they are your LENDER.
Imagine if they were responsible for the value of your home, then it would also have to be true, that they would be responsible for the value in times of growth as well.

Imagine if you sold your house after 10 years and it doubled in value. Then the lender should be able to enjoy that growth, not the homeowner.

It's not the lenders fault if homes appreciate or depreciate.. Well, it's not the lenders fault - exclusively.

AND,

At least where I live, lenders are not loaning based on the value of the house, they are loaning based on the value of the LAND.

AND,

What if you don't take care of your home? What if you defer maintenance? Is it also the lenders responsibility to absorb those losses?

I think the entire point of an appraisal is to have a small check and balance for the bank. After all, the bank is loaning YOU money based on your history, credit, employment, etc. not the value of the land. But they appraise the land to try to cover their own ass...

If you are stupid enough to sign a document and overpay for a piece of property, it's not the banks fault because they lent you money, based on false information. The appraisal is not a courtesy to the buyer, it's the due diligence of the institution.. AND, it's clearly very SUBJECTIVE as well.

It's not the banks fault that people lie, that people take stupid mortgages, that everyone and their mother wanted to buy a house, flip a house, and pocket a couple hundred grand for a months worth of work.
Yes, the banks might have made it too easy, but this can't be blamed on them, because people have DECIDED it was less expensive to default on their mortgage then it was for them to pay it.

I live in LA where people who were making $60k a year were buying million dollar properties with the intention of flipping and making a quick buck. Or buying a place they could not afford and hoping rates would stay low. Or buying a place and then taking money out of it like it was an ATM machine so they could buy Mercedes and buy second places...

Yes, the bank is at fault for not investigating better, for not saying "NO" to borrowers. But it's not their fault that many people wanted to make a quick buck. The PIGS GOT FAT but the HOGS GOT SLAUGHTERED...

__________________
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"When two people agree on everything, one of them is not necessary" - Arliss

I have to admit I only made it through your first few sentences...

Fact is this, had an appraiser not given a value to a property and a bank excepted that value...this mess would have never happened. That is a fact

Nobody where I am values a home based on the land, it is nearly completely based on the house. And I'm not saying blanketed across the board with out exception the rule would hold. As with everything else, there are exceptions.

__________________

An unwavering defender of those I see worth protecting.

"promote the general welfare, not provide the general welfare"

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

Wagner, you and I both know that the value of something, the value of anything, is based on TWO things.
1) What someone is willing to SELL for.
2) What someone is willing to BUY for.

The Bank is not setting the price for the home, land, etc. The bank is simply looking over the deal, set by the seller and accepted by the buyer, to ensure that there is no blatant misrepresentation. But there is always room for interpretation.

In Los Angeles, 3 parties can look at the same exact 1960's house.
Party 1 thinks it's a land value, tear down.
Party 2 thinks it's got good bones, but needs modernization
Party 3 thinks it's a charming old house and is fine, as is.

The point is, value is SUBJECTIVE. And it's not the banks job to decide the price on the home. It's only the banks job to decide if it wants to assume some risk, assuming the debt, based on stated finance and the apparent value of a home.

So regardless if it's a structure or land your buying, it is now and will always be CAVEAT EMPTOR (Buyer Beware.)
And should the housing market go down for any reason, it's not the banks responsibility to assume the loss, while if it goes up, YOU assume the gains.

Houses are a commodity. Commodities go up and down. The risk is always on the buyer (which unfortunately is now being transfered onto the bank.)
But an appraisal means:
Today, as of right now, based on the seller, based on the buyer and based on comps in the area, THIS IS WHAT the property is worth..
-- But that can change TOMORROW.

__________________
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"When two people agree on everything, one of them is not necessary" - Arliss

Still if you're buying your home you wouldn't pay the price if it was deemed of that value. So if an appraiser sets the value for you, regardless of purpose, you assume that value. If months later you're told the value was really 30% less, how is that possibly your error? You should have known the appraiser was misleading you

__________________

An unwavering defender of those I see worth protecting.

"promote the general welfare, not provide the general welfare"

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

Surely there is more than one appraiser in this process. The real estate agent who listed it was probably the first appraiser. The purchaser has to have their representative look at it. And then the bank does a due diligence and has their appraiser in purely in respect of the mortgage risk. The onus has to be on the purchaser; if they didn't have their own appraisal, then shame on them.

I don't think it is anything to do with appraisers, it is simply both individual and systemic greed.

__________________
2007 X3 3.0si, 6 MT, Premium, White

Retired:
2008 535i, 6 MT, M Sport, Premium, Space Grey
2003 X5 3.0 Steptronic, Premium, Titanium Silver
2002 325xi 5 MT, Steel Grey
2004 Z4 3.0 Premium, Sport, SMG, Maldives Blue

Maybe the buying process works differently in MD than in the places I have lived.

Where I live, you go out with a real estate agent, you look at houses, you find something you like, you make a bid, the bid gets accepted.

Then during the contingency period, you secure a loan, get the house checked for defects, etc.

During the period of time you are looking to secure a loan, the bank sends an appraiser, who either APPROVES or DISAPPROVES the loan, based on what the bank feels the property may be worth.

The appraiser doesn't SET the value. The buyer and seller SET the value. The appraiser APPROVES or DISAPPROVES the value that YOU have set.

If the property is really 30% less, it's not the appraiser's fault. Value's change constantly. We were in a market where people were seeing 100% growth in the equity in 1-2 years.

My point is, the appraiser who works for the bank that you have asked to secure your loan didn't mislead you. They put a subjective value on the home that YOU valued.

Their job is not to help you buy a home at a good price. Their job is try to minimize any losses that a bank may incur if you can't pay your mortgage.

Again, appraisers don't SET value. Real Estate agents, sellers and buyers and market SET value. Appraisers simply approve or disapprove the value you have negotiated in an effort to protect the bank.

__________________
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"When two people agree on everything, one of them is not necessary" - Arliss

Wow, so the assumption is that every home buyer has some over-ridding knowledge of property value? Amazing.

__________________

An unwavering defender of those I see worth protecting.

"promote the general welfare, not provide the general welfare"

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

The alternative is that big brother tells them what to buy.

__________________
2007 X3 3.0si, 6 MT, Premium, White

Retired:
2008 535i, 6 MT, M Sport, Premium, Space Grey
2003 X5 3.0 Steptronic, Premium, Titanium Silver
2002 325xi 5 MT, Steel Grey
2004 Z4 3.0 Premium, Sport, SMG, Maldives Blue

__________________
2007 X3 3.0si, 6 MT, Premium, White

Retired:
2008 535i, 6 MT, M Sport, Premium, Space Grey
2003 X5 3.0 Steptronic, Premium, Titanium Silver
2002 325xi 5 MT, Steel Grey
2004 Z4 3.0 Premium, Sport, SMG, Maldives Blue