Gina Branch

A couple of weeks ago a lender ordered an appraisal on one of my Short Sale listings. He had been hired by the lender to set the value. He was an out-of-area appraiser and did not have a SUPRA key, so one of us had to meet him at the property.

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As we went through the property together, we noted the overlay roof with rotting decking and soffits, carpets that would need to be replaced, deteriorating siding, and rotted beams on the front of the house. I suspect that the buyer will have to pay cash or perhaps a 203(k) rehab loan due to the roof and rot.

As we talked, he shared his comparables.  I asked him why he did not use the three foreclosures on the same street rather than going into another subdivision to find sales. He told me that the lender’s directions were “not to use foreclosures or Short Sales” as comparables. Of course, when the value came in it was at least $20k too high.

If this was a normal mortgage, you can be sure those three foreclosures would have been used to determine value but in a Short Sale, they will not. This process almost guarantees that the home will go into foreclosure.

Let me understand the situation. We created HVCC to allow appraisers to operate without influence. The AMCs are usually owned by the lenders, so now the lenders are telling appraisers how to value properties!

So all we’ve done is to have the appraisers work for the lenders (through the AMCs) rather than the borrowers.  This has driven up the cost to the borrower, reduced the income of the appraisers, and increased lender profits.