"You've Caught the NET!"

While I do believe that foreclosures and short sales should count on the appraisal, things have gone too far... 

Hi Dean -- Wow, I haven't seen that here in Greater Cleveland, Ohio -- but we didn't have big run up in prices the way Chicago or other major areas have.  That said, we have a ton of foreclosures and short sales and prices have dropped, but I haven't personally been involved with this situation to date.

We are developing a new policy in our neck of the woods.  The lock box comes off the house the day we get into contract.  The appraiser will be meeting me at the house in person as that will be my only chance to know who this person is.  We're gonna talk and I want the business card.

What do you mean, the realtor can't talk with the appraiser? that the law in Illinois? I was under the impression that it was the pressure from  the lenders that HVCC was designed to adress, as there was no diect pressure fro the agents. I think Bob is pon the right track, I would meet with these appraisers and at least let them know what comps I used to justify my listing price for the seller.

William -

Thanks for the comment!

Just to clarify, HVCC does not prohibit Realtors from talking to Appraisers.   Quite the contrary, I meet appraisers for all of my listings.

However, once their verdict has been rendered, a call from you to them will often be fruitless.

DEAN & DEAN'S TEAM CHICAGO

Appraisals are definitely a huge issue here in the northeast.

I read an article recently that NAR is working on just that same issue.  I am waiting to see if they succeed in turning things around.

here in NYC our biggest obstacle are the co-op boards. appraisals are a factor but not as much as you would think

J am just now hearing a lot of cases like this all over...I am working on a deal that was ridiculously under bid...The true value of anything is what someone else is willing to pay...

The new system is not working and everyone who knows anything about this business, realtors, lenders, brokers, appraisers, etc..knew this was no good yet somebody pushed it on someone...who and why?  These are the people we need to go after...my guess its the big bad banks who want to drive brokers out of the business and didn't think or care of the consequences this would bring to the entire industry.  Let me know if you know for sure who was behind this bill and the lobbying firm behind the negotiations to get it passed...Good luck in Chicago, I just talked witha guy who buys and sells properties in Chicago and he said he has had a lot of trouble too...

I hear you.  It wasn;t my lisitng but a friend in another part of the state saw his just under seven figure property come in $100,000 under for the appraisal Ouch.

Michael

Here....just a squidge north in the greater Milwaukee/Waukesha area a 3 month window has been the standard for a while...unless it is a local bank with a short sale and then the numbers can be unbelievable to a licensed anything...realtor, appraiser....etc....wanting what you want doesn't mean you get what you want unfortunately said the buyer to the bank...good luck.

Yes it is happening here too. We are in a declining market so every appraisal comes in 5% lower automatically.

Dean - We have been seeing appraisals come in under contract price in increasing numbers for the past couple of years here in Northwest MS.  It seems to be most concentrated in certain neighborhoods.  The first one I had, the seller had to bring cash to the closing.  I am working on one now where the appraisal came in $13,000 under contract price of $180,000. 

In each instance, the appraiser has either contacted the lender or the listing agent direct to ask if we know of any non-MLS sales that may affect the value before he finishes the appraisal.  Unfortunately, like you stated, the prevelance of short sales and foreclosures are taking a toll on the value of all the homes in our market.  

I had an agent tell me a couple of weeks ago that a low appraisal on one of her deals caused 3 other pending contracts in the neighborhood to fall apart.    

I've had my last three appraisals come in significantly lower. This is after a few of the clients gave the appraiser comps for the neighborhood from their realtor. The appraisers were from a completely different part of the state and didn't know the market at all.

The idea is to establish a trend line, but that line is being drawn to tightly and why to short. Oklahoma City has not had this problem the last two years because our market is not volitile, but it is being treated the same way as a highly distressed market.

Wow!  Thanks for sharing this Dean, it seems to be happening all over.

In our declining market in the Phoenix area this is all too common with appraisal results these days.  it's a catch 22 for the lenders, as the majority of the listings are Short Sales or REOs, in which case the Lender takes the loss to make the deal work.

Dean, I just had a listing come in under.  It was a small neighborhood and it was the underwriter who made the appraiser go back and find another comparative.  I called the offending comparatives agent to see what the deal was and it was an out of area appraiser who had caused this one to not compare.  So that one getting dinged caused mine to get dinged.  It just seems like there's something wrong with that picture but it is the world we live in NOW.

If this continues, this will put a massive brake on the housing recovery, exactly what no one needs.

Dean,

It's the new market!  I've been under attack on just about every sale.  The values have dropped 60% from the high. 

It's possible to do the impossible then the appraisalcomes in!  It's a shame the government corrections often make it worse, for the short term anyway!

hey Dean,

this is the next chapter in all of our lives isn't it?  between HVCC and HERA the challenge of getting to the closing table has grown exponentially. I love someone's idea about removing the lockbox and forcing contact from the appraiser.

any progress on that referral I sent you? (can't remember--was it Charlie?)

Jill

THis has been happening here for weeks.  One of my listings in Lathrup VIllage sold for $160,000.  The buyer told his agent that he was very excited to be able to buy that house for $160,000 based on the prices of the other 19 houses they saw.  He was convinved it would appraise for more than the offer price.  It actually appraised for $133,000.  Neither the appraiser or the bank would even discuss the appraisal.  The buyer did not have additional cash, the seller could not reduce the pwrice any lower--the deal died.  The house went short sale and eventually closed 4 months later for $125,000.  There are any number of agents in my office wo have had similar appraisal problems that killed their deals as well.

In South Florida, we had the problem of the Appraisals or BPO's coming in too high. Prices were dropping faster than the Appraised value and the lenders were not accepting our contracts on Short Sales because of this. That system sounds like it would work well here as it would more closely reflect the current market.

Become a CDPE Today

I had a similar occurence here in Baltimore. The appraiser, instead of using prices within a mile that were comparable to the house and comparably sold, he chose to use a house that was $40k below our value. The problem I had was that the listing remarks of this LOW home clearly stated that the seller would accept offers for two weeks and the highest bidder got the house.

I understand this is a marketing tactic, but how can you compare what is basically a two week auction value to the value of a home that has open houses, is marketed for weeks and gets regular showings? So if one person came along in that two weeks and offered $50, that would have been our comp?

We appealed the decision, provided over a half dozen comps that were at/above our appraised value. We waited THREE WEEKS for this "appraisal compliance board" to reevaluate the appraisal, only to come back and state that the original appraisal was correct and not going to be changed.

Of course they are going to say that! They certainly aren't going to start undermining the appraisers!

Dean,

Lets be honest with on another.

If the current rules existed and were followed the unrealistic run up in property values may never have occurred.  While many Realtors think the run up in prices and volume were a good thing I as a tax payer am now getting stuck with the bill for those who bought homes at inflated values they can not afford to keep. 

Not only did many buy homes at inflated values that they can not afford to keep many should never have been able to buy the home in the first place because they could not afford it.  Many were told not to worry about interest rates going up or property values going down.  Granted they were fools for thinking sales puffery was fact however what is a fact is the existing taxpayers, their children and grandchildren are getting stuck paying for the mistakes of others.

If someone bought a home they can not afford the home should be sold and the person who bought it should have to pay back the money the bank lost on the property even if it takes them 20 years to do so.  They do not "need" a cell phone, cable TV, a second car or a vacation.  They made a deal to buy a home at specified price with specific terms.  If the property went up in value they would not have allowed me to share in their win.  Why as a tax payer do I have to share in their loss?

We are having the same issue and it did not start until HVCC rules came into effect.  Most often the appraisal that comes in low is from out of the area and my RURAL town is not a suburb with stucco cookine cutter houses.  Someone suggested to me last week to contact the lender and get the name and phone number of the HVCC management company.  It is worth a try. The listing agent has the right to challenge the appriasal and if you can provide comps that justify the sale price the seller may want to contact an attorney...that always seems to get everyone attention.

Unfortunatly in a lot of markets the short sales and foreclosures are MAKING the market.  It use to be that they would be a small blip on the comparable sale radar, however because of the number of sales and the fact that the typical short sale/foreclosure property is not the same as it was many years ago (general condition is better-making it compete directly with non-foreclosure properties).  Please do not blame the appraisers, they are just doing their job using the guidelines they are given.  By the way, in some areas there are instances of out of area appraisers doing apppraisal work in markets they are not knowledgeable in; this is a different story and needs to be addressed.

Just when you think the worst has happened... Now low appraisals. I dealt with this in the 70's and found some solutions. Later today I'll release my 16th "Knox First Tuesday" video for FREE. The title is "Low Appraisals and the Home Valuation Code of Conduct". You must watch this if you're facing low appraisal problems.

There is no perfect answer, but this video will give you some of my ideas on how to save most of your transactions. Go to:

David Knox Productions, Inc. : Knox Sales Meetings : David's FREE Monthly Sales Meeting Videos

Also check out "Knox First Tuesday" #5 that digs a bit deeper into the basis for #16. Please let me know what you think of these ideas. I'm on the road for the next two weeks so my response may lag a bit.

David

For clarification, HVCC affects everyone that has a direct interest with the transaction. As a Certified Mortgage Planning Specialist in the Chicagoland region, I am constantly communicating this issue with not only Realtors but also consumers. I had a client whose home in Streamwood, IL appraised for $100,000 less than it's real improved value and 20% less than their original purchase price of 6 years ago.

Although the consumer informed the appraiser from Monee, IL (~50 miles away) that the home was not purchased with a finished basement...the appraiser gave minimal adjustment. For instance, the appraiser gave an adjustment to one of the comparables a $8,000 upward adjustment because the home had a 3rd bay on the garage. On the contrary, the appraiser only gave a $12,000 positive adjustment for an 1800 square feet completed basement with 3 bedrooms, a full bath and a family room.

