I found this post over at Matrix about appraisals.  While I agree completely that the appraisal industry is ridden with fraud and overinflated appraisals can cause huge issues, I have noticed a reversal in this in the Phoenix and Tucson markets as of late.  Maybe others in other markets have seen it as well.  My appraisers are finding every reason to make the value as low as possible, I gather to protect their butts.

I’ve been through several purchases and re-finances lately.  The purchases have all been new-build so the appraisal on the buy is easy.  The builder’s lender uses the same appraiser for every home in the community.  The appraisals come out of the appraisal machine, one after the next, for the exact sales price.  The appraiser already has record of all the floor plans, he has all the comps because he’s done all the appraisals.  There’s very little work involved.

Re-fis are a whole nother story.  I’ve been buying these new-builds and re-financing them a short time later.  I have tried several different appraisers, partly because I am trying to figure out the game they are playing.  I get a different theory every time as far what upgrades affect value, how close in proximity the comps need to be, and in new communities where there are no resales, where do they get the comps, etc.

One appraiser will tell me backyard landscaping adds no value, the next guy says he’ll give me $5k for that.  One guy says he’ll give me $20k for the $20k lot premium I paid, the next says he’ll give me $10k.  One guy says tile set on the diagonal is worth a premium, the next says it makes no difference.  When the area is so new there are no resales, and thus no recent comps, one appraiser will say he can go next door to a different community to get the comps, and another says he’ll use active listings within my community instead, albeit the lowest listing prices he can find.

My favorite was the guy that came with his clip board and baseball cap.  His cap was pulled so far down on his forehead he had no peripheral vision upward, perhaps no ability to look around at all.  That might be why he was standing in my living room and had to ask me if we had vaulted ceilings.  My ceilings are as high as a person can reach by putting an 8 ft ladder up on top of the countertop and standing on the top step to reach the top of the wall with a paintbrush.  Must be something like 14 feet.  I don’t know… would that classify as vaulted???  This guy also had to ask me if we had window treatments.  One look at any window with a half-open eye would tell you yes, but then again he was there to ask me questions, not look around.  I don’t know if he was in a hurry, or literally knew nothing about houses.  Suffice it to say, I’m pretty sure he came courtesy of one the ”appraisal factory” outfits.  He was there for the obligatory visit and to please the mortgage broker.  I had so much equity in this case it really wasn’t an issue, but sometimes when I’m scraping for equity so I can get my LTV right, it matters!

I’ve been tempted to go through appraisal school to find out exactly what the obligations and constraints of an appraiser are.  Certainly it would give me negotiating leverage if I knew how much smoke they’re blowing vs. what really is legit.  My objective is to get a fair appraisal and sometimes I’m pretty sure I’m getting whatever can be thrown together the fastest.