When Will Appraisals Be Worth More Than The Paper They Are On?

Although I've been in the hard money lending business for quite some time and have never relied on selling my loans to another investor (institutions and/or wall street), it still amazes me with the lack of integrity appraisers have and the fall of the subprime market and securitization in general. They are still pushing values even in todays market climate. There isn't a day that goes by when I don't see appraisers pushing values. How can someone say a value is based on a sale 7 months ago in this down market environment? And better yet, using comps over a mile away in a conforming neighborhood when there are listings next door to the subject property 20-30% less than the appraisal.

I just want to say - wake up appraisers and start valuing properties correctly since the NextGEN lenders will critically analyze the trustworthiness of the appraisal. As if you didn't know already, you need to start taking into consideration the following for valuations:

• Comps within the same neighborhood
• Recent sales within 45 days or less
• Current listings - this includes both retail listings and REOs
• Be objective and quit listening to brokers regarding what value needs to be at. It is your job to let them know what the value is
• Days on market - if a property isn't selling then obviously the property isn't listed at the correct price and needs to be reduced

Appraisers owe it to their clients (i.e. borrowers, brokers and lenders) to keep expectations in check and value the property correctly. The industry really needs to keep a score card on appraiser's accuracy in determining true value. Remember, the fall of the Subprime and securitization can be partly blamed on quality of appraisals. You owe it to yourself to help rebuild the trust within the appraisal system. The rise of the NextGEN lenders will be keeping a close eye on value.