Much of the appraisal issues that we see is due to geographical incompetence with a lack of clear understanding of the local market and all of it's nuances. The second major issue is due to quantity over quality. Many of these appraisers are spending more time driving to appointments that the time they assess the data becomes minimal. It's not just my belief, but told to me by several appraisals.

Although HVCC, or as I like to reference it HaVoCC, has great intentions, many have failed to recognize that the exact system that was criticized has now become the solution. I am speaking of the Appraisal Manangement Companies.

Dean, I feel your pain. On a side bar, it was nice meeting you at Chicago REBarCamp.

There are a lot of myths with regard to the HVCC.  You most certainly can dispute the findings if there are mistakes or if the support for the opinion of value is not based on market indications.

As for short sales and foreclosures, well, if there are a bunch, those could be legitimate substitutes to your listing.  Granted, a lot of short sales involve houses that need a lot of work, but some were owned by folks who took care of the place but who were unfortunate enough to lose their jobs.

I just wrote a piece on what you can do:

http://activerain.com/blogsview/1177601/5-things-the-listing-agent-can-do-when-the-appraisal-is-lower-than-the-sales-price

Dean - We are experiencing a rash of under-appraisals here in Sacramento as well.  When you stop to think about it, the appraisers could very well drive the housing market further downward, rather than helping to stabilize it.  It seems some of these "low appraisals" are coming from desk bound folks, who don't know the neighborhood, and are ignoring good existing comps to do their handiwork.

I have had more appraisal issues in the last 90 days then ever before.  Yes - the appraisers have all lost their minds!

I'm waiting on a VA appraisal now, my first in a couple months. Ya'll are making me very nervous!  Seems that people who don't 'have' to sell, may want to continue hanging on till the foreclosures and short sales dry up.  Unfortunately, if jobs keep going on their downward spin, we'll have distress sales for a long time to come.

Wow!  I'm bookmarking this blog for folks who think otherwise.

Here in Florida this has been the case for some time now.   Market is driven by REO's and Short Sales, so if follows ALL sales are going to reflect the Market.  

Just because a home is not a Short Sale, nor a REO really does not add to value, as we know what does matter is condition.  I think one would be hard put to justify the difference in price because of ownership two properties in the same condition.  As in Gerrys Banister case, the home sold for 125,000, and that would be the value of the home, not the $160,000.  Looks like the appraisal of 133,000 was too high!!!!

I've heard from both agent and appraiser friends of mine that EVEN WHEN THE APPRAISER FINDS VALUE, they are getting pressure from underwriters and "appraisal audits" to move the "value" down!  This means that people who've not only NEVER seen the comps, but who also NEVER saw the property (location, condition, etc.) are telling the appraisers what to do!!!

A close friend, who's an appraiser, has been screaming fowl to anyone who'll listen after having been "required" to downwardly adjust her appraisals by the underwriters.  She's complained to her supervisor who basically said "we need the business..do what the underwriter tells you!"

FOLKS.....I'm not convinced it's the appraisers we should be concerned about!  It's the BANK who orders the appraisal (therefore THE APPRAISER'S ABILITY TO EARN AN INCOME!!!!) that adding fuel to this fire!

I am also an appraiser and recently brought in a value $25,000 under the contract price. It was the second time in 17 years that has happened.

Let's all be honest; not all realtors are the best and brightest. I asked the listing agent how he arrived at the list price. He provided 14 properties (which I considered) and told me how great the house was. When I did my inspection, I found that he had compared a home built in 1995 with all original interior finishes and appliances to homes built in 2008. This house also backed to a busy boulevard. The selling agent obviously didn't do they're job either because they let their clients offer almost full price.

Market value is defined as an agreement between KNOWLEDGEABLE buyers and sellers. I don't think the agents did their jobs in educating their clients.

I do agree that this HVCC thing is not helping. I have already seen a company drop thier prices to appraisers and am having trouble getting paid form one AMC. I think realtors and lenders should be prepared to see a lot of good appraisers quit which means a lot more bad appraisals.

This is a very sad reality in our area as well. I understand the banks reluctance on wanting to lend, however, appraisers are coming into the area that do not have access to the local MLS in which data and info. is readily available.  We just had a home come in 100k under.  Now it's a scramble to try and get new loan and appraiser for a refi. All this so they can purchase a home for their handicap son....So frustrating!

It's going to continue to be a problem until the downward trends end. 

Appraisers are not relying on comps alone.  They are smart enough to see trends. 

Many agents are not. 

Best warn buyers and sellers that what we see as the market today may not be what the market is when the appraiser gets the assignment. 

This is tough stuff. 

It's only just begun, folks! The litany of horror stories is growing daily. The unintended consequences of HVCC are so numerous. Mortgage brokers must order their appraisals through the bank (no they can't order an appraisal and shop the file with various lenders) and the banks are ALL using Appraisal Management Companies. These AMCs then place the assignment out for bid to the lowest fee.

This is what results. For example, I have just received an assignment from an AMC for a $150 fee which I know they are being paid $450 for. Human nature being what it is, combined with the fact that appraisers have had their clients yanked out from under them, well, you are seeing the results.

There is a glimmer of hope. Ask your congress person to support HR 3044 or better yet, sign on as a co-sponsor. This bill would put an 18 month moratorium on the HVCC to allow it to studied exhaustively. If you think it's bad now, wait a few years. How many new appraisers do you think will be trained at these fees. (2,500hours of experience and 150 hours of classes are now required for certification). After a certified appraiser pays their overhead, what is left to pay a trainee?

Thousands have left the profession due to the current economy while no trainees are coming in. Within five years, the profession will be decimated, then, not only will the quality of work continue to decline but you'll have to wait weeks to get it done.

Dean, I'm getting proactive to protect my sellers before the appraiser steps in the door.  I wrote this on another appraisal blog last week by Jennifer Allan.  (Sorry, I couldn't figure out how to just do a link!)

"But I don't stop there.  To combat some shoddy appraisals conducted by appraisers who are not familiar with my market, I prepare a bound booklet that I leave on the counter of my listing being appraised.  If I can meet the appraiser at the door, say hello, and give him/her my contact information in case of questions, I do that.  But my booklet is what I'm really proud of.  I include a spreadsheet CMA with all the salient points.  I include my property sketch.  I include a one-pager about all the attributes of my listing that make it stand out among the competition.  Finally, I print out all the listing sheets of comparable actives, pendings and solds, and make notes on each one as to how it compares to my listing.  Just last week some buyers for my listing had an appraisal.  I did all of the above.  I knew my listing ROCKED, as evidenced by the 34 showings and a contract in 48 days.  However, just two weeks before, some VERY comparable homes closed for over $100,000 less than our contract price.  I was worried that the appraiser wouldn't take the time to find out why those properties sold for so much less, so I painstakingly explained it to her in my documents.  The home appraised at $20,000 over contract price.

Was my seller angry?  No, because she saw my data, and we knew that an inexperienced or lazy appraiser might not delve into the details.  She still got the price she wanted.

Sorry to be long-winded, but I want to add another point.  One worry that I had on this deal (because it's happened to me before) was that the buyer agent was "gaming me," agreeing to a contract price because he didn't think the home would appraise.  I agree with you Jennifer, I'd rather cross that bridge if/when it appears.  But warning to gamers - if an agent counsels his clients to accept a higher price because surely it won't appraise - then he's doing his clients a disservice, because if it DOES appraise for the contract price, the buyers are stuck paying that amount!

I've had a lot of success with my appraiser booklets - it just makes sense to be prepared!"

I've experienced this as well.  I have become very cautious when making offers because of it.  I recently spoke to a listing agent for a REO who's property was listed higher than the comps I pulled.  I asked him what would happen if my client put in an offer, then the appraisal came in below.  He said the bank wouldn't negotiate because they'd had their own appraisal before listing the house.  Out of curiousity, I had an appraiser friend look at the listing and the comps I pulled.  He thought I was right on and in his opinion the "real" appraisal would come in thousands less than what the property was listed at.  My clients opted NOT to put in an offer, but it should be interesting to see what that house does end up closing for.....

Dean--Wow! I have heard of a few agents with such problems in our area but so far I haven't had it happen to one of my transactions but loan officers and other agents are grumbling so it probably is only a matter of time. My transactions this summer are coming in at the exact appraised value or within a thousand or two of the sale price. In one circumstance I have seen $6000 and FHA required a reappraisal. Another at flew through $5K over but it was a refi and there was significant equity in the home.

Just returned from your lovely city and the weather was beautiful on Friday and Ssturday...we were in Evanston/Rolling Hills area. :)

The HVCC is not protecting sellers who get low appraisals due to the buyer's lender having to hire an appraiser they can't talk to and does not know the area! Oh, and having to wait 10-14 days for it to be turned in as well!  It is absolutely fine for it to come in low if it is the real value, but when it is not and everybody has had to jump through even higher hoops to get to that point, only to have it fall through unnecessarily does not help the buyer or the seller.

Dean,

I am working in the Atlanta market and I have a similar situation with one of my Buyers. The appraisla came $ 4,000 above the sales price but the underwriter wanted to have a  review appraisal  which is taking another 10 days . the Seller  is fannie Mae and of course they don't want to extend the contingency even is not my Buyer's fault, so if something goes wrong my Buyer will loose their Earnest money.

Fannie Mae and other banks need to revise their Addendums based on the new laws in place, they need to give more than 10-14 days financing contingency, esspecially if they don't sign any additional exhibits ( appraisal contingency,etc). It takes forever now days to get the appraisal done , you have no control over it, not a person to talk to... And it's getting worse, starting September, the Lender needs to get an IRS transcript for the Buyer( can you imagine how long time it will take to get it back from the governmnet)... employment within 30 days after closing. So, I expect time from contract to closing to be 60 + days instead 30days now days.

