Market Conditions in Atlanta>Question Details

Veronika Bar…, Real Estate Pro in Roswell, GA

Do you feel that less-than-contract price appraisals contributing to delay of values recovery?

Asked by Veronika Barash, Roswell, GA Tue Oct 2, 2012

Please share your stories and tips on successful appraisal rebuttal...

Help the community by answering this question:


Ron Thomas’ answer
There is absolutely nothing that happens, that does not have both positive AND negative consequences;
The appraisals are probably keeping some people from becoming homeowners who SHOULD NOT BE HOMEOWNERS!
We have seen the damage that this can do; and in the long run, that would be a good thing:
I would not wish a FORECLOSURE on anyone.

If we were selfish and say we were looking at the Big Picture; we would want things loosened up so that the Market could surge ahead:
But not at any cost; please!
0 votes Thank Flag Link Wed Oct 3, 2012
In my experience, 90% of the appraisals add virtually nothing to the process of accurate market-based pricing mechanism in the housing market.

As you suggested, below contract price appraisals hinder price recovery in areas where a large percentage of sales are financed. (It has no impact on value recovery.) At the same time, above contract appraisals - which are as rare as hen's teeth - also distort the market.

When we're in a rising market, as we've been in the past 7-8 months, then we should expect plenty of appraisals to come in below contract price. This problem is being driven by the fatal flaw of the appraisal process -- the comps are all looking backwards by at least 2-3 months.

Except to prevent obvious mortgage fraud, appraisals didn't protect the banks from the far bigger losses from shady mortgage underwriting practices or a declining housing market. Since there's no accountability anyways, why don't the banks just transition to use BPOs. They're much cheaper and are at least as useful as appraisals.
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0 votes Thank Flag Link Sat Oct 6, 2012
Appraisal requests and the orders from the bank that accompany them, are for the sole purpose of positioning the resulting mortgage to be resold to the investment groups. If the mortgage can not be resold, it will not be granted. (sound familiar)
The appraisal review board of the lender will not only review the comps but GRADES the appraiser and overseers the resell process. The underwriters, are pedantic about makings conditions proper to insure the lender will not be required to buy back a stinky deal from the investment group.
What pops out of the end of the process, that we call an appraisal, is a bit goofy.
As Cathy seems to understand, real estate professionals must realize this process is gamed. Equipped with this reality, the battle must continue to fight to preserve the home owners equity. Failing to do so will be the element that drags down the home value recovery.
The real estate professional must accept the RESPONSIBILITY, especially when marketing a home in an eclectic community, to advise the owner to accept offers only from well informed buyers.
The market value of a home has always been defined as what a wiling and able buyer, and a willing and able seller agree upon. NOT what a corrupted 3rd party convoluted process dictates. The goals of the 3rd party is clearly different than that of the buyer or seller.
Anticipate the goof ball appraisal and make certain the selected buyer is able to adapt. The results produced by these resolute agents is being reflected in the newest stats. To these agents we must give deserving accolades. Remember, all real estate is local.

Best of success to you,
Annette Lawrence, Broker/associate
Remax Realtec Group, Palm Harbor, FL
2 votes Thank Flag Link Fri Oct 5, 2012
They sure can be. In their haste to write legislation to help the consumer they have hurt the consumer by using 3rd party companies to hire appraisers you are not then getting the best or most experienced workers. Some appraisers in their hast are being way to conservative and under pricing homes either on purpose or by mistake using short sales that were not sold at market value.
1 vote Thank Flag Link Mon Oct 8, 2012
In one sense I believe you are right....they are a potential cause of delayed recovery....but this is a natural part of the cycle.
These appraisals, as subjective as they are, can reflect the caution and pessimism on the part of the appraiser....when a judgement call is necessary. This will hopefully gradually turn to a more optimistic view. Of course there is also the other school of thought that says new regulations have put uninformed appraisers on the job as well.
I believe real estate values are so "local" in nature, the recovery takes hold in small baby steps on a case by case basis. I am witnessing these little "miracles" every day out in the marketplace.
In one example, a listing of mine recenlty sold to a cash buyer for a higher price than would have otherwise been possible....This buyer was informed about values but did not request an appraisal. He just loved the home and location, and was willing to pay for it.
What has happened as a result is the surrounding properties are now selling (and appraising) for $10 - $20k higher. .....Each seller is receiving the "gift" of increased value. .....and so it goes.
1 vote Thank Flag Link Mon Oct 8, 2012
@ Ron Thomas: not sure how low appraisals prevent foreclosures... BUT all these down payment assistance and $100 down programs are contributing to building up foreclosure inventory. Buyers who qualify for these programs are not ready to be homeowners, in most cases. All these buyers can afford thanks to these programs is the lowest end of inventory that is, to the most part, a money pit considering amount of repairs needed. We all know that homeownership involves huge financial responsibility that can’t be handled by everyone.

