All Forum Posts by: Account Closed

 How is that funny? The bank does that on purpose. They have identified the appraiser that does that and specifically hire them when they need a loan to be inflated. That's acting outside of their employers best interest for personal gain at the very least. It is very dangerous to a borrower too, who is relying on a sound valuation. You are fortunate to be wiser than the regular mortgage holder.

The appraised value will never equal market value, it can only ever be an estimate of probable market value. The worst part of these is when the appraised value is represented as a single price, instead of a range of value, as is the case in a mortgage appraisal. But, the bank doesn't want to go down the rabbit hole of working with a range of value so, they task the appraiser to make the call. Just like an umpire, the appraiser usually gets it close, and sometimes not so much. The most "accurate" appraisal would be one expressed as a range while the least "accurate" appraisal is expressed as a price. Why??? Any real investor that does not know the answer to that question is not a very good real estate investor as they lack a very basic understanding of how real estate markets work. Banks understand what I just said precisely. Most borrowers have no idea what I just said, which is what makes it dangerous to them.

What determines the quality of any appraisal if all else is equal and as it should be? The quantity and quality of data available.

It is more appropriate to describe an appraisal as weak or strong than it is to describe it as good or bad.

 Outstanding. And why wouldn't all investors and all people not deserve just that if at all possible?

Again you are confused, or at the very least combine two things that ought not be combined. I'm sorry, but if you don't understand the foundation behind appraisal in the first place, your little conversation here is nothing more than entertainment and will not be productive whatsoever, ever.

Mortgage appraisals are for the use of the bank to assist them with regards to making a decision concerning a mortgage loan transaction. Please read that until it sinks in, using the most literal, word for word translation you can. Here is the language you will find in the URAR 1004 form used by FNMA, the most commonly used form in mortgage appraisals from all lenders. You will find similar language in all written appraisal reports and nearly identical language in all mortgage appraisal reports. I wonder if you have ever taken the time to read any of this sort of language, usually making up half of the report, as it is more important than the valuation itself. The reason it is more important than the appraisal itself is the appraisal can be misleading if the appropriate context is not defined.

INTENDED USE: The intended use of this appraisal report is for the lender/client to evaluate the property that is the
subject of this appraisal for a mortgage finance transaction.

INTENDED USER: The intended user of this appraisal report is the lender/client.

(from Appraiser Certifications:)

20. I identified the lender/client in this appraisal report who is the individual, organization, or agent for the organization that
ordered and will receive this appraisal report.

21. The lender/client may disclose or distribute this appraisal report to: the borrower; another lender at the request of the
borrower; the mortgagee or its successors and assigns; mortgage insurers; government sponsored enterprises; other
secondary market participants; data collection or reporting services; professional appraisal organizations; any department,
agency, or instrumentality of the United States; and any state, the District of Columbia, or other jurisdictions; without having to
obtain the appraiser's or supervisory appraiser's (if applicable) consent. Such consent must be obtained before this appraisal
report may be disclosed or distributed to any other party (including, but not limited to, the public through advertising, public
relations, news, sales, or other media).

23. The borrower, another lender at the request of the borrower, the mortgagee or its successors and assigns, mortgage
insurers, government sponsored enterprises, and other secondary market participants may rely on this appraisal report as part
of any mortgage finance transaction that involves any one or more of these parties.

All appraisals are developed according to the intended use and the intended user. Each appraisal is unique to those two things. Possession of a report does not equal right of use, and those granted permission to rely is not the same thing as the intended use, though it is easy to confuse that fine line. Because most people have never experienced anything other than a mortgage appraisal, they unwittingly assume all appraisals are similar to mortgage appraisals when that could not be more false.

Mortgage appraisals are the very worst of all appraisals in terms of quality (not including the nightmares known as AVM's like Zillow). However, the bank only needs a certain quality to make their decision concerning the loan, and so therefore the current level of quality is acceptable. All mortgage appraisals are written to satisfy the banks needs and concerns, with zero consideration of the borrower.

Banks (FNMA), not appraisers, developed the form format for all mortgage appraisals - they wrote it. If you don't agree with the methodology and reporting, you need to take that up with FNMA, right behind an endless line of appraisers doing the same, and who have been doing the same for a very long time, with almost no results.

It is very important for FNMA and all lenders to have a uniform appraisal. URAR is an acronym for Uniform Residential Appraisal Report, just like USPAP is an acronym for the Uniform Standards of the Professional Appraisal Practice - emphasis on the word uniform in both cases.