Violet Marinova

Hi Dean

I am a Chicago girl transplanted to Georgia. Love that city! As an appraiser I have to say a few things.

First appraisers only analyze and REPORT their finding of the CURRENT market. They do not define values, the market does!

Second I could not agree more that lenders (espeically the appraisal managment companies that are ordering the reports) are sending appraisers to areas that they have no business appraising in.

Third: What Realtors may feel are true comparable properties, I must tell you most of the time they have supplied to me are not. They are sales that are too old, not comparable to the property in age, quality, size and condition and are too far from the subject property.

Fourth: The is absolutely NOTHING wrong with Realtors talking to appraisers about comps. What I suggest to our local Realtors is for them to leave an envelope with comps in them with notations as to anything special about these homes that the appraiser may not be privy too. Just don't try to push the comps on the appraisers, give them the information and tell them to call with any questions.

Fifth: You DO have the right to rebut the appraisal. We offer review services here in Georgia and one of our recent reviews resulted in another appraisal being ordered, the local Consumer Reporter to report on the problem and the owner got her loan! So hire your local appraiser to review any "BAD" appraisal to see if indeed they are flawed. The appraisers can give you the data and the "lingo" needed to rebut the appraisal and be successful!

Finally, as an appraiser is it actually very nice not getting those phone calls and pressure from all parties to hit that magic number. If an appraiser knows the basics of appraising, then they do not need any influence from anyone. This was the root of the problem. Appraisers were forced by lenders and others to make the deals work or they lost their business. Appraisers are not running in fear, they are just accurately reporting what the current market is and if foreclosures are the majority of transactions in a given neighborhood then yes they will use them, but condition adjustments can and should be made! 

Mary

Another thought I just had.....I had a conversation with a lender recently who told me that several agents he was working with were putting in high bids just to get the property under contract, then depending on the apraisal to bring the price back down for their clients.   The Phoenix market for REOs has become very competitive and it is hard to secure a deal, but personally I'm not interested in playing a game of chance with my client's money, emotions, or trust. 

Paul,

I thought it was WILLING BUYER AND WILLING SELLER. Knowledge is certianly valuable but are we responsible for everyone elses decisions?

If every appraisal has to be based on the last homes sold, how will prices ever increase? Would it require an all cash sale?

Common Sense would go a long way. But how do you teach Common Sense?

A buyer may be willing to go to contract for a certain price, but that does not mean the home is worth that much. Appraiser's have to take numerous factors into consideration. And often, lately, a contract will contain a seller's concession. In most parts of the country we are in a declining market. One bank I work for requires that time adjustments be made to every comp as of the contract date. Appraiser's are not sales professionals. They are paid to provide and independent opinion of value and there is no benefit to arbitrarily providing a low value.

The majority of my REOs in Phoenix have been coming under appraisal for the past 2 months... My REO Sellers even make the buyers sign a document stating they will make up the difference in cash at closing if their offers are higher than apraisal.. Not really sure why they would do that..

I have noticed the past month that all my new listings are being appraised instrad of just 2 or 4 BPOs..

CRAZY market you guys. We are in the wild west again!

As an investor and rehabber, I meet the appraiser at the property. Along with any comps that I pull which support the price, I also have a list of all the repairs that have been made, improvements, along with either copies of receipts attached for big ticket items and/or the list of repairs/rehab with the cost to do so. Nothing like an appraiser walking through your door who has already pulled comps of $100,000 when those properties are all short sales and foreclosures. So, I support my position by letting the appraiser know that I have brand new wood flooring, new carpeting, updated bathrooms, custom kitchen cabinets, finished basement, new lighting throughout, new doors throughout, etc...

We have seen a little of this in our market.  I recently sold a condo for less than I sold it to the client a year earlier....upon appraisal we learned that he would have to drop it another $5000, unfortunately when we tried to find comps to justify our origianl sales price we could not.  The market is crazy right now!

Suffered through the same thing - we won in multiple offers and still paid below list price - appraised $10,000 light on a $130,000 purchase price!  Appraiser had to compare the subject with new carpet, paint, appliances, and furnace to the foreclosure in the same townhome development that was missing all appliances and the previous owner had even stripped out the baseboards!  Frustrating!  We worked it out by each side giving in a little, but wondering how prices are supposed to ever go up, if we can't let the (multiple offers) market set the price!

Even though I write in my contracts to have the appraisal done during the inspection period, I think the problem is even  worse than just getting the appraisal in, providing additional comps for any adjustments(yes, it is totally possible), and then negotiating the revised selling price to salvage the deal.   I want to have these actions done early in the contract timeline.   The next huge hurdle is getting it through the lender's underwriters.    With each lender having their own policies on how the underwriting on an appraisal is handled, to me, this is the scary part because it is different with every deal because each one has its own.   So, you can think you are home free after receiving the original appraisal, but the sweating has just begun.   We are all learning together what the stumbling blocks are and how to climb over them to close a successful deal!

In our community home prices have not dropped considerably nor do we have a glut of REO.  Still, when an appraiser comes into our town from a different part of the state, they don't understand that and we get under appraisals.  It's HVCC and national banks.  We don't have the same degree of problem with locally owned banks and credit unions.

Common sense has been thrown out the window.  Things aren't as bad here as the are in where you are, but I'm seeing some real low-balls by appraisers who don't know or understand the dynamic of the area.  The real difficulty is in homes where they truly are the best house on the street - or the best condo in the complex.   Appraisers are afraid to acknowledge this.  But the margins you are talking about are much bigger.  We don't have that many short sales though....

i said this was going to happen----same thing with me

2 in 1 week

lenders just randomly picking appraisers who arent even familiar with the area\

MORE FUN ON THE WAY  with new disclosure and fee rules(collecting appraisal and app fees)

if thats not done properly now u will have deals just blowing up because out of compliance

DOM

Happening here too. When we meet with the sellers who insist on listing way higher than what the CMA suggest we go into (among other things) the potential - appraisal issues. ~Rita

I agree with James's comment...

Much of the appraisal issues that we see is due to geographical incompetence with a lack of clear understanding of the local market and all of it's nuances. The second major issue is due to quantity over quality. Many of these appraisers are spending more time driving to appointments that the time they assess the data becomes minimal. It's not just my belief, but told to me by several appraisals.

Don't leave things to chance.  Meet the appraiser at the property and hand over appraisals that support the sales price and don't forget the Market Trends Analysis Addendum that the appraisers have to fil out.  They need 50+ comparable sales over the past 12 months to create a trend line in terms of HOW much the market is declining.  They want a continguous area, but where they draw the line geographically can drastically alter their statistics.  I provide this info as well.  This is not illegal.  I'm providing data which the appraiser can ignore, if they wish.  I'm not telling the appraiser that the home must comp out to a number. 

Even after all this work and an appraisal that supports your sale price, an underwriting in the back room of the lender can adjust the appraiser's appraisal numbers downward based upon their statistical analysis.

When there are no comparable sales, it's like priming the pump of a well that's gone dry.  I just went through this in my market area and we got the comparables started again with two cash buyers and a lender who was willing to hold a portfolio loan, so we now have our three comparable sales and two other supporting sales (for the declining market).  Now we are on a roll to sell houses and keep the well from running dry again.  In fact, I'm negotating an offer now and have to run.

We have had numerous low appraisals here in Southern Colorado and I know it is due to the appraiser's being fearful (I heard they are held accountable for 36 months from the date of closing if that loan goes into foreclosure and they inflated in way, they pay.) We have alot of short sales and alot of foreclosures in my area and I beleive it is hard to find fair market value when these are pedominate in the market.  This cycle is just part of the fixing --I am ready for it to be over but I think we are in it for quite some time. 

Marlene Berrier

Hey Susan,

Similar situation we have in metro Atlanta with REO properties. The property is so under-priced when it comes on the market , it immediately accumulates 10-15 offers the next day and of course the buyers are bidding up instead going down.

I had a situation with a HUD property which was insured and qualified for $ 100 down on FHA Financing. The "AS IS" appraised value was $ 69K but this price was $20- 30K below the market price in the area. The winning bid was $ 87K.

 The problem we had here is : let's say you have a Buyer who is going with FHA, if they bid that High ,there is no way they can use the FHA appraisal already in place, they cannot order another appraisal because there is already one (per FHA rules), so even the property is advertised and offered for first time home buyers/owner occupants, FHA financing, etc by HUD, there is no way that somebody who is using FHA financing can finance it.

Violet

The governments solution to the problem; increased cost, takes longer, more paperwork, which provides a less reliable product.

Got to love it!

You're right the other shoe is about ready to drop with a big thud caused by the knee jerk reaction that this whole foreclosure mess has gotten the RE industry into. But it's not just appraisals that's the culprit. Notwithstanding the sub prime debacle that got us into this whole mess to begin with now here in California we're dealing with Prime, Jumbo and throw the Commercial in for posterityas well.

I'd like to talk to the person with the crystal ball who can tell us where and when this will start to correct itself. Not trying to sound too pessimistic albeit I don't see any light at the end of the tunnel for quite awhile in this neck of the woods. In fact I can't even find the tunnel. Now having said that I can see some appreciable action in the high end market in some of the more exclusive areas and along the coast.

