I was recently speaking to a real estate agent who was quite upset and was asking me for advice on on a particular situation.

You can’t make this up.

I never saw the appraisal report and don’t know if it was right or wrong. It’s the process that amazes me. The agent told me:

>I’m refinancing with a bank where I already have a mortgage – [Large US Bank Who Took TARP Money].

>The appraiser who came to my apt [threw] his hands up in the air and said “how am I supposed to appraise this thing” and indeed he did not as the comps he used were completely not appropriate and he did not look at the info I sent to him PER HIS REQUEST.

>To make a long story short, I have escalated this as much as I think I can at [Bank Name Redacted], but I see no results and Monday will be exactly 2 wks since this happened.

The agent just got back to me and told me the bank stood by the appraisal.

Of course, the bank has little to do with the review – that’s because national lenders are centralized, nearly all rely on Appraisal Management Companies and have little or have no local knowlege in housing markets or have relationships with someone who does. The AMC who hired the appraiser for the bank is likely the one who reviews the report. Remember, they are the same firm who felt it was appropriate to use an out of market appraiser, so how reliable will their review be?

The AMC position tends to be: if you are licensed in New York State, you should be qualified to appraise in all counties of the entire state.

A state appraisal license does not equal experience or competence. It’s a revenue opportunity for state governments and it is a very low bar to cross to get a typical state license. Basically a half dozen courses and 2 years experience.

In this case, the out of market appraiser based in Armonk, New York, and was hired by an AMC on behalf of a bank to appraise a duplex co-op penthouse in Manhattan. This is becoming a more common occurrence in appraisal function of the national retail banks, all of whom are using Appraisal Management Companies.

From the appraiser’s reaction in front of the bank customer/borrower reaction, I would guess he’s not familiar with this type of property, nor does he act as a professional while on the inspection. A low bar indeed.

Another large US bank I know uses nearly 300 appraisal firms in Manhattan with appraisers driving as much as 4-5 hours to bang out a bunch of co-op reports in one day. In my nearly 24 years as an appraiser in Manhattan, I am aware of only 4 firms that regularly do Manhattan work.

I don’t think the banks are stupid (I know, I know). I think they see the mortgage universe as short term profit and loss, rather than as long term preservation of capital. It’s a modern cultural thing I suppose.

If that’s not the case, then they don’t see what value appraisers bring to the table (no pun intended). It is going to be much harder for appraisers in the post-credit bubble universe to make a compelling argument for competent services if the market doesn’t seem to need them in the current structure and where most of the competent appraisers were put out to pasture.

Speaking of pastures…although I’m based in New York, I’m thinking of flying out to Montana and banging out a quick appraisal of a 100,000 acre cattle ranch for $175 in 24 hours.

How do I make money this way?

Volume, my friends.