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Long-Distance Appraising

April 16th, 2007 9:20 AM

Long-Distance Appraising

A new trend in the industry is using long-distance remote control appraisers from out of the area. These inexperienced appraisers may travel hundreds of miles to areas they are not familiar with, nor do they have the legally required local source data that is needed for a USPAP compliant appraisal report. These appraisers are not familiar with the unique nuances and special aspects of your specific neighborhood, and typically they either significantly undervalue or overvalue your property due to this limited local knowledge. For all this inaccuracy, you usually pay a significant premium to cover the additional appraiser travel charges such as the automobile, gas, insurance costs, and may even foot the bill for an overnight hotel stay.

Areas in Santa Barbara County usually have many invisible subtleties such as school districts, geographic boundaries, water districts, unique areas, etc. and these can have a significant impact on the value of your property. Only a local expert who has a strong geographic familiarity will truly understand your property, and how to properly value these many nuances. In addition, a specialist who frequently performs appraisals in the area is very familiar with all the local comparables, and in many cases they have personally inspected and performed appraisals on most of the area comparable properties as well.

As part of our ongoing appraisal business, we perform numerous appraisal reviews each year, and find that many of the recent out of area appraisers significantly over and undervalue the properties, and the reports were fret with inaccuracies and missing required data due to the appraisers inexperience, unfamiliarity with the area, and lack of USPAP required supporting data. Some of these properties had to be reappraised at considerable cost, or the loan was simply rejected by the underwriter. The undervalued properties did not meet the qualifying value, so the unfortunate borrower/client ends up paying for an appraisal on a property that should have gone through the entire loan process, but was needlessly canceled from the outset.

Choose a true local expert for your next Real Estate Appraisal. PAA - Professional Appraisal Associates has been performing Real Estate Appraisals on the Central Coast since 1991. We have specialists that service Santa Barbara County exclusively, and are familiar with the many unique areas that comprise this special part the Central Coast. We maintain all the required source data, including comprehensive on-line access to Public Property Records, Zoning, Flood, and all Local Multiple Listing Service (MLS) Boards. Instead of wasting time and paying travel expenses for an inexperienced and unfamiliar out of area appraiser, give us a call and let a local expert perform a quality Real Estate Appraisal at a best value price.

For more information about Professional Appraisal Associates, visit us at our Website at: ProfessionalAppraisalAssociates.com or feel free to call us at (805) 688-5033.

Posted by SUSAN KRAUSHAAR - AR009243 on April 16th, 2007 9:20 AMPost a Comment (0)

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Appraisal Quality doesn't cost, it saves.

April 16th, 2007 9:19 AM

Appraisal Quality doesn't cost, it saves.

There's an old adage that states "you get what you pay for", and nothing could be more poignant and true than when it comes to a home Real Estate Appraisal. A poorly prepared, poor quality, and minimal effort appraisal costs everyone in the long run, including the originating Loan Officer/Mortgage Broker, the Appraisal Reviewers, the Bank Underwriters, and finally the borrower/client in the end.

There is a disturbing new trend in the industry towards faster, cheaper, and significantly limited and inaccurate appraisal reports in an effort to save a buck. This frequently back-fires when the loan deal falls through because the appraisal is rejected.

A poorly prepared appraisal and report will be quickly rejected by the initial reviewers or underwriters, which drives cost and delays the overall loan process. In some instances, Bank Underwriters are forced to require a special review appraisal be performed, or may even insist on a complete re-appraisal of the property again. Depending upon the review results, they may very well reject the entire loan package based on missing or inaccurate information. If the property was overvalued, many times the borrower/client is the one that ultimately loses in the end since the qualifying value could not be met, so they have paid for a worthless appraisal.

As part of our ongoing appraisal business, we also perform numerous appraisal reviews each year, and find that many of the recent appraisal reports are overvalued due to inaccuracy, or in some instances, out and out fraud, and all of these properties must be reappraised at a considerable cost. These reviews then go back to the underwriters, who must then face the loan cancellation dilemma.

PAA - Professional Appraisal Associates has been performing high quality, comprehensive, and accurate Real Estate Appraisals for over 25 years. Instead of wasting time and money, give us a call and let us help you save money up front by performing a quality Real Estate Appraisal at a best value price. For more information about Professional Appraisal Associates, visit us at our Website at: ProfessionalAppraisalAssociates.com or feel free to call us at (805) 688-5033.

Posted by SUSAN KRAUSHAAR - AR009243 on April 16th, 2007 9:19 AMPost a Comment (0)

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Comp Checks

April 16th, 2007 9:19 AM

Comp Checks

What is a Comparables or Comp Check? Typically, banks/lender’s are trying to determine the value of a prospective mortgage client property/home to confirm adequate equity exists for a loan.