I am an appraiser (also a real estate broker) You have no idea, as an appriaser, the issues we have to endure from the banksand the restrictions placed for distance, size differences, line adjustments, net and gross adjustments only to name a few. The restrictions placed make since to THEM, but sure makes it almost impossible for us to do our job. HVCC is a nightmare. No, we cannot talk to the realtor, or the lender about values, comps etc. It is smart for the realtor to leave a folder for the appraiser at the house, just for review, and it is non verbal communication, and make sure to just put a nice note, offering your expertise and knowledge. Do NOT add comps over 6 months old, we cannot use them!!! I personally have been using 6 sales (3 within the banks restraints, and 3 outside the neighborhood boundaries if necessary or older or what ever I think are better and more reliable comps) I make every effort to use arms length transactions and use bank sales and short sales if I have to, but give them very little weight. I seldom have a lender dispute my opinion as I cover most concerns and questions they might ask. The market changes and we must change with it. It is the realtors job to price it high enough to make money for the client, but low enough to be competative. Not always easy. I recommend checking comps and changing the price as dictated by the market sales on a weekly basis. I have only had a few come in low, and can't be helped. Sales price and adjusted sales price must bracket opinion of value. It would be awesome if realtors would "shadow" an appraiser for a complete inspection, preliminary work and after teh inspection input, evaluation so you understand our process better. We are not the bad guys, but we do not work for the realtor, teh seller or even the buyer. Our client is the BANK. We have to answer to them. I have always had a favorite saying. It is what it is, but have had to change that to It AIN'T what it aint.

I will always do a fair and honest report, I donot cave in to lender pressure, seller, buyer or realtor pressure. But I am fair and I do a great job. I have had few complaints, and typically everyone remains happy. I know there are appraisers out there that do not take the time required to do the best tehy can, and many that just aren't trained. But there are MANY MANY of us who do know what we are doing and take pride in our work. May you all be blessed with those appraisers since now, thanks to HVCC no one has a choice to choose the best, they are often chosen by who is the cheapest. God help us all.

Good topic!  As a long time appraiser in a prior career, I would like to point out that the sellers of REO properties are not "typically motivated", a requirement in the definition of Market Value, that is conveniently brushed aside by parties with an agenda that find it convenient to use or pressure appraisers to use REO sales as comparables.

These are properties where the highest an best use is as owner-occupant residences or in some cases, non-owner-occupant residences. The REO owner has no reasonable option to occupy the property.  Quiet enjoyment of the utility the property has to offer, for them, amounts to the proceeds from liquidating it, since holding costs for an unrented property will typically eat speculators alive & they aren't going to live there or rent it out, in most cases.  REO sellers think in terms of liquidation value, quick sale value, which are defined differently from market value used by Fannie & Freddie & FHA, etc.

You all know the motivational factors for short sale sellers are all over the place, unpredictable.  Some just want to stay in place and hold off the lender.  Short sales should be used as comps only in situations where other sales data is virtually non-existent.  Might as well use a trustee deed some of the times.  Definitely, a forced sale by other means, considering the credit damage inflicted.  REO sales are more predictable than short sales & are more useful data, certainly short of ideal, however.

Appraisers are wrongly being intimidated into using REO and short sales as comparables, and when they do it, it is often without the proper analysis. These type of forced sales do tend to lower MV, and in some areas, the difference may be hard to distinguish.  But, often times, the market is bifurcated and a reliable adjustment can be extracted for a REO status comp vs a non-distressed comp sale.  An appraiser could use an REO in that case, with a well supported adjustment or with well supported evidence in his file that an adjustment was not necessary since the market didn't differentiate.

Why would a buyer pay less for an REO?  Because he can.  Because the closing date is less predictable.  Because a better offer can sometimes swoop in and displace their offer!  Last minute title issues are more likely.  Just about any title or cost apportioning issue tends to be presented in favor of the REO client (assuming the pressure to use the REO title company was successful).  Watch out for water bills, etc.

The buyer can reasonably assume that the last year or so of ownership the REO home had under a financially distressed owner and later, the asset preservation team, was not as lovingly caring as if it were owned by a typical owner that made sure there was salt in the water softener, etc so that the interior of the pipes and plumbing valves were not caked in calcium.  Stuff like that.  Knowing that a home had timely winterization and stayed heated enough that frost heaving or pipe damage, joint weakening had not taken place.

The buyer may well consider the disclosure statement by a typical, non-distressed owner (especially a long term owner occupant) to be more thorough than a typical REO disclosure (as is-don't know, etc).  And, what if there were a material fact that was knowingly withheld?  Which entity would you rather sue or arbitrate against?  A REO company that has real estate attorneys up the gazoo that are on retainer or payroll??

I think in some areas, where the subject homes are in equal apparent condition, REO and non-REO may sell for the same price.  But should they, if the buyers were well informed by the agents?  The definition of Market value assumes both buyer and seller are well informed. 

I had this problem.  They are also treating this as a down market, with prices going up.  They prefer comps only one month old. 

We are working through one right now:)  Fun new world, isn't it?

I suffered my very first under appraisal last month. I'll admit that it has changed my dialogue a bit. Interestingly, buyers are competing with multiple offers, but the homes are not appraising.

Short sales and foreclosures are too great a market force to be ignored... We'll be feeling this pain for awhile.

I have to ask appraisers this question.  How can a home in a distress situation, whether it be poor condition or owners who are in jeopardy of losing it be considered a comparable to a home with responsible owners who perform their maintenance and are not forced to sell because of forclosure?  That goes against the basic rules of comparison is my book.  A sale should be "comparable" correct?

In Phoenix I am finding that the banks are removing the appraisal contingency in their counter on their bankowned properties. Of course, my FHA buyers with limited funds can't pay the difference making it an investors market.

The HVCC affect on the appraiser:

1) A lower fee

2) A quicker delivery requirement

3) Tighter review standards means that basically every appraisal gets re-done at least twice. 

4) More requirements and more documentation:  I have a client that requires 4 sales and 3 listings on every report for the same fee as 1 year ago.  That's basically 2 appraisals for one fee.

5) Low market activity:  There are few sales out there if you don't want to use short sales and foreclosures.  If you don't use them, the lender calls back and demands the use of more recent/closer comps which are usually short sales/foreclosures. 

So, basically, the big bad banks who are apparently, based on previous posts, trying to drive us all out of the business, are dictating what/how the appraiser, who is supposed to be independent, and do, charge, deliver, etc. on each and every report.  What is also true, is that your qualifications, quality, integrity, experience matter little.  The guy from another market is cheaper and faster so the AMCs call that guy and ignore the local appraiser due to fee or delivery time.  Then the deal still isn't closed 2 months later we all wonder why.  I can't tell you how many times over the last 3 months that I'm the 2nd appraiser on deal that started 2-4 months prior to my getting involved.  Funny, we appraisers always think we are the ones who are being eliminated by the banks, realtors, etc... and now I see those same comments above. 

TRY TO HAVE A GREAT DAY EVERYONE!

Micheel Del Greco does not realize that it was Fed easy money policy and because of loose money, banks and brokers were making tons of money pushing out these loans.

Also people such as home inspectors and real eatate professionals do need cell phones and cars to conduct business. Good luck competing without them.

Luckily in this country we have bankruptcy protection and other laws which give people a chance at a fresh start and  keep people from the type of slavery Michael is proposing.

Let the banks eat it since they are one of the main causes of the problem.

Been there done that and getting pretty darn tired of it here in Macomb MI. It's bad enough the market has been torn apart by the short sales and bank owned but now we must deal with appraisers keeping the market down. Can we get a break here???

BEST ADVICE from Gerard bears a repeat:

Ask your congress person to support HR 3044 or better yet, sign on as a co-sponsor. This bill would put an 18 month moratorium on the HVCC to allow it to studied exhaustively.

 ALSO AS AN AGENT - an ounce of prevention:

Bring comps and MEET the appraiser - work WITH them and offer comps, but don't tell them how to do their job - They don't tell you how to do yours. Most will welcome the additional research, provided it's current and within their guidelines. They may not know something about a recent sold house that you do (water damage, termites, etc.) that caused a cheap sale. If they can note that, it's a great help to them.

I hope this is helpful - Great post!

I am amazed at the comments, all of which have the same stream of thought.  Unfair and unrealistic comparisons, lack of knowledge of the area and neighborhood, etc. We are experiencing a good deal of this in the Florida markets (notice I wrote "markets" plural.)  When you have such diverse properties that abut each other in close quarters it takes an experienced professional in the areas and neighborhoods to understand the nuances.  For instance, along the waterfront you'll have prestigious, premier properties in the Million that abut entry level or aged home neighborhoods.  All within a 1 mile radius.

A larger question is how to determine the knowledge and familiarity of the professional being tasked the the job of appraising a property?  If they are all to come from a "pool" of professionals how is a computer that puts the order in in California supposed to know that one appraiser is more familiar than another in Pensacola's Northhill Historic District , or penthouse Beach Condos, or the beautiful rolling hills of the ranch and farm land just north of us and in the same County, if all of the Appraisers say their territory is Escambia County, where all of the areas and neighborhoods are located?

The problem gets even larger if they list Northwest Florida.  Perdido Key, Pensacola Beach, Navarre Beach, Destin and everything in between all have very different personalities and amenities to offer; they all have their own local ordinances, taxes, insurance rates, and requirements.  They are all within about 50 miles of each other.

I have to say that I do like the idea of taking the lockbox off of the door when the property has a two sided contract on it.  A little more work but well worth it and time to enteract with the Appraiser and Inspectors. 

One task I always complete for a listed property is a "listing book", which gives information on the neighborhood, location with respect to business, medical, retail, transportation, higher education, etc., distinctive amenities on the property, as well as all information on updates and renovations (with dates and receipts if available,) survey and subdivision (if available,) plats with Bylaws, CRs, etc.  And, of coarse the always present Seller's Disclosure Statement.  This has been a great tool for Buyers and Buyers' Agents while showing the property and aiding them in making a decision to purchase.