Armed with a uniform report format developed by appraisers beholden to a uniform code of conduct, lenders from CA can obtain an appraisal from a property in WI and make a decision on the value without wondering what the particular appraiser is attempting to communicate - in other words there is a very real need to keep it simple so the whole machine of lending across state lines goes smoothly. Borrowers have been enjoying this benefit for a very long time, but as they say, what have you done for me lately?

Lately borrowers seem to think they have a say in how a mortgage appraisal ought to be done. And why not? They paid for it. However and again, that is an issue you need to take up with the bank as a consumer, after convincing you to purchase something for them. Can you think of anyone besides your family and friends for whom you might purchase something as a gift? Pretty much unheard of in business. Yet, because borrowers want to borrow, they pony up and pay the banks expense. Did you know that some banks skim the appraisal fee?

Now that we have talked about mortgage appraisals to the point of nausea, I would love to talk about how a better appraisal could be done.

Better appraisals are in fact being done everyday. However in small numbers, because instead of people purchasing these better appraisals, they instead decided to rely on the one they purchased for the bank, that they don't have a right to use anyways outside of a warm fuzzy when they get a loan.

I had been providing these better appraisals to people for a very long time, in small numbers as I already stated. Those people made very informed decisions and the amount I charged them for the service was really no more, and even less in many cases, than the typical fee for a mortgage appraisal.

Appraisal is an art, not a science. Until you wrap your head around that, I won't waste my time with you any longer. Maybe you we're hoping I'd come to that about 4 posts ago - lol.

 Enough. Time to get my fishing gear set and launch the boat. 

You go ahead and plan out that revolution of yours. Let me know how it all works out.

 LOL. Yea...I get what you are laying down here my friend. However, I might say you miss the point of the appraisers role entirely. Appraisers do not exist in the world of mortgages because nobody else can figure out what the property is probably worth - any monkey can do that.

Computer programs can not be programmed to calculate human objectivity as it translates into dollars. And believe me, the programmers have been trying to do that for a very, very long time. Will that be possible in the future? I highly doubt it, as that would require technology that literally taps into the brains of humans. The only way around that is to compile and accept as fact certain historical data that could be used to calculate a property value. The problem there is assumption, time and location, each of these has an affect on value and/or prices. The cost of such an accomplishment is an interesting consideration too.

The reason appraisers exist is to keep the dishonesty of loan brokers in check. This has always been the case. Once that problem is solved, mortgage appraisers will no longer serve a purpose. If you would like to get rid of them, solve that problem and you're done. All you have to do is change all humans to never be dishonest and presto!

As far as archaic methodology, I might agree with you in that regard, but I would not make any of the suggestions you are making here, as none of them would be better, or more cost minded, than what we already have in place with human appraisers. IMO, the appraisal world is in fact behind in the times, and that creates reasonable frustration among people like yourself. All I can say is I did what I could when I was an appraiser to correct that, but my efforts were futile, just like resisting the Borg. And as a last joke, you aren't suggesting we would be better off as a race if we were more like the Borg are you??? (Borg - A race of beings that are one part living, one part machine - from the television show Star Trek)

Live long and prosper.

The appraisal of property is an art, not a science. Sometimes the art of appraisal employs science. Why is it always an art and never a science? Because at the end of the day it is still an opinion, not a scientific fact. I would expect out of all people, real estate investors would be a group that could easily wrap their heads around that, whereas I might expect that to be challenging for a regular person.

However and to counter what I just said, it is also true that some appraisers believe it is a science and not an art. If this thread is about complaining about appraisers and the stupid things they do, that is a contribution to the list from me.

This is the reason you have had this experience:

USPAP 2018-2019, STANDARD 1: Real Property Appraisal, Development, Standards Rule 1-5

"When the value opinion to be developed is market value, an appraiser must, if such information is available to
the appraiser in the normal course of business:

(a) analyze all agreements of sale, options, and listings of the subject property current as of the effective
date of the appraisal; and

(b) analyze all sales of the subject property that occurred within the three (3) years prior to the effective date
of the appraisal."

The appraiser is required to obtain a copy of the current purchase agreement, is required to "analyze" it, according to the portion of USPAP that pertains to the development of the value conclusion. The problem is, what "analyze" means is defined exactly nowhere, and the provision is located within USPAP under a standard that deals specifically with the development of value, not reporting, not ethics, not record keeping, not scope of work, etc. This creates a confusion and common misinterpretation and arguments between appraisers and appraisal users alike.

The reality of all that is this - the appraiser knows what the sales price is and they are going to hit it every time unless they have a good reason not to. Whether or not they ought to be doing exactly that is highly debated. The fact the general public are mostly unaware of it is wrong.

 Challenging an appraisal may be illegal.