Understand that Real Estate Appraisers are primarily governed by the rules and regulations from the Uniform Standards of Professional Appraisal Practice (USPAP). One of the key USPAP restrictions specifically prohibits an appraiser from accepting an assignment to appraise a property based on a predetermined value or range of values.

When responding to a Comp Check request to find out if a home will appraise for a certain value, we then cannot accept the assignment to do the actual appraisal. In performing a Comp Check, and even when verbally stating a simple value range, by the strict USPAP standards we have in essence performed a form of appraisal and are bound by requirements to maintain complete records showing how and when we arrived at the value that we provided with the Comp Check. In essence, a Comp Check is an appraisal.

The main intent of this important USPAP rule is to dissuade dishonest appraisers from over-appraising properties and "hitting the target." USPAP standards are trying to prevent predatory lending practices, and ultimately stop mortgage fraud in our industry.

In addition to the ethical dilemma, we are typically asked to do as many as 5-10 Comp Checks each week, and each request requires considerable research time and effort. The majority of requests we get are for qualifying values far in excess of the current prevailing market values. Property values can also vary significantly dependent upon condition, upgrades, views, etc. Since many of these Comp Checks reveal that the requested value is not feasible, these free Comp Checks result in many hours of lost work time and money.

It is truly not our intent to waste borrowers/lenders money on useless appraisals for loans that will not work, though at the same time we cannot determine nor state any actual property values without performing the complete appraisal process per the USPAP Standards and Guidelines.

PAA - Professional Appraisal Associates has been performing high quality, comprehensive, and accurate Real Estate Appraisals for over 25 years. Instead of wasting time and money on useless appraisals for loans that will not work, give us a call and let us help you use the free comp check tools available on the Web.

For more information about Professional Appraisal Associates, visit us at our Website at: ProfessionalAppraisalAssociates.com or feel free to call us at (805) 688-5033.

Posted by SUSAN KRAUSHAAR - AR009243 on April 16th, 2007 9:19 AMPost a Comment (0)

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The Problem with AVM's

April 16th, 2007 9:17 AM

The Problem with AVM's

AVMs (Automated Valuation Models) are now gaining widespread use in determining Real Estate property values, through the use of non-standardized computer programs.

In a perfect static world, computers could easily estimate property values if the prices simply remained the same, or just changed at minimal or specific predictable rates. In reality, the Real Estate market is extremely dynamic and ever changing. This is particularly the case in Santa Barbara County, where typical home prices vary significantly from the nationwide median norm.

The other problem with computers predicting Real Estate values is the old adage "garbage in, garbage out." Computers need reliable data to make accurate predictions, but this data is simply not available in many areas, especially here on the Central Coast. The accuracy and recency of data is also an important factor, and AVMs inherently lag in their pricing data and results.

Computers aren’t appraisers, so they can’t see your new addition, special flooring, tile countertops, landscaping, etc, and they don’t consider these very important amenities when calculating the value of your home. Whether your house is the great Taj Mahal Palace in India, or a burned down ruble, the computer algorithms only appraise your house as a median data average.

AVM’s are historically inaccurate. It is no surprise that the City of New Orleans and the Federal Government (FEMA) recently issued a directive to stop using AVMs, since they were notorious for being grossly inaccurate. In fact, the typical errors rates were as high as 50%, and both in undervaluing and overvaluing properties.

AVM’s are clearly flawed, but despite this fact they are becoming the new rage in the lending industry to get appraisals faster and cheaper. The problem is when the estimates are grossly undervalued (which is often the case), then these inaccurate computer valuations cause the loan deal to fall through. Many times the borrower/client is the one that ultimately loses in the end since the qualifying value could not be met with the AVM, so they have basically paid for a worthless computer report. Just as serious, an overvalued AVM property appraisal gives the owner false information that could later cost them thousand of dollars.

Choose a real person for your next Real Estate Appraisal, not a flawed computer program. PAA - Professional Appraisal Associates has been performing Real Estate Appraisals on the Central Coast since 1991. To us, you and your home are not just statistical data points. We physically inspect and evaluate your property, and consider all the many amenities and upgrades you have worked hard to purchase and/or install. Instead of wasting time and money paying for an AVM that is either significantly under or overvalued, give us a call and let a local expert perform a quality Real Estate Appraisal at a best value price.

For more information about Professional Appraisal Associates, visit us at our Website at: ProfessionalAppraisalAssociates.com or feel free to call us at (805) 688-5033.

Posted by SUSAN KRAUSHAAR - AR009243 on April 16th, 2007 9:17 AMPost a Comment (0)

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