In addition, for the appraiser and home inspector, I leave additional information regarding huge differences in potential comps in the immediate area, especially those with extenuating circumstances I encourage them to contact the listing agent, seller or estate representative for that property for details. 

It takes more work and time; and, it is up to us to share the local information with our business partners - Appraisers - that we researched ourselves to provide our clients with the information they needed to come to the decision to buy or sell.

OH..THE TRAVESTY!!

It's bad enough as realtors (as well as all other fields under the housing umbrella) that we are in such an unstable and competitive market, AND of course...agents not educating themselves properly to subsequently educate their buyers and sellers, but now we have this situation looming! 

I have been working on a Short Sale, which I received bank approval on in a relatively short period of time (YAYYYY!)...but the "yayyy", turned to "nayyy" quickly when the buyer's mortgage appraisal came in.  The appraisal came in $10K less on a purchase price of $259K.  But wait...it gets better!  I was told that a desk appraisal was ordered as well.  After 2 weeks of WAITING AROUND for this....the desk appraisal came in $30K less than the original appraisal of $250K!!  YOU HAVE GOT TO BE KIDDING ME...Why such a discrepancy??

Needless to say, the Short Sale lender is going to love this!...However..I think BANK TO BANK they should understand??  I dont know.....TO BE CONTINUED....

Welcome to my nightmare! If you really to get steamed, try dealing with the VA appraisors. They rarely leave their offices to visit the property and they always come in low.If you even mention that you think it is low, they will dig a fox hole and start World War III!

It is very interesting to read this especially the comments from appraisers. We had a listing just last week come in low but I did not think it was too far off the mark and as a percentage of the asking price, or should I say contract price, thought the seller should accept it. I am meeting with one of my favorite lenders tomorrow to talk this over so I have a better understanding of it. As Realtors we seem to be the only people in a transaction that can try to pacify the seller and this is just another thing we now have to deal with.

My Sellers and I are "feeling the pain" right now.  Last month, one of my approved short sales came in @ $25K under the agreed upon contract price of $300K.  Buyer knew that the $300K was already a great deal - but there was nothing we could do; the lender would not budge.  Even with an identical townhouse as a comp, the appraiser was adjusting the value at the rate of approx 1.75% a month, in one of the premier neighborhoods in the southwest Orlando area. 

The news got worse last week, when one of our "normal sales" (i.e., no shortage) under-appraised for $40K...!  Similar to the many of the other postings here, very small upward adjustments were given for what most Buyers would consider to be major differences in construction (for ex., semi-custom vs. production homes, tile roofs, wider lots. etc.), and huge downward adjustments were made for missing features.  Here again, sold prices on the comps were adjusted downward at the rate of about 1.7% a month - even though the property is located in a new, well situated, fully built-out golf & lake community. 

Do the math, folks - Does anyone really believe that these homes are going to drop another 20% (i.e., 1.7% x 12 months) in the coming year off of the current short sale prices that they are utilizing for the comps...???

I guess that they might if the appraisal process continues to (mal-)function in this way....

I have found that underwriters will even reject the appraisal. I have had an underwriter with the PMI company reject the file and the appraisal even though the property appraised

Oh I know this story all to well, both personally and professionally.

List of mine just got a contract and then an appraisal that was $20K less than asking price. Seller is not selling and I don't blame him....

Personally, my own condo has dropped about $60K in value.....I won't be moving anywhere for a long time to come! And an investment property has dropped as well.

Don't you just love this country? When and where will this slide end...cuz I don't think I see it yet!

Having just navigated this very minefield last week for the first time, it's clearly a big issue and as you said, a new one on the scene.

Dean,

I attended a class recently where it was suggested that the listing agent,when contacted by the appraiser on how to enter the property, ask WHERE they are located, do they have access to the local MLS system AND are they familiar with the area.  If they can't answer all of these questions with a satisfactory answer, call the LENDER and request an appraiser who is GEOGRAPHICALLY COMPETENT!!!

It appears that some appraisers are accepting appraisals JUST to get the FEES offered and driving 3-4 hours to view the property!

Kathy Opatka

"now we must deal with appraisers keeping the market down".

Please see my post above.  Appraiser's never determine what the market is doing.  Rather, we just try to interpret it and then provide an opinion of how the house we are appraising relates to the market in terms of value.  One of the toughest issues I deal with is why would some one pay full market price for a property when they could buy a short sale down the street for much less?  Another, what is the difference between "declining", a verb, on the appraisal form and "delcined", past tense.  Often I can show that a market has "declined" from previous years, but it is very difficult, due to a lack of sales, to show that a market is "declining".   No one seems to have a firm grasp on what is really going on.  Just last week, I had a lender insist that I change a report to "declining".  When I stated that there wasn't enough evidence (after factoring out foreclosures) to show "declining" they continued to insist.  When I asked for their research, or at least their source of the research to site in my appraisal for changing to declining, the canceled the order.  I'm assuming that I'll never get paid nor will I hear from this client again. 

Most lenders do not allow enough time or provide a high enough fee to do what really needs to be done.  The result is that professional appraisers are left high and dry while the vast majority of the lenders are getting railroaded into using the cheapest, fastest and least qualified appraiser by the HVCC and most of these appraisal management companies.  It's no different than the realtor's clientele beating down the commission with the self help listings etc.  The facts are the facts:  YOU GET WHAT YOU PAY FOR!

I truly feel your pain and understand your dilemma. 

Michae J. Geis

Upon The Rock Real Estate Services, LLC

Certified Residential Real Estate Appraiser in OH and MI. 

The interpretation is wrong. You cannot compare apples to oranges. Meaning the short sale or foreclosure which sold 3 doors down with frozen/leaky water pipes, mold on the ceiling, sloping floors, carpeting with cat pee, rusty bathtub, tile coming up all over the place, water in the unfinished basement, Brady Bunch countertops and kitchen cabinets, yellow appliances in no way compares (comparable) to my property with brand new custom kitchen cabinets, new countertops, new tile, new doors all around, great plumbing, new tub surround, new vanity/sink/faucet, new wood flooring, new stainless steel appliances, new carpeting, new paint, finished basement, new water heater, etc....  Yet the appraiser sees nothing but short sales and foreclosures in the past year in this subdivision and wants to discount my property without realizing that those that sold for $40K less were in terrible disarray. Again, the apples aren't being compared to the oranges.

"I attended a class recently where it was suggested that the listing agent,when contacted by the appraiser on how to enter the property, ask WHERE they are located, do they have access to the local MLS system AND are they familiar with the area.  If they can't answer all of these questions with a satisfactory answer, call the LENDER and request an appraiser who is GEOGRAPHICALLY COMPETENT!!!"

Geographic Competency is certainly an issue.  However, an appraiser can become geographically competetant in any area if he is willing to take the time.  This has a little to do with access to the MLS, but is more of an issue with what the appraiser is willing to do to become competent in a given area.  If you'll see my posts #72 and 85 above, it is nearly impossible for an appraiser to become competent in an area 3-4 hours away.  Fees and delivery requirements just don't allow for it. 

Michael J. Geis

Upon The Rock Real Estate Services, LLC

Certified Residential Appraiser in OH and MI

This is happening in Arizona as well.  I had 3 appraisals come in $20,000 or more below the sales price in the last week.  The buyer of one of the homes even agreed to pay $8,000 over the appraised value.  In my area it's a suppy and demand issue.

"Low" appraisals are a common complaint these dats, under the new HVCC rules. There IS a solution to it.

Section IC of the HVCC states:

"Nothing in this section shall be construed as prohibiting the lender (Or any 3rd party acting on behalf of the lender) from requesting that an appraiser (i) provide additional explanation about the basis for a valuation or (ii) correct factual errors in an appraisal report."

I think it is dangerous to assume that ALL "Low" appraisals are incorrect, however, based on some of the scenarios I see listed above, there may indeed be factual errors in a report that is "Low". This can be anything from incorrect comparables to incorrect adjustments.

"I know the arguments will be "Appraisals are art and not science so how can you say one adjustment should be something else?"

Nothing could be further from the truth. There are several analytical methods that can be used to validate a particular adjustment to see if it is correct or incorrect.

How is this done? By sending a copy of the appraisal to a professional review appraiser. As a professional review appraiser, I can tell you if a property is under appraised based on flawed methodologies by the original appraiser. Then you have some ammunition to go to the lender and show them that there are factual errors, which may lead to a revised appraised value.

Paul,

I agree, and that would be a bad appraisal.  However, not ALL short sales and foreclosures are like that.  Please see all of my posts.  All I'm trying to do is explain the bigger picture.  I'm not  making excuses for bad appraising which there has been a lot of over the last few years.  But there have been a lot of bad actors in this industry including mortgage brokers, appraiser's, inspectors, and, yes, even realtors. 

For long, too many (appraiser's realtors, mortgage lenders, realtors, inspectors. etc) in this industry have cared about nothing but getting the deal done and collecting their fees, regardless of whether they were being careless, negligent, or even fraudulent.  So, now, we reap what we sow. 

Michael J. Geis

Upon The Rock Real Estate Services, LLC

Certified Residential Appraiser in OH and MI

Low appraisals have definitely been on the rise here in Lancaster and they really stink when it happens.  But the one appraiser that commented had it right - their job is to best reflect the market and how can they "rubber stamp" a full price offer unless the list price is already demonstrably low?  I'm finding that I'm having longer conversations with the listing agent (or buyer agent as the case may be) about the possible roadblocks ahead of time so we can prepare the parties for bad news.  That seems to help a lot when and if that news comes.

