Anyone do home appraials or work for mortgage departments?

[IHateMyJob2004]

I have a good question.

Our future real estate agent that we have to use because he is a longtime family friend is trying to tell us that banks have to pull appraisers from a pool blindly. Almost as though it is now based on some sort of lottery system where appraisers are randomly assigned to each loan.

what this in turn means is that people from 60 miles away can be assigned to do an appraisal. And because of this, they don't know the local market. To compound things, they don't even enter the home. They basically make "brash" estimates via drive-bys.

So, we have a nice newly remodeled home and he is basically saying that our home interior does not matter because of the system that is now in place. We could have a dump and it would appraise just as much as the same exact house with $50K put into it. And visa-versa.

I'll just leave it at that. This can't be for real. Maybe I should just talk to the local bank. This is really irking us.

 

[Fear No Evil]

I think that is the case, at least for non-FHA loans. For FHA loans the requirements were different ~2 years ago but may have changed. We were trying to buy a short sale house in FL and it had ~$150k in remodeling done inside. Appraiser was appraising it for ~50k less than we were offering on it. Basically said the same thing, inside didn't matter. Just comparing to sales in the neighborhood and square footage. We eventually went FHA because it didn't have the same requirements for a 'random' appraiser but we had to put down more money on it.

 

[DCal430]

I have a good question.

Our future real estate agent that we have to use because he is a longtime family friend is trying to tell us that banks have to pull appraisers from a pool blindly. Almost as though it is now based on some sort of lottery system where appraisers are randomly assigned to each loan.

what this in turn means is that people from 60 miles away can be assigned to do an appraisal. And because of this, they don't know the local market. To compound things, they don't even enter the home. They basically make "brash" estimates via drive-bys.

So, we have a nice newly remodeled home and he is basically saying that our home interior does not matter because of the system that is now in place. We could have a dump and it would appraise just as much as the same exact house with $50K put into it. And visa-versa.

I'll just leave it at that. This can't be for real. Maybe I should just talk to the local bank. This is really irking us.

That is true for when I just purchased my home. There no inspection inside the home it self, everything outside. They will compare your home to REO sales and short sales too that have depressed values, no adjustments will be made for this. So if a trashed REO that is similar age and size to your house sold a block a way from you for half your home value, they will call that value your homes value.

 

[IHateMyJob2004]

Wow.

That is just totally messed up. It makes no sense. Well, I guess we are not moving for a while. Or requiring 40% down payment.

 

[s1175290]

Our future real estate agent that we have to use because he is a longtime family friend is trying to tell us that banks have to pull appraisers from a pool blindly. Almost as though it is now based on some sort of lottery system where appraisers are randomly assigned to each loan.

Essentially, yes.

what this in turn means is that people from 60 miles away can be assigned to do an appraisal. And because of this, they don't know the local market.

Yes as well.

To compound things, they don't even enter the home.

Definitely not. Appraisers need to inspect every room and attach a photo of just about every room to the appraisal. Not sure what your agent is talking about, but I guess you should be glad he is your realtor and not your loan officer!!

The appraiser certainly will take in to consideration the improvements you have made. Don't worry about what your agent is telling you.

(I am an NMLS licensed loan officer, for reference).

 

[OCGuy]

I am a mortgage loan underwriter/processor. Here is the skinny:


Brokers are required to follow HVCC appraisal guidelines, where an appraisal management company has to randomly assign an appraiser. Some banks choose to participate in this program as well.

Correspondents and direct lenders are not required to follow HVCC, so the loan officer can interact with the appraiser still. I originate loans on the side as well, and I have an appraiser I personally love to use.


Also, appraisers do enter each room. They are required to verify the square footage versus public record, and supply permits for any additions to the GLA.


And just so you know, home re-models can add adjustments, but in reality, it is not a great investment. Your value is going to be based off what homes with the same room count and square footage sell for, generally within a mile of your home (depending on the type of area you live in, of course).



Edit: Expanding on the "adjustments", basically the appraiser will look at your beautiful kitchen, and will adjust it against a comparable sale. I can see a $50k kitchen getting a 5-$10k adjustment.

 

[Turin39789]

When we were looking we almost bought a home but it appraised too low. The appraiser did a wonderful job, took interior pictures, commented on the fact that the attic wasn't finished when nearly every other home in the neighborhood had already had this done etc. Great knowledge of the home and market.

A few months later when we found the home we finally bought, we were using a different loan company and the appraiser they pulled had a single photo of the outside of the home, attached three comps and had little to no notes. I even called our broker to bitch about the drive by, but he said nothing he could do, appraiser said he went in(though no details in report) oh and hey it just happened to appraise for our offer price.

Welcome to the world.