It is not illegal to challenge an appraisal if errors are discovered, however be advised, no appraisal is perfect and there is room allowed for small errors before an appraisal will be deemed deficient. The errors must be a) substantial to the result or b) so numerous that they illustrate incompetence. A couple of typos aint going to cut it. An appraisal that demonstrates an appraiser can't add and subtract might. An appraisal that demonstrates a difference in opinion between you and the appraiser is not going to cut it.

It is illegal to challenge the appraised value in all mortgage appraisals. It is illegal for the bank to do it. It is illegal for the borrower to do it. It is illegal for the realtor to do it. It is collusion if these parties conspire to do it.

Where everyone goes wrong on this issue, is the law allows the appraisal client (the bank) to request supplemental information from the appraiser post-submission of the appraisal report, for the purposes of providing further support of the value conclusion already made and delivered. This provision is widely misinterpreted, for obvious and self-serving reasons, as an open-season to challenge the value conclusion. Take a second and consider the circumstance of obtaining a mortgage appraisal in the first place - the entire point is to create a barrier between the valuation of the asset and the loan officer, according to the rule of law to do so - not because nobody other than the appraiser can figure out what the property is probably worth.

The absence of law enforcement has made the problem more widespread, to the point where people are challenging appraisals all the time. In the absence of law enforcement, each individual appraiser faced with the circumstance must navigate how to address challenge requests, often blatantly titled "Reconsideration Of Value Request" by the lender, borrower and realtor. Some lenders even have policies encouraging borrowers and inviting realtors (what the hell is the realtor doing in the loan office?). What most appraisers do, is bite the bullet and write a paragraph of nonsense saying they aren't going to change a damn thing and **** you, written in a much more polite and professional manner. The really stupid appraisers will actually conspire illegally with the bank, borrower and realtor and change the value (if I can add to this thread list of things stupid appraisers do, that might be the top of my list). The incredibly smart appraisers MIGHT take the time to explain this to the client, except by doing so, lenders usually call another appraiser the next time, seeing as they prefer to have their head in the sand while the sand is profitable. See no evil.

The influence on appraisers from loan brokers in the modern world is the telephone. Play ball or the phone stops ringing. Each appraiser actively working in the mortgage industry currently is therefore a) ignorant of the laws governing the profession - an act prohibited under USPAP or b) dishonest or c) both or d) doing the best they can while they suffer injustice and an impossible choice. I'd say option D is the most common one. It's 100% the appraisers fault and at the same time is 0% the appraisers fault. That last bit takes a few more pages of text to explain. It's also at the core of why I stopped being an appraiser. I have seen the evil and have walked away.

As far as the question about comps, why are you attempting to analyze comps??? Think hard. Answer honestly.

As far as your inclination that appraisers are working for the "other" party, I wonder at what point did you ever think it might be any other way??? Was it when the bank talked you into paying the fee for the appraisal? Is that when you thought you purchased an interest? Of course the appraiser is working for the bank. The appraiser is working only for the bank. And what that explains, is why the comps appear to be selected according to what the bank might want to see, maybe not what might make the most sense to another party. That is exactly what is happening, and also exactly as it should be. Your problem is you think you are entitled to more for your money than you are!!! (As a side note, the only reason the borrower receives a copy of the appraisal report today when they pay for it is because someone complained to the right person and a law was passed a few years ago - borrowers did not always get a copy, and the fact that everyone does now creates confusion over the rights of use.)

As far as the ability to pull data on your own - bravo! Each investor will need to become their own appraiser. Then when you have cash and don't need a bank, that skill will really come in handy as there are no social safety nets in place for cash buyers.

 I am sorry for your loss. I can sympathize your exact situation. I am also sorry you felt forced to seek internet help, an obvious act of turning over all stones.

However, you are also finding out, maybe for the first time, that seeking help on the internet is not something you are capable of dictating in all cases.

I make this post to offer condolences, but to also offer the observation that you are currently in another situation outside of your complete control that you will only be able to dictate partially and it might be wise to understand that. I say this because you appear to be failing to understand that in this thread. If you truly do not want to waste time on the internet, why are you doing it my friend??? Replying to people who make off-topic or irrelevant posts is entertainment, not getting work done.

Food for thought. And again, I am sorry you are going through extra difficulties during an already troubling time. Be well and welcome to BP.

In WI, the time frame is 20 years. There are always time frames with this stuff. It is my understanding that a claim to title must be made, that the transfer of title is not automatic HOWEVER, that is my understanding and I AM YELLING AT YOU to find out for yourself. Yes, call a lawyer the instant you believe you don't have a handle on this, and in my opinion you are already there.