Regarding the loans themselves - I can't believe the number of goofy conditions coming out of underwriters these days!  EVERY loan seems to entail the buyer doing gyrations to prove some small point to the lender.  I'm warning buyers like never before to expect a fight to get the home loan package.

There's always something isn't there!!!!!!!

Patricia

Jeff,

What do you mean by "rubber stamp a full price offer"?

For me, it's even worse.

The property did appraise couple of thousands higher than agreed ipon price but lender has refused to lend money. Can some action be taken against his lender?

Should I mention that the price is mid 500s and I represent both sides? What a disaster!

- Praful Thakkar

This is nothing new - there have been appraisal issues nationwide since May 1st when HVCC took effect.  I have seen about 50% of the appraisals coming in with errors or incorrect room counts, etc.  It is just silly.

I work with country cabins and homes in Southwest Wisconsin where some comparables 25+ miles away.  Lenders from out of the area do not realize this and are asking for the same criteria you mentioned in your post.  Some of these homes and cabins don't have 5 EXISTING comps within that range, let alone past sales.  Big government has got to go. 

Dean,  I have lost a couple this past month myself. I do plenty of BPO's and can't figure out how the appraiser came up with his values.  A big problem here in Ft. Myers is that the appraisers are coming from Tampa or Orlando and don't have a clue to what's going on here! Some areas have stabilized and prices are on the uptick...so how will prices go up if the appraisers are killing the deals?

We are in Las Vegas, NV - the #1 Foreclosure capital of the world and we have been dealing with this issue for awhile.  It is sad but now the appraisals are driving the market down further - the REO's dominate with over 70% of the closed transactions.  We have less than a one month supply so properties are getting multiple offers - yet the median home price didn't go up again this month. Many of the Buyers are first time homeowners using FHA financing - unfortunately, as a listing agent that is the last Buyer you want to work with on a sale - if the appraisal comes in low it stays with the home.  We have had buyers change loan programs to get a new appraisal. 

Try adjusting a sales price down with a lender on a short sale - we have one with Bank of America that they have informed us rather than reducing the price down $7500 to meet the FHA appraisal it makes more sense to foreclose!!!!

You might be interested in my recent ActiveRain post on this topic titled REAL ESTATE APPRAISALS AND PICKETT'S CHARGE.  In the post I sketch out my (so-far) successful approach to working with appraisers.  It might not apply to every market, but it has done well for me in the Sierra Foothills.

I'm always pretty skeptical when I hear 'appraisal came in low' or 'under appraised'.  Did the appraiser come in low or was the buyer willing to over pay?  An appraisal is not 'under appraised' simply because it did not meet the purchase price.  Appraisers are paid to be OBJECTIVE.  They don't appraise based on what ONE buyer and ONE seller agree to on a purchase, they (we) are looking at what a TYPICAL buyer would pay, given the market, comparables and the current market.   If 7 out of the last 10 sales in the neighborhood are REO properties, that IS the current market and they should be used.   I am very careful with short-sales however, especially active listing short-sales and won't use them unless I contact the agent as many current listing short sales are just listed to prove it can't sell for a certain price. 

Right now is a very important time for Appraisers to truly examine the market and submarket of neighborhoods.  In certain area's, even in my Phoenix market we are seeing big changes in the months of housing supply and pending sales volume.  Some area's have stabilized, even if for a temperary bases.  Some still are nose diving, its very important to examine the current market carefully and accurately.

We dont make the market, we read it, anaylize it and report it.  Realtors, I DO want to meet at the property of a purchase, you have information about the property I may want that isn't publicly available.   That said, the appraisal report won't be discussed with anyone but my client.  Let's face it, Realtors and Appraisers are always going to feel different about the value of a property from time to time.  Funny thing is I've never heard of a sellers agent claim the Appraiser OVER appraised a property.  Hard to be objectional when you benefit from the transaction.

Hi Dean, We are seeing this happening here also. Appraisers have definitely tightened their guidelines, and if the house doesn't appraise, it's pretty much tough luck for everyone involved in the transaction. It's terrible that it has come to this now.

As far as some saying you can dispute the appraisal, I have tried on 3 and no luck. I don't know if the appraiser even looked at my comps. case just closed! He has taken every reo and short sale around and did not include my 3 at similar pricing, depressed market he says, no foolin'.

I just received my first notice that the appraisal is coming back under the sales price.  This is extremely disappointing as my sellers are also buying another house and they are elderly and every step of the process is difficult for them.  We are being given the opportunity to show the appraiser some other comps but how do we also tell him that decent homes under $300K are getting scarcer in this area?  The Buyer was so confident it would appraise and he thought he was getting a great deal.  Now we wait to see if he considers both agents information on other comps.

Here in California, as a mortgage broker, I'm using portfolio lenders so I can order my own appraisal.  Just had one sail through the lender's appraisal review process. That is how I've been navigating my borrowers safely around the HVCC landmines. 

You all need to sign the HVCC petetion here and tell those stories so we can get HVCC repealed:

www.hvccpetition.com

Same thing happening here in Georgia, but it has been going on for some time.  And it's hard to "meet" the appraisers when we don't know who they are or when they'll show up.  The FDIC has scared banks and mortgage companies to death... they've scared appraisers to death, and absolutely no one is deriving any benefit.  Over a year ago, I had a new construction home that appraised by the bank at $352,000 for the construction loan.  When we closed 6 months later, we couldn't get above $325,000 on the appraisal.  Luckily, some creative financing pulled us through.  But it's happeneing more and more... and I'm afraid there's much more to come!

You are right on. With few recent sales and appraisers too afraid to go back more than 60 days in some instances we have seen some really interesting properties used as comparables. It's absolutely ridiculous.

As both a certified appraiser & a sales agent I see both sides of these issues.  There are both good & bad things about the HVCC.  The bad things about it affect appraisers as much as they do the lenders, REALTORS & everyone else.  The good things are ment to protect buyers from less than ethical parties in the transaction, but as it sits the HVCC probably falls short of accomplishing what it was intended to.  I largely second the comments above made by another appraiser in post #46.  I would not call for a full repeal of the HVCC, but it could stand some modifications.

One thing I see that would really help many agents is a greater understanding of how to support value for a sale they are working on.  How to pick good comps that really are the best ones & how to use that information in setting their listing prices or offer prices, so that these appraisal issues would be minimalized.  Yes, I'm suggesting that a buyers agent comp out potential sales just like a listing agent would, so you know what a supportable sales price would be, before you write an offer. I can say that with my sales, I rarely have any value issues with appraisals.  I'd say don't keep gambling with those deals, take some valuation classes & hone those valuation skills.  Someone commented on leaving or sending the appraiser a set of comps & info about the house.  A good idea that I have used, especially if the comp info you leave is really valid. 

Craig Chapman - the value guy    accessappraisals@msn.com 

A Realtor in our office recently had his listing bid up over list price.  Enter the appraiser, who valued it at list price.  The bank had accepted an offer $10,000 over list.  What do you do?  Will the buyer cough up $10K more?  Will the bank accept list?  What about the other bidders?  Start all over again? Oy vey!

Using the REO and short sales as comps is fine, but there HAS to be some major adjustments for a standard seller still, since their homes are going to be SOOOO much better(in most cases) than the REO. And there shouldn't be a standard deduction in price.  If there are multiple offers bidding over list price, that shows that the market is increasing slightly or staying stable, NOT decreasing.

A definite horror story, we are increasingly seeing some of this in the savannah market. Not a pretty picture. It is really surpressing the home buying market.  And stopping any kind of market recovery in the housing industry.  They need to cancel the whole new appraisal system -HVCC---

It's the Wild, Wild, West out there!  The only thing that can protect us is sharing our experiences, like you've been gracious enough to do.  

Same thing here in FL - Used to be you didn't even think about properties coming in uncder the sales price...now I'm dealing with it on a regular basis - Not fun!!

Very strange & very scary. Guess we just have to watch, help each other learn, and find ways to clear all the hurdles being put in front of everyone.

I have similar stories - I wrote one of 19 offers on a property priced at $299k - the L.A. said 5 of the offers were in the $315-320 zone, including ours.  He made the winning bid rewrite the offer to $290k because he was afraid it wouldn't appriase!  Here you have 19 people wanting to buy this property, 5 of whom are ready to pay $315-320k, and the final price that is on the record is $290k!  The market WANTS to turn around, prices SHOULD be going up, but HVCC is preventing the recovery from happening!

I have similar stories - I wrote one of 19 offers on a property priced at $299k - the L.A. said 5 of the offers were in the $315-320 zone, including ours.  He made the winning bid rewrite the offer to $290k because he was afraid it wouldn't appriase!  Here you have 19 people wanting to buy this property, 5 of whom are ready to pay $315-320k, and the final price that is on the record is $290k!  The market WANTS to turn around, prices SHOULD be going up, but HVCC is preventing the recovery from happening!

Too many comments to read before posting. I havent' had an appraisal problem in quite a while. Approx 2/3 of our sales are either foreclosure or short sale and the other third of the solds are priced like a foreclosure or short sale. We have too much inventory for buyers to over pay. But I do have 2 farms pending that I'm sweating out the appraisals on. Neither are foreclosures of short sales, but a lack of comps.

This is what happens when Big Govt get's involved. While oversight is needed, heavy regulation is not.

I'm working with a prospect today whose only hangup is the appraisal. He wants to know that if he picks me, and decides to go elsewhere he can take his appraisal. I explained HVCC and how it was "looking" out for him.

Funny, he didn't see how it was in his best interest for him to pay for an appraisal, me to order it and the Bank hold all rights to it. He didn't see how having to pay for a 2nd appraisal if this lender decided they didn't like the loan was in his best interest.  But I feel good because I know my clients are being looked out for by our government.

