Make us your home page
Instagram

The Nation's Housing: Appraisers feel pressure to keep home values low

Appraisers pressured to keep values down

WASHINGTON — Growing numbers of mortgage loan officers and real estate agents say appraiser reluctance to report local appreciation is becoming a significant complication in sales transactions. In a new poll of its members, the National Association of Realtors found that 33 percent of them reported appraisal problems in May.

Even appraisal experts concede this is a troubling issue. Frank Gregoire, former chairman of the Florida Real Estate Appraisal Board and an appraiser in St. Petersburg, says many appraisers are reluctant to make the upward adjustments they know to be justified because they fear criticism that they are potentially overvaluing the property — exposing lender clients to "buy-back" demands by Fannie Mae or Freddie Mac or to future litigation.

"Even if they have the (local) data to support" adjustments reflecting positive trends that affect value — pending home sales and new listings of similar houses at higher prices, for example — "they take the easy way out" and go with a lower valuation to avoid upsetting hyper-cautious reviewers at the appraisal management companies that now control the bulk of all home real estate appraisal assignments, Gregoire said.

One appraiser in his area recently assembled strong supporting data to make an upward adjustment to a valuation based on recent sales activity on comparable houses. When he delivered the report to the appraisal management company that hired him, however, an official of the firm sent it back with instructions to "revisit" the upward adjustment — in other words, to get rid of it.

Joseph Petrowsky, owner of Right Trac Financial Group Inc., a Manchester, Conn.-based mortgage company, says too often valuations in upward-trending markets "aren't catching up with the new values, let alone a property that was involved in a bidding war." He cites a series of recent loan applications where the appraisal was thousands of dollars below the agreed-upon contract price, endangering or blowing the deals.

"Appraisers are scared to death" to report rising values, said Petrowsky. "They feel they have to (deliver) appraisals they know should be higher." Much worse is the impact on sellers and buyers. When an appraisal comes in much lower than the agreed contract price, the buyers typically need to revise their loan request by increasing the down payment — which may not be feasible — or renegotiating the contract price with the unhappy seller.

Buyers and sellers can guard against this problem by making sure real estate agents on both sides of your transaction have assembled accurate data on "comparable" sales or pending sales that demonstrate how the market has changed in the past six months or less. Then make sure the appraiser sees the data.

The Nation's Housing: Appraisers feel pressure to keep home values low 06/23/12 [Last modified: Saturday, June 23, 2012 4:30am]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Washington Post - Writers Group.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Parent of struggling DeVry University is changing its name to Adtalem

    Corporate

    Associated Press

    DOWNERS GROVE, Ill. — The company that owns one of the nation's largest for-profit college chains is changing its name.

    This 2009 photo shows the entrance to the DeVry University in Miramar, Fla. DeVry Education Group, which owns DeVry University, announced Wednesday that it will now be called Adtalem Global Education. 
[Associated Press file photo]

  2. New DEP secretary says there's no conflict in political side businesses

    News

    TALLAHASSEE — When Noah Valenstein, the newly appointed head of the Department of Environmental Protection, was applying in April to be the state's top environmental regulator, he left one thing off the application: Companies he started and his wife runs have been paid nearly $1 million by politicians and lobbying …

     Noah Valenstein got the job as secretary of the Department of Environmental Protection on Tuesday May 23rd, on a unanimous vote by Gov. Rick Scott and the Cabinet. He will take the helm on June 5, with a salary of $150,000 per year. [Florida Governor's Office]
  3. New stores coming to Tyrone Square Mall, like Bath & Body Works

    Retail

    Tyrone Square Mall will welcome a half dozen new stores, like Bath & Body Works and MidiCi's The Neapolitan Pizza Company, this summer.

  4. Target Corp. reaches $18.5 million settlement with 47 states over data breach

    Retail

    Target Corp. has agreed to pay Florida $928,963 out of a newly-announced $18.5 million settlement over a huge data breach that occurred in late 2013.

    Forty-seven states and the District of Columbia have reached an $18.5 million settlement with Target Corp. to resolve the states' probe into the discounter's massive pre-Christmas data breach in 2013. 
[Associated Press]
  5. Gov. Rick Scott's family history of alcohol abuse could decide 'liquor wall' bill

    Legislature

    TALLAHASSEE — Gov. Rick Scott must decide Wednesday whether to let Walmart and other big-box stores sell liquor, and he says a factor in his decision is the history of alcohol abuse in his family.

    Florida Governor Rick Scott is considering a veto of a bill that would allow Walmart, Target and other big box retail stores to sell liquor. [Andres Leiva | Tampa Bay Times]