I believe my neighbor was attempting to steal my property a couple years back. I moved in, he had been there for 16 years. Being the sort of person I am, I cut through the vegetation to discover and expose my property lines. I found a substantial encroachment on my land. If I had not taken steps to remove my neighbor from my property, they could have made a claim of adverse possession. The portion of the property was the "lookout" of Lookout Drive, a piece of land with a commanding view. My neighbors property sits behind and above me on a bluff, while my house is below. I own the entire cliff of the bluff, which restricts my neighbor from controlling the view. My property value would have been decreased and his would have been increased, substantially for both.

What I was able to do is first have a conversation with my neighbor. He willingly admitted he was using my property and knew where the lines were!!! What??? That right there was the moment where the whole thing could have gone either way legally. Had I not objected to his use, he could make claim to my property today. Instead I objected and asked him to remove all personal property from my land and discontinue use - he complied, sort of.

What he did is retreat partially. The problem was that the area in question was so thick with vegetation it was impossible to determine the property lines even in the winter (except he knew were they were and not me right?). Further, the leaves in the summer made it impossible for a surveyor to discover the lines in summer using GPS (accurate to 1/4 inch). So, I had to wait until spring to schedule and get the work done, according to nature and according to the surveyors work schedule (I've heard local surveyors are currently two months out with appointments).

Once I got the survey done, I found out my neighbor had likely moved the property marker during the time I lived there, in between the time I first demanded a retreat and the time I did the survey. I know/suspect this because I personally witnessed the property marker in the ground, then pulled out of the ground and laying at a later date, then pounded back into the ground another later date, neither by my own hand, with the only person with an interest in doing so being my neighbor. Further, as a matter of coincidence, the surveyor who set the tampered marker in question originally was the same surveyor I hired! He left the marker in question in place, set a new marker in the correct location, and noted on the survey that two markers now exist, one accurate and one that displays evidence of tampering. The survey is filed with the county as a matter of public record.

Armed with that information, I went ahead and cut through all the vegetation that I had previously been unwilling to cut down because my damn neighbor was essentially making a claim to it. Once the entire line was exposed, I strung a line from one marker to the other and took about 100 pictures to document the line location in the event my neighbor wanted to play more games with the property markers, making sure I got shots of trees as permanent markers of reference. My neighbor came out to the yard to question me about what I was doing at that time. I told her. I had also put up orange road cones in certain spots along with red property marker flags. She had the nerve to request I remove them because she found them ugly. Seeing as I had just written a $500 check to the surveyor five minutes prior, I was thinking I might put up big signs every four feet in rainbow colors reading No Trespassing and No Dumping. LOL. I hope we can get over it and laugh over a couple beers someday, but for now we have an adverse neighbor relationship. I removed the orange cones, the red property flags along the line remain.

What I want to stress with this long story, is that the entire process I just described happened over the course of a few years!!! TIME IS OF THE ESSENCE.

Adverse Possession. It's a thing. My advice is you call a lawyer right now. A consult will be worth every penny.

It's a house of cards.

I was an appraiser for 14 years, specialized in mortgage work, just like nearly all professional appraisers out there.

Out of the handful of appraisers out there that don't do mortgage work, many, if not most, started in mortgage work or were taught how to do appraisals from a mentor that was versed in mortgage work as their first introduction to the appraisal of real property. 

What I'm getting at here is the influence of mortgage work on the entire Professional Appraisal Practice is much more than substantial, it has been a defining force in the industry, permeating all aspects of real property appraisal and by association, the appraisal of personal property too.

This is of course due to the need for appraisers in the first place. Without the need created out of the finance industry, very few real property appraisers would exist. I might guess the numbers would be similar to the number of Personal Property Appraisers that exist today who are by the way, governed in many cases by the same "rule book" of professional standards as Real Property Appraisers are, called the Uniform Standards of the Professional Appraisal Practice or USPAP for short. (The Antiques Road Show on PBS television is a documentary series covering Personal Property Appraisers and their Appraisal Clients in a conference hall setting).

USPAP itself is not the law. However, numerous law enforcement agencies have adopted the text into law, some federal agencies, some state agencies, and even some local agencies in a few cases. Insurance companies have adopted USPAP in some cases. The IRS has adopted USPAP in some cases. Etc etc. USPAP is a self-governed document for the appraisal practice profession, a trade organization document one might say. But there are some very sinister things everyone ought to know about the USPAP document.

USPAP was originally written in the 1980's after the Savings & Loan crisis (maybe some of you remember that event) where the fact of the matter was, banks were employing appraisers the same way they do now, to value an asset for purposes of underwriting a loan however, loan brokers and appraisers were too "cozy" with their work together, and were even employed by the same bank and working in the same office in many cases, where fraud began to find it's evil way into one bank, then another, then another.

