I never said that all appraisers are honest. That is a completely different story. Even though I am an appraiser, I have to say that I don't think very highly of most appraisers out there. I was also a review appraiser for a while and saw first hand the crap that the occasional appraisers was trying to pull and how flat out incompetent others were.

All I can speak from is my personal experience. I do not inflate values and I am sure I have lost some work because of it. I never said it doesn't happen. I was just explaining how an appraisal is supposed to work and that is by simply reporting values, whether the lender likes what you have to say or not.

I will go back to what I said earlier about how I think loan officers should be salary and not commission and here is why. These loan officers are trying to close every loan possible. Whether it is good for the bank, where they work, or the borrower is irrelevant to some of them. Here is a simplified example;

I am appraising a house in a townhome subdivision where there have been 5 sales of the exact same floorplan as the home I am appraising. I mean same paint colors, size, view, lot size, condition, age, quality and everything. These sales have a tight range of $145,000 - $149,000. Lets say I appraise it at the upper end of the range and call it $149,000. Then the loan officer calls me up and says, look man we really need to get $152,000 out of this deal because the borrower has a bunch of debt they are trying to wrap into the loan. What do you do now? Do you tell him, not possible or do you grab 2 sales from the next door town house development where sales are still similar but ranging from $150,000 to $155,000, add in 2 sales over $152,000 and call the appraisal $152,000?

If you say you can't get him $152,000, then the loan officer will probably find one of the many appraisers starving for work that will do this and now you have just lost a client. This is what some appraisers are struggling with, but it is bacause of pressure put on them from the loan officers. As an appraiser, they are your client and you want to make them happy so they can close loans and get paid and so you can get paid as well. This is why I think they should be on salary. That way they wont be putting as much pressure on appriasers to stretch values.

Some lenders are also going with middle men or appraisal ordering companies in order to end direct contact with the loan oficer and appraiser, which may help the situation. However, I am not a fan of them because they cut into our fees bigtime.

There is some margin of error on an appraisers value estimate. For example If I were appraising a $500,000 house and I was off just 2% with my estimate, that translates into it appraising anywhere from $490,000 to $510,000. Therefore, if an appraiser feels that a house selling for $510,000 is really worth $500,000 they may just side with the open market contract price and call it $510,000 becuse of the margin of error. You see what I mean. There is a huge difference between intentionally inflating values and sliding the value scale a percentage or two on a deal. It is part science and part art.

I haven't read all the posts as I was getting dizzy trying to figure out who said what, so I apologize if I repeat anything that was already mentioned.

Wagner...what about the stocks and commodities market? there are companies out there that release reports that will drive up or drive down the price, depending on the company's position.

buyers are the only ones that set the market. sellers and agents set listing prices to try and draw in as many buyers as possible. your home is worth only as much as the amount someone is willing to pay for it. appraisers determine the value of a home based on what has sold recently. underwriters decide on whether the appraisers assessment is accurate and if it's worth the risk to lend out X amount for the home.

I feel a lot of the blame falls on the bank...it's their fault for offering stated no doc loans...why did they make these loans? because they probably could make more money selling these loans on the secondary market. they were short sighted. the sub-prime market came about because banks saw that as another group of people to make money from. why in the world would you loan to someone who has a 495 fico? because you could charge them a ridiculously high interest rate, charge them 3 points w/ a pre-payment penalty, and they would love you for it because no one else will give them a loan. there's a reason why their fico is that low. falsified docs are created by scam artists and unethical brokers trying to make a quick buck. as a buyer, you trust the professional to guide you to the right decision. yes, it's ultimately up to the buyer to give the go ahead to falsify docs, but look at it like cheating on anything...if you can do it w/o getting caught, would you? most people would. our moral compass is completely out of whack when it comes to achieving the american dream. most will do whatever it takes as long as they don't think they'll get into trouble. again, short sightedness. as for having lenders being responsible for maintaining the value of a home, they don't have that power. a property's is only worth as much as a buyer is willing to pay for it. that's what lenders would look at when lending money for refi's, helocs, etc.

JonK is correct in saying that the common denominator is greed...there's a reason why it's one of the 7 deadly sins.

Not trying to beat a dead horse, but it is buyers and sellers who set the market. The seller always wants high and the buyer always wants low. It is the agreed upon price of the TWO parties that sets the market. Without sellers it would only be demand, not supply and demand.

So in summation you agree the costs are adjusted by the lender/appraisers. So the cost is artificial based on what is being achieved.

__________________

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.

Not completely. There is a difference in an appraiser's value estimate being off a percentage or two on a home costing hundreds of thousands of dollars and flat out fraudulent price inflating.

You have to remember that the value that an appraiser gives is just one persons estimate and who is to say that an appraiser can't be off a few percent? I feel like I am good at what I do, but it would be crazy for me to sit here and tell you that I know what every single property is worth down to the dollar.

Like I said, if a house is selling for $510,000 and I thought it was worth $500,000, but I have sales of similar property from $480,000 to $530,000 it would not be fraud or price inflating for me to concur with the price that the open market set because it is within a reasonable range (+/-2%) of the sales price and I have comparable sales supporting the sales price. I would just be agreeing with the market price in this situation. It is a possibility that my estimate was 2% low and that the market price was correct.

Now, If I only had sales of comparable property ranging from $480,000 to $507,000 and I still wanted to call it $510,000 that would be wrong.

Again, agree to disagree. If only this "being off" didn't occur 90% of the time.

__________________

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.

Say you were going to sell your house, but first you have me do an appraisal for you. I would bet with most certanty, that the final sale price you agree on with the buyer would not be the exact appraised value I gave you ahead of time. It may be off a few percent. This is the same thing as me appraising a house for 1-2% higher than what my orignal opinion of value was.

This is no big deal and is in now way even partially responsible for what has happened to the real estate market. Fraud and price inflating, on the other hand, has contributed to the issue.

The funny thing is that I am behind on a few appraisals right now because of this thread.

I need to get back to pumping values.

Just remember, don't let the lender bias 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.