Appraisal Issues in N. Texas? (Plano, West: loan, house, neighborhood)

[jdallas]

The point is to save up and rely less on lending institutions.

[Rakin]

Originally Posted by HFamily

I'm not looking to blame anyone, I'm sure this is a multi-agency problem. I'm looking to find out who makes these rules so that I can write them about this situation and help them understand how it is hurting the market recovery. A solution needs to be found, but they must be aware of the problems first before they can work on solving any.

A lot of the problem is the laws passed over the last 3-4 years. Lenders can no longer talk directly to the appraiser. There are all kind of regulations and some hold the Appraiser responsible if he is too generous.

In 2-4 months the problem should be resolved as more and higher priced homes per sqft sell.

Until then, you might fire off an email to the big guy in DC.

[serger]

Originally Posted by HFamily

Qualifying isn't the issue, we're already credit approved. The issue is that the underwriters won't issue the loan if the contracted price is more than the appraised value, and the appraisals aren't taking market competition into account. With some lenders this is the rule, regardless of whether or not you're paying cash for the difference.

This is what happened to us in 2010, the difference was small, seller agreed to small adjustment after the appraisal came in, and in the end the diff. was < 1% of the appraised value. We were doing 20% down, so I could not believe this was an issue at all. We ended up signing a letter saying that we understand that the appraised value is slightly lower and that solved it. That and the cash for the difference.

[ETex2]

Originally Posted by HFamily

Qualifying isn't the issue, we're already credit approved. The issue is that the underwriters won't issue the loan if the contracted price is more than the appraised value, and the appraisals aren't taking market competition into account. With some lenders this is the rule, regardless of whether or not you're paying cash for the difference.

Never heard of that. Lenders care what the appraised value is and not sales price.

Appraisers are expected to predict the future based upon the past. It also hurts that many brokers will not disclose, even if kept confidential, the prices for properties under contract. In the past, it was common for appraisers to adjust for changing market conditions, if the market is going up and that can be established by enough comparable sales, then an upward adjustment for changing market conditions is appropriate. However it is also where the regulators and others who have power over appraisers and their licenses, are most eager to hang the appraiser out to dry if he's wrong. As a result, appraisers are often forced to be conservative or risk losing their license.

[HFamily]

I found some pretty good resources: TALCB - Home Page, Agency Information This is the website for the licensing & regulating board for Texas appraisers. From there, I found a link to the standards of practice rules: http://www.talcb.state.tx.us/ActAndR...ALCB-Rules.asp And then this: APPRAISALFOUNDATION.ORG This is the information I was looking for, sharing for anyone else having these problems.

It looks they are regulated by state boards, not the White House or President, and each board members' contact information is listed. Complaints need to go to the correct people if there is any hope of anything being changed. Thanks for the suggestions anyway!

[Johnhw2]

Thanks for sharing this. I bought in 2010 and was worried about appraisal too at that time the sales were not very frequent and harder to find comps without big adjustments. Despite putting 40% down I was told if my home did not appraise at sales price I could have a problem. I argued that why should they care if my equity is this high. Fortunately we appraised just fine but....they have me stirred up if what I was told was true. I asked why couldnt I pay more down, if it came in low, to keep the loan to value ratio or what ever the lender had to have... again was told was not allowed. I dont understand why this would be true. I was a little peeved to say the least after the fiasco appraisals must have been a few years before I bought during the big bubble.

I wonder if things have evolved at all from 2 and a half years ago when I closed.....but it doesnt sound like it has... clarify for me Rakin or other knowledgable posters on CD Big D.

[ritholtz]

My realtor told us, appraisers can go to jail for any misrepresentation according to the new rules. There is suppose to be shortage of appraisers as some of them gave up their licenses. We panicked and offered full price which is 5% more than market value given in county tax records. We are waiting for the appraisal report. We might end up in similar boat.

[nsumner]

OP, You are not alone. It is being experienced by many right now. Appraisers are being super conservative because they were under the gun a couple of years ago and were being scrutinized so they're playing it safe. The housing bubble didn't happen because of appraisers over appraising homes, it happened because lenders gave loans to people that weren't financially responsible. It is still happening today with USDA loans. If you make less than 84K, you don't have to put ANY money down but the home has to be in a semi rural area.

OP, your lender can order another appraisal, you don't have to change lenders, ask the seller to split the cost with you. How much of a difference was it anyway? May be with a second appraisal, the owner would be willing to come down to meet it and compromise.

The appraisal review is a joke IMO. The file gets turned over to another appraiser to check the work of the first appraiser and then he can determine if the first appraiser followed the rules or not. 99% of the reviews are coming back showing that the first appraiser did his job just right.

I had a situation in the last 2 weeks where the appraisal came back well below contract amount and the measurements were 101sf smaller than the previous appraisal. The appraiser came to the house on a Sunday afternoon, had kids in the car, measured a 3400sf home etc. and was out the door in 15 minutes and told the seller that he was on his way on vacation so he had to make it quick.

After reviewing the files, I found out that the same appraiser appraised the house 2 years ago when he seller refinanced and the measurements were still different and he appraised it back then for more than he did today. So what happened in 2 years? did the house shrink by 101sf? it's not that much space but it's still a 10K difference when the sales price is $100psf. Are you telling me that the value of the home was higher 2 years ago than today? NO WAY!!!

Filed an appeal, came back that the appraiser didn't do anything wrong and justified that difference in SF that "it's not significant enough to warrant a change in the current value.

I think one of the posters on here Hockeydadof2 is an appraiser. I would love to hear his opinion on this.

Naima

[Rice&Curry]

If it weren't for contingency of appraisals, low inventory would lead housing into another bubble. However, appraisals are sucking air out and that's not good either.

[ritholtz]

Originally Posted by Rice&Curry

If it weren't for contingency of appraisals, low inventory would lead housing into another bubble. However, appraisals are sucking air out and that's not good either.

It is so easy with new homes. They are not even insisting for 5% down payment. Wondering, if the rules are completely different for new homes? Why do they lend only with 5% down payment for new homes?