 

[IHateMyJob2004]

OCGuy,

Thanks for all the info. You pretty much contradicted everything my realtor said. He said everything in an absolute manner when that is clearly not the case. Had to read up on HVCC. He thinks that applies to all mortgages. Nope!

The nearest comp near us puts our home right where we want it from a value per square foot measurement.

 

[DCal430]

So I looked over the appraisal again I had, and it seems I was a little off. According to my appraisal they did look at the interior of my house. HOWEVER for the comparable which is what is most important, they only looked at their exteriors. One of the homes they compared mines with was an REO I looked at that had major damage inside, the appraiser did not know this, so it wasn't noted when compared with my home.

 

[OCGuy]

So I looked over the appraisal again I had, and it seems I was a little off. According to my appraisal they did look at the interior of my house. HOWEVER for the comparable which is what is most important, they only looked at their exteriors. One of the homes they compared mines with was an REO I looked at that had major damage inside, the appraiser did not know this, so it wasn't noted when compared with my home.

This is true, there is no way for the appraiser to access the inside of comparable sales.

 

[DCal430]

However they did 5 comparable for mines, so I think the idea is with a wide range they should get a decent measurement. My home appraised at purchased price, so I was satisfied.

 

[IHateMyJob2004]

So I looked over the appraisal again I had, and it seems I was a little off. According to my appraisal they did look at the interior of my house. HOWEVER for the comparable which is what is most important, they only looked at their exteriors. One of the homes they compared mines with was an REO I looked at that had major damage inside, the appraiser did not know this, so it wasn't noted when compared with my home.

Ya, they can't actually go into the comps. That is why a local guy is needed. that's also why a pool of appraisers that don't know the markets is stupid. Granted I can understand why Fannie and Freddie are forced to do this.

 

[MotionMan]

Our future real estate agent that we have to use because he is a longtime family friend

Terrible reason to use a particular agent.

Interview a bunch of agents and select the best one for the job. This is the biggest financial transaction of your life and you should not be limited by who your parents decided to be friends with.

If the friend is the best person for the job, then he should have no problem with a little competition.

MotionMan

 

[IHateMyJob2004]

This will be the 3rd sale and eventual 4th buy of my life. The biggest sale I guess.

We pretty much got rid of him today. Have 2 agents coming over the next 2 days.

 

[MotionMan]

We pretty much got rid of him today. Have 2 agents coming over the next 2 days.

Good for you.

Good luck.

MotionMan

 

[Slew Foot]

When we got our appraisal there was only a general guide to the condition of the house listed (good, fair, bad, etc..) that affected the price. LIke OCGuy said, the pile of money you spent on a Sub-Zero fridge and slab granite imported from Uranus is worth pretty much dick.

 

[Aikouka]

And just so you know, home re-models can add adjustments, but in reality, it is not a great investment. Your value is going to be based off what homes with the same room count and square footage sell for, generally within a mile of your home (depending on the type of area you live in, of course).

I've been under the impression that usually the note-worthy interior items were the ones that may affect an appraisal. Such as say... hardwood floors vs carpeting. Is this usually the case or is it completely random and up to the appraiser?

 

[IHateMyJob2004]

When we got our appraisal there was only a general guide to the condition of the house listed (good, fair, bad, etc..) that affected the price. LIke OCGuy said, the pile of money you spent on a Sub-Zero fridge and slab granite imported from Uranus is worth pretty much dick.

Don't worry, I am in the black even after the housing bubble pop.

PS: Way to generalize and stereotype in one post. It makes you seem smart. By the way, the underlined part is what you said. Not what OCGuy said. My stainless steel fridge is very nice and shiny. My $700 Stainless Steal fridge that most people would not know is a $700 fridge.

 

[OCGuy]

I've been under the impression that usually the note-worthy interior items were the ones that may affect an appraisal. Such as say... hardwood floors vs carpeting. Is this usually the case or is it completely random and up to the appraiser?

It is completely discretionary and up to the appraiser as far as the adjustments. You are correct in the fact that a nice interior may give an appraiser a stronger case if he is trying to stretch an extra $5k out of an appraisal...but in reality, it just doesn't give the return that homeowners assume it will.

The thousands of appraisals I have seen/reviewed are in California, so I must note that each market may be different.....


In my company and every other I have ever done business with, the appraisal is reviewed by a 2nd appraiser, who has no interest in the deal. He checks the comps, as well as the adjustments (to make sure the appraiser isnt giving a $70k adjustment for a pool). So there are some checks and balances in place these days, to protect the banks as well as the buyers.

 

[IHateMyJob2004]

OCGuy,

Your input is very much appreciated. You are lifting the veil of mystery on all of this.