WOW---we have been seriously dealing with this in the North East Florida area.  Recently, on one of the offers I submitted we put in the Para 18 contingency list:  'contingent on appraisal being equal to or higher than purchase price.  If appraisal is lower then purchase price to be lowered without penalty to buyer."

Bottom line:  seller lost 11,000 in purchase price and my buyer retained their closing cost concession, etc.  A proud moment--no.  But when I work with buyers my responsibility is to protect them.  And, when I work with sellers--the opposite.  A catch 22 certainly.  It will also drive down the appraisals for the short sale lien holders----so no one wins in the end, including the lien holders who have the foreclosures and short sales.

It just gets more and more interesting.  And, scary-----

I too haven't had an appraisal problem in awhile, but I think the shoe is about to drop.  The main problem this time is there are no recent comps.  With the underwriters asking for nothing older than 90 days we don't always have comparable sales to show.

The recent appraisal mess has been covered a lot. To add insult to injury, I received a low ball offer yesterday, more than 20% off listing price with an appraisal contingency! The buyer stated that the appraisal had to be more than the offer price.

I said sure! But, the buyer had to agree to up the purchase price every penny that the appraisal come in above the offer on a cash deal. Well...I wanted to say that but I didn't.

I did say, offer full price and if the appraisal comes in lower the seller holds the option to reduce the contract price to the appraisal and keep the contract. I'm waiting for an answer on that one...

Dean:

I just received a "Reconsideration of Value" order from a major lender, the second such order in as many weeks.  In the current scenario, the lender provided three additional "comparable" sales (25% - 33% larger lot sizes than subject and 20% - 80% larger in gross living area) for me to consider versus those utilized in the appraisal previously done in the preceding weeks.  I assume that these sales were provided by either the listing or selling agent, or the borrower.  While the "comparable" sales provided were not superior to those utilized (i.e.: required fewer adjustments), I diligently researched and reviewed them to make that determination.

Many lenders do have a mechanism in place for disputing appraisal results.  A qualified appraiser should have no qualms about reviewing a few more sales - I just wish that those providing them knew what the word "comparable" means.

Dean,

You are right when you say that it's the thin inventory.  We have taken to underwriting each appraisal as they come in and we are finding that in the markets with more foreclosures and other distressed deals than standard transactions, the appraisals are DOA.  With the HVCC no discussion and no debate.  In fact, we had one appraiser "report" us to the HVCC authority with the lender we were using after both the Realtor showed up for the appraisal with comps and we questioned the appraisal coming in $40K light on a $385K sales price. 

Now that deal is dead, everyone loses and we end up arguing with a wall about why the appraisal/appraiser are being to conservative.

Question...could the reason that the appraisals are being done as conservatively as possible be related to the fact that most lenders own a 50% interest in the Appraisal Management company (AMC) they are requiring be used?  Or is that a random coincidence?

Stay well my friend.

Dean,

You are right when you say that it's the thin inventory.  We have taken to underwriting each appraisal as they come in and we are finding that in the markets with more foreclosures and other distressed deals than standard transactions, the appraisals are DOA.  With the HVCC no discussion and no debate.  In fact, we had one appraiser "report" us to the HVCC authority with the lender we were using after both the Realtor showed up for the appraisal with comps and we questioned the appraisal coming in $40K light on a $385K sales price. 

Now that deal is dead, everyone loses and we end up arguing with a wall about why the appraisal/appraiser are being to conservative.

Question...could the reason that the appraisals are being done as conservatively as possible be related to the fact that most lenders own a 50% interest in the Appraisal Management company (AMC) they are requiring be used?  Or is that a random coincidence?

Stay well my friend.

The best way I have found to see if a house is going to appraise is do a CMA before I put in an offer. That way, I know that our offer price falls within a reasonable range and has a chance to appraise once it is accepted. I will even send the comps along with my offer to allow the agent to show them to the seller, or REO company if they don't believe that the offer price is a high enough sales price for a successful transaction. Sellers who have been unable to sell all year are still hoping for someone to come along and offer last years price, and an agent representing a buyer can really help the sellers agent make a case for accepting an offer they may have thought was too low. 

Barbara Le Pine, Broker

S & W Real Estate in beautiful Newport Oregon

The government has come in with too much protection and has actually harmed the consumer, in my opinion.

In my recent experience it has been the banks that are undermining the appraisals. In my last 2 buyer transactions: 1) the bank required a 2nd full appraisal because their "in house valuation" came back lower" and 2) the bank randomly re-valuted the appraisal down $20,000.  We currently have a shortage of inventory in my market in the entry level. Multiple offers are the norm (14 on a shortsale that my client offered on today!).

I thought the definition of value is the price at which a willing seller will sell and a willing buyer will buy.

I tell my clients that the market is currently being driven down by the lenders, not the market.

Dean,

             I am in the greater Cleveland Southwest Suburbs and I see this happen all the time. I see it started happening after HVCC took effect. HVCC can also slow closing as the banks then are reviewing the apprasials for 4-5 days. This takes the monkey off their back I think, so I don't know if they care. I am also hearing these complaints from lot's of other agent's. It doesn't appraise and you can't close them on time. Seller's are seeming to have to take it on the chin and then if they are repurchasing they turn around and hold to the apprasial on the buy. Sometimes it all comes out in the wash. As lending tightens I beleive it will happen more. I also beleive there is no stop to the foreclosures and short sales in sight, so how can you not count them as comp's? I am told by my LO write 45 day contracts.

It's crazy.  I really like working with FHA loans now as the lender can still pick the appraiser and at least get a competent one.  The problems have only just begun.

Dean,

We here in Vegas are dealing much with the same problems. It was already tough to get borrowers approved for mortgages and then came the HVCC to add more grief, although it only applies to conventional.

Dean:

Sometimes these underappraisals have more to do with the quality of the buyer and not the value of the property.  The lender has one eye open for the potential that the buyer may default in the future and they are attempting to insure  that they will not lose money.  HVCC is supposed to take care of that with conventional mortgages but it seems to be causing HAVOCC.

Dean,

I feel your pain just had a deal cancelled by the seller for this same reason. Agreed purchase price was $116,000 and the appraisal came in at $95,000. My buyer knowing this was still willing to pay the $116,000 but of course what the buyer wants and what they get are two different stories. The seller was unwilling to agree to a lower price and the property has now been sitting on the market an extra 2 months it was just relisted again at $109,000. Now the seller which is a bank is waiting on an all cash offer were the appraisal issue will not arise. The property has been listed for over 200 days you think they would get the picture but I guess not. If someone is willing to pay that price and offers are coming in over list price on 75 to 80% of properties I would expect that to be reflected in the appraisal. Sales are way up in my neck of the woods and hopefully we will look back at this time and say this is when the bottom hit.

We're having problems here in Northwest Indiana also.  My issue is the out of area appraisers.  I have no problem with what they are trying to do with the computerized system of assigning an appraiser.  Only make it an appraiser from the area, one that has been in the homes and knows the market!

The other problem I had was when we did try to dispute the comps, I was held to a different standard than the appraiser.  The comps that were submitted by the appraiser were over 1/2 a mile away from the subject property and over 6 months old. I was told I had to have comps less than 6 months old and under 1/2 a mile.  Right!

Good Morning Everyone,

Now that we have shared the horror stories, what about a possible solution?  What about hiring an appraiser before an offer is in place.  Get an appraisal, get a consultation.  Then when you meet the lender's appraisal at the house, give them that information.  Or, work together with the listing agent and have the information emailed to the appraiser when he calls for an appointment.  In this way, the appraiser you hire will be completely independent of the transaction..... mainly the contraints imposed on him by the lender.  You'll be able to get a good picture of the market from an apppraiser's perspective.  Then you can work with the appraiser to get a clear understanding of what to expect when you get that offer.   Yes this will cost some money, but it may save the deal and all of these renegotiations and delays offered by all of these posts.  I'm sure you can find a good appraiser willing to work out a reasonable fee schedule for the product you need. 

This is not really about the value or what to list the house for.  We all look at the same data.  However, we do interpret the data differently for different purposes.  In other words, this is about getting your deal through underwriting and to the closing table in a reasonable fashion with as few delays as possible from an appraisal perspective.  What is that worth in light of all these posts?

I just had one the other day that was almost the exact same story and the Buyers Agent (it was my listing) Threatened that her client was going to sue us both because i had priced it 10% over its market value and her because she wrote and offer for him there!  I was in total shock at how crazy people are right now. 

Yeah!  Yesterday I got notice that my VA appraisal came in fine!

Dean I'm in Clayton, North Carolina and I just had my listing appraise for the sales price, however we are not immune to homes not appraising either.

Wow,  it does seem to be quite a problem in many areas.  I have heard that short sales have been affecting slelling prices here in the NW.  I understand that there are a number of foreclosures in the works here as well which may add to the problem eventually.

I think tht appraisers have swung to the other extreme on thre pendulum.  Just like many appraisals came in high during the madness of the market of 2004 through 2007, now appraisers are contributing to the declining prices today.

Our market is wild! Most first time buyer type properties are garnering multiple offers. Many are coming in over the asking price (which is often deceptively low). These offers challenge an appraiser to find comps in a market that has declined 40% but it now showing signs of vitality. Then comes HVCC and we are really I trouble.

Appraisers need to watch the market closely, and as the market improves, move their numbers up accordingly.

Brian

Appraisers need to watch the market closely, and as the market improves, move their numbers up accordingly.

Brian

Great post and comments.  To sum it all up: HVCC doesn't work.  Another regulation that seemed a good idea until it was implemented.

Our brokerage "suffered" the same unfortunate low ball appraisals as many of you have.  I appreciate reading the comments from other professionals such as loan officers and appraisers.  I makes me look at the problem through their eyes and be more understanding of their point of view.