The important part to remember here is that while each bank is it's own entity, the industry acts as a whole sometimes, similar to how the real estate market acts as a whole sometimes. For instance, when prices go up or down within a market segment, all of the individual buyers and sellers are affected. In the case of the S & L crisis of the 1980's, and in the case of today, the finance industry has been intertwined with numerous forces that shape the consumer landscape. Each and every problem discussed in this thread, save for the complaints of poor customer service from individual appraisers at the personal level, stem from this dynamic, where mortgage appraisals are but one piece of a larger formula we all know and love as the ability to obtain funds using credit or OPM (other peoples money, as is commonly phrased by many investors here on BP).

USPAP was taken over by the Appraisal Standards Board or ASB since the 1980's, under the oversight of the Appraisal Subcommittee, the entity granted the power of over-sight by the United States Congress. What that means, is USPAP started as a trade organization document born from the input of appraisers only, while today it is written and updated according to the ASB, which allows input from parties other than appraisers, for example financial institutions. The affect is that the modern USPAP end up serving multiple masters in a situation when the entire purpose of the profession was to separate the masters from each other.

Seems the smart people have found a way to keep the loan brokers and appraisers cozy after all without anyone realizing it's happening. But why? How? Is it accidental and I've let my cynical mind get the best of me? Could it be that the only thing needed is a few rewrites? Perhaps. Perhaps not. I keep going back to how smart people are smart, powerful people are powerful, and if a person was smart enough and powerful enough, they might come up with a scheme. Then, when I consider how USPAP shapes the world, I can't help but notice it makes for the most perfect scheme that could have been thought of - LOL - a defining example of a conspiracy theory right??? Well, as the old saying goes, theory is something unproven, while facts are things we know to be true. I won't be able to prove collusion, but I can prove conspiracy, even if the conspiracy did not intend to create adverse consequences.

Everyone still with me here or have I written too many sentences? The background and context to this story must be understood.

Here's the problem and here's why the government stepped in to regulate. The financial industry means housing, housing means loans, and when the whole thing collapses from bad practices people lose their houses and lose their money and in addition to that, the over-all economy suffers too. This happened on a country level in 1980 and happened on a global level in 2009. The term "housing bubble" became a household word from each of these events.

People believe real estate markets are driven buy the individual decisions made of buyers and sellers and that's true. What is also true, is that the individuals are additionally influenced by policy. Therefore, the purchase or sale decision of individuals is not as free and pure as many people perceive it to be (including misperceptions from incompetent appraisers sometimes). Indeed, policy can and does influence prices and the economy. It's a great tool for government, it's a great tool for society, it's a great tool for business, it can also be a very bad thing. The question then becomes do we accept to take the good with the bad? One interesting thing about laws, is they are much easier to create than they are to get rid of. Another interesting thing is often they are too complicated to understand what might be wrong with them. I might conclude the complicated nature is the problem, but other people would argue the complication is necessary and so it must exist.

Some of those "bad things" are the things being expressed in this thread today. Ignorance for starters. Confusion. Anger. Financial loss. I would like to take one topic, an enormous one, and explain how the regulated world of loans for housing has the adverse consequence of perpetual increases to housing prices all across the country, witnessed personally by all of us in the last 20-30 years, where few comprehensive answers to why markets continue to increase in price have been found. I will demonstrate how it is the USPAP, in combination with other forces, that accomplishes an artificial and perpetual increase in prices. I will need at least one person to like this post to do that however, as I am not going to waste my time on a crowd that isn't interested. It took a considerable amount of time to write as much as I have already. If all any of you want to do is take a moment to vent about the appraiser, even in the presence of a former appraiser, I won't say another word about it, you go ahead and enjoy yourselves. I'll throw in how annoying it is to have a stranger enter my home and take pictures of everything!!!

Be well.

My advice? Every investor must learn to be their own appraiser or they will likely fail.

Second piece of advice? Never read a mortgage appraisal unless you're an underwriter and your job requires it as due diligence. You will poison your minds and drive yourselves crazy attempting to make sense of any of it - the evidence of that statement is found right here in this thread.

I've got an appraiser joke...

Appraisers who provide opinions of value in an amount that supports the loan are considered good appraisers who have developed and reported a good appraisal 99% of the time.

Appraisers who provide opinions of value in an amount that does not support the loan are considered bad appraisers who have developed and reported a bad appraisal 99% of the time.

All Appraisers develop and report mortgage appraisals the same way 100% of the time.