NEW APPRAISAL STANDARDS YOU NEED TO KNOW ABOUT

I thought I'd talk a little bit today about the biggest "deal killer" in the real estate market today, appraisals. Most agents can now talk personally about a slam dunk deal recently lost due to the appraisal process.

Appraisals have been a sore spot in the real estate market in the past decade. When things were booming, pressure was placed on appraisers to make the value hit the loan amount. This caused prices and values of properties to skyrocket. Everybody loved 'em in the day.

Then when the downturn hit, appraisers realized their culpability in the boom and tightened their standards. Real estate agents were bamboozled as property sales were constantly getting stuck at the appraisal stage as the values were regularly coming in under the loan amount.
Now let me take a minute to explain I am not blasting appraisers. They are the middle man in the home sales equation and are always in a tough place. If they are too tough they do not get work later on so their is a self interest at stake. I get this.

But now new Fannie Mae and Freddie Mac regulations have put the appraisers in a bigger bind. They demand that lenders control the choice in appraiser, not mortgage brokers or real estate agents.

The cost cutting mentality of the appraisal management companies is lowering the standard on the quality of appraisals. What is ironic is that they are paying the appraisers less but charging the customers more at the same time.

So now the top quality appraisers are being squeezed economically while they also are under the whim of the management company to get work. This is not the recipe for an effective market.