We use appraisals to value properties in bankruptcy cases to determine whether the second mortgages are wholly undersecured.  The judges scrutinize the appraisals even in the absence of objection from the lenders, often discounting foreclosures and REO sales.  My appraisers have been advised to mention, but not include them in the comparables.

If the Senate reconsiders allowing bankruptcy judges to modify loans, another element will be added into determining value and that is affordability; ie, whether the debtor will be able to service the debt at the appraised value.  Judges will look to the median income in an area and standardized expenses - appling FNMA and Freddie Mac lending criteria.  That may push valuations down further.

Wow!  I had a really low appraisal come in just recently as well, purchase price $353,000, substantial closing help, no comps close by, appraised at $330,000.  The next day the house next door settles, tiny lot, no backyard, for $330,000, and appraised at $335,000 (according to the buyer's agent).  Appraiser says he doesn't see a substantial difference and wouldn't be worth raising it even the $5,000...

Just reading through all these comments makes me think it would be a great idea to have some of these comments listed out for the sellers to read regarding possible (or actual) under appraisals coming in --  at least they wouldn't feel it was just THEIR house!

Wow that's great that you just ran into the problem!  Notice that the appraiser no longer adjusts for a short sale or foreclosure?  When did that stop?  No added value upward against a distressed sale as before, it's like that part of an appraisal got thrown out the window.  And, with the new rules, the underwriter now forces/reviews the appraiser to lower his value.  How is that working right with the new HVCC?  So much for influence - it's just with another person!  The underwriter has never even been in the house & they're calling the values!  Unbelievable!  We've got to think of a solution!

Ok, last week the lender called while the buyers agent and client were in one of my listings.  A mfgd home on 3 acres, creek, pond, across from large lake..nice property.  Lender wants to know specifics, as the client has already told him if the interior matches exterior, he will offer.  Lender says fha is ok, he knows local appraiser who is excellent...should be fine.  Agent calls next day, lender has said not to write, he cannot find comps within 5 miles!  This is a rural property, there are comps that I based my cma on, and gave to the lender.  What the heck? internal desktop appraisal at the loan officers office?  Not my buy side client, so cannot say shop for your loan!

I had almost exactly the scenario you are describing... seller agreed to everything the buyer asked and had given a discount already off her listed price.  After she did a bunch of repairs to the house, we had raised the asking price, but the appraiser would not allow it... he used the original asking price as the value, which was actually $10k under the contract price!  He said that once you lowered the price, you cannot raise it, even if you made some improvements... never heard that before!

It almost blew the deal out of the water, and this was after the buyers had to jump through hoops you wouldn't believe to qualify.  To close the deal, the buyer agreed to cover part of the additional cost, the seller covered part, and me and the other realtor each gave up part of our commissions.  That is what it took to get the job done... unbelievable!

The next sale after that also had problems on the appraisal, although not as bad.  This was a probate house which had just been lowered $60k three days before my clients saw it and made the full-price offer.  The underwriter objected to one of the comps the appraiser had used to justify the value, and I ended up having to look up new comps for the appraiser to use!  This was a VA loan, and that appraiser was so nervous, I thought he was going to have a heart attack the day I met him at the house.  As it was, all this extra delay caused us to have to extend the closing three times... and that's a big deal in OR; the buyer or seller can back out at any time when that happens!

And Portland is barely declining at all compared to some markets.  First time I've experienced this, but I'm sure it won't be the last, with this new law.  This actually happened just BEFORE this law passed, so I suspect some appraisers were getting a lot more picky and cautious even then...

I like the suggestion about meeting the appraiser at the house and discussing the comps, and I think I'm going to do just that from now on... even if I think it's a shoo-in!  That's what I do with short sales already -- meet the BPO agent, so I guess it's time to do it on all sales!  If the lender can't talk to the appraiser, I guess the realtor has to do it... just something else to add to our list of important responsibilities!

Sharon Wenger, CSSN

Hi fellow realtors:

I am a realtor but i am also an appraiser.

People used to ask me 'how come the appraisal always comes out at exactly the contract price'.

Something was definately wrong. Sign a contract for x dollars and the appraisal would come back at a value of x. Sign for x+y dollars for the same property during the same week and the appraisal comes back saying the house is worth x+y dollars. Lazy appraisers were getting away with murder and nobody cared cause every body got paid---hence the total mess in the market today.

The constant complaints i hear from brokers today tells me that HVCC is the best thing for the market---together with the 1004MC every one comes back down to earth and no one is getting ripped off.

As for the comparable pool being foreclosures and reo, i use them ,then  i make a 15% positive adj to reflect the fact that these properties sell for about that amount less than arms length deals and i have not been confronted by any lender yet

g bascombe- realty valuation services, brooklyn ny

Congrats on the shout-out in the Forbes.com article recently Dean!  Obviously, you've hit the nail on the head, unfortunately, it was your thumbnail.  We are all feeling the pain of HVCC.  Here in Florida we've got AMC's using appraisers that are 40 miles from the neighborhoods we are trying to get values in.  Makes for quite a ride and it's blowing up deals.  All the appraisers and legislators defending this knee-jerk legislation need to wake up and smell how much this is decelerating what little momentum we have in the housing industry.  Keep speaking the truth!

We're seeing the same her in the metro Phoenix area.  In May, I had a buyer offer $105,000 on a house listed at $103,000.  It appraised at $90,000 because the neighborhood is full of repos.  Luckily, that buyer got his house at that price.  Right now I'm sweating a buy, although a house a couple of doors away just sold for about $7000 more than we've offered.  But sometimes the appraisers pick some really odd comps.  Back during the big house rush, they seemed to comp tract homes with custom (helping jack up the prices). 

I've been watching your weather - we'll be up there the end of this week for our grandson's Great Lakes boot camp graduation.  With it still over 110 here, I'm having a difficult time deciding what clothes I'll need to bring (I'm fighting the thought of bringing a heavy jacket).

Great post, by the way.  Certainly something that most of us are wrestling with.

i AM NOT IN THE REAL ESTATE BUSINESS BUT RECENTLY FINANCED MY HOME. I HAVE DONE A TON OF WORK ON THE HOUSE OVER THE LAST TWO YEARS , MOST RECENTLY REMODELING THE KITCHEN. I HAVE KEPT ON TOP OF SALES NEARBY, SOME FORECLOSURES, BUT A FAIR AMOUNT OF NORMAL SALES. DENVER'S MARKET,  PARTICULARLY WHERE I AM HAS NOT GONE DOWN TOO MUCH. THE APPRAISAL CAME IN ABOUT 40 THOUSAND UNDER THE MODEST ESTIMATE I GAVE THE BANK. WHEN I HAD THE OPPORTUNITY TO SEE THE APPRAISAL AND PROTEST IT.. IT HAD ERRORS. NOT ERRORS ON THE HOUSE OR QUALITY, OR SQUARE FOOTAGE.. ALTHOUGH IT IS BRICK AND SHE PUT WOOD AND PLASTER.. AND THEN TOLD ME IT DIDN'T MATTER. THE ISSUES I HAD WERE ON THE COMPS. ONE WAS OUT OF THE 1 MILE RANGE, ONE WAS A FIXER UP THAT WAS BOUGHT BY A DEVELOPER, ONE WAS THE WRONG PICTURE AND WRONG INFO.. SHE ACTUALLY HAD FOR ONE COMP THE ADDRESS OF A HOUSE IN PRE-FORCLOSURE, THE PICTURE OF A HOUSE DOWN FOUR BLOCKS, AND THE INFO OF A HOUSE A FEW HOUSES DOWN..  A TRIPLE WHAMMY. I KEEP READING ALL THIS STUFF ON THE WEB ABOUT FRUSTATED REALTORS AND POOR MALAIGNED APPRAISERS.. WHAT ABOUT THE CONSUMERS?  MOST PEOPLE WOULD NOT HAVE CAUGHT THESE ERRORS..  ALSO WHY EVEN BOTHER WITH COMPS THAT ARE IN CLOSE PROXIMITY AND STYLE AND SIZE IF YOU ARE GOING TO DECLARE THESE SAME COMPS ARE VALUED 50 TO 75 PERCENT HIGHER. SHOULDN'T GOOD COMPS BE SIMILAR ENOUGH TO THE HOME BEING APPRAISED THAT THE PRICE WOULD COME IN CLOSER?   SORRY SO LONG i AM JUST FED UP AND FRUSTATED.

I am a certified residential appraiser.  I can appreciate many of your concerns, as they are my concerns as well.  First I need to repeat what some others have said.  A lower the contract appraisal does not mean the appraisal is low.  I have run into situation where the contract is suspiciously high.  I contact the agent (yes, we certainly can talk to them) and ask them why the contract is so much higher then the surrounding home sales.  One would think that they'd answer with..because of sale A, sale B, C, etc.  But no. They just said that the buyer was willing to pay that.  I then talk to the buyer and ask if they have seen the homes like this that have sold and they say "No, only active listings".    Wow!  So much for a transaction with an informed buyer.  Realtors, please, check the sales. Remember to account for concessions as they do impact the sale price.  I know the quicker you sell, the quicker you get paid, but get your buyer up to speed. 

HVCC is a nightmare, I agree.  These AMCs are just pimps riding on the backs of appraisers.  Why do these appraisers use bad comps?  Because they are getting paid 1/2 fees so they use the easiest comps available and don't do the research.  There is no excuse, but they have forced this upon appraisers and, as they say, you get what you paid for.  I advise all appraisers not to cut their fees for these AMCs.  The moment you start, another appraiser will undercut you fee and the spiral down will continue.