Here’s the result of an email interview I conducted with Brick Underground expressing my dissatisfaction with Appraisal Management Company (AMC) appraisers these days and corresponding situation that a real estate agent was going through.
The real world appraisal situation – the name of the appraiser and related organization was omitted to protect the guilty. Here’s the sequence – READ THE DETAILS CLOSELY (sorry for the all caps but I really am yelling):
- Appraiser who works for an Appraisal Management Company on behalf of a national lender performs an appraisal of a walk-up apartment.
- Contract price in appraisal was $414k when the contract price was $460k
- The appraised value was close to the incorrect contract price.
- The wrong apartment was appraised. The correct apartment is larger than the one appraised.
- The inspection/effective date was listed as January 27, 2010 when the property was actually inspected on February 3, 2010.
- No comparables from the subject neighborhood were used.
- The appraiser reversed the floor level adjustments suggesting that the lower floor of a walk-up is less valuable than a higher floor (A built-in health club!).
- The appraiser gave no credit for a private roof deck.
And the key detail…
- The AMC fought hard saying that the appraisal was correct. In fact, despite these amazingly negligent errors they “refused a new appraisal saying despite errors below, the value stands.”
In other words, the appraiser did not know the market or how to appraise a walk-up, was guided by the contract price which was actually wrong. When told the price was wrong and a smaller apartment was appraised, the AMC stood by the appraisal.
I didn’t appraise the property and have no idea whether the apartment was worth the sales price. I’m just using the information provided.
The only solution for the buyer is to roll the dice and go to another bank. The bank loses because a professional evaluation was not performed. The bank likely doesn’t even know that this happened. A buyer and seller lose because the appraiser was incompetent. The broker may lose a fairly earned commission because of a form filler who has no business being called an appraiser.
This is not appraising – it is idiotic form filling managed by people who should not be in the mortgage lending business.
So you can see how my interview on Brick Underground covering this topic was so terse – I was being told the above situation at the same time. Here is the link again:
How to not get scrwd by an appraiser [Brick Underground]
As I’ve said many times before, the current appraisal system with Appraisal Management Companies is an accident waiting to happen while we pretend that everything is OK.