Veronika Barash, Realtor®,





678.230.4235 c

678.287.4800 o

404.410.6983 f

Keller Williams Realty Consultants

695 Mansell Rd. Ste 120

Roswell GA 30076
1 vote Thank Flag Link Sat Oct 6, 2012
Ask for a "field review". That may or may not work out in your favor, but it at least gets a second set of eyes on the case.

There are some strong arguments to be made on both sides of this issue.

One the one hand, some markets (especially in more affluent areas) are currently experiencing price appreciation. I see it all the time. Its something that an appraiser that really does his or her homework should be able to notice after evaluating neighborhood sales data.

On the otherhand, however, just because ONE person is willing to overpay, it doesnt neccessarily mean the appraiser should just give it a go ahead. If that one person defaults and goes through a short sale or if the bank forecloses, what would the next highest person be willing to offer?

Appraisals are definitely more art than science. I've seen many appraisals grossly underadjust for things like: 1 fireplace versus 5 fireplaces (-$2,000 adjustment). That just doesnt make much sense at all.

Unfortunately, now that appraisers are receiving lower fees--due to legislation requiring the use of Appraisal Management Companies--many are simply not putting in as much time and effort as we would hope for. Imagine getting paid half of what you were once accustomed to receiving. You would want to hurry through the motions, rather than exert the same amount of effort. Its human nature. It really sucks to be them these days.

$225 dollars is typically what an appraiser receives per order. Prior to passage of Frank-Dodd, it was about $450.
1 vote Thank Flag Link Sat Oct 6, 2012
Thanks for the input, Daniel! What does "field review" means exactly? Review by the same Appraisal Management Company ? Or, the seller/listing agent hiring another appraisal? I am coming from the listing agent perspective...
Flag Sat Oct 6, 2012
I forgot to mention the Georgia appraiser refuses to clear the property for sale. What recourse is possible to get the sale through?
0 votes Thank Flag Link Wed May 1, 2013
How is it possible for a Georgia appraiser to dictate to a seller to finish painting the interior of the property and replace the wall socket plates which are cosmetic. When the buyer of the short sale agrees to paint after obtaining the property. This is a VA short sale property with nothing else wrong with the property.
0 votes Thank Flag Link Wed May 1, 2013
@Jay: yes to little "miracles"! Had that happen as well when a buyer of my listing was willing to pay more than the listing appraised for.

Still, the trend I see lately is that there is a system in place that allows banks to SET THE MARKET!

Some banks don’t use MC, they have their own list of appraisers and their own guidelines, in addition to HVCC rules. Almost each appraisal gets revised by the underwriters these days. So, the definition of appraisal as “opinion of a value” gets skewed by banks’ attempt to protect their portfolios.
0 votes Thank Flag Link Mon Oct 8, 2012
The real delay of the recovery, comes Not from Less-than-contract price appraisals, rather that the Feds & the Banks are slowly releasing the Foreclosed Property inventory....had they flooded the market two years ago or so we would be on our way back towards recovery at a more rapid pace....this way buyers and sellers are still worried how big is the "shadow inventory" preceived or real, hence the confidence is still not at full speed. Then add the unemployment numbers to the mix and there is your "delay"...
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0 votes Thank Flag Link Sat Oct 6, 2012
@ Endre - I disagree and let me give you and example. I am a mortgage lender and I order 10 appraisals, that sales price on each home sold for $150,000, half the appraisals came back at $150,000 and half the appraisals came back with a vlaue of $130,000, these are all bank owned foreclosures and the banks agree to sale the homes for the $130,000 appraised value. All the listings and appraisalsover the next six months will use these closed sales as comparable sales and this will absolutely cause the next listing and sale to be for less!

FYI - Litterally half the appraisals I order are coming in for less than the sales price and 90% if the purchases I am financing are bank owned foreclosures.
Flag Sat Oct 6, 2012
@Jim Simms: you right about some agents takes overpriced listings and by doing that driving values down. It will never sell until after several price reductions and a low ball offer. Time on market is what drives the final sales price.
Yet, hopefully, most of us have a sit-down with the seller going over the recent solds.

I never had less-than-contract-price appraisals (!) on my listings up until this year. This is why I am so alert. All these listings were under contract in one week, with multiple offers! Can it happen to overpriced listing?
Thank you, all, for sharing your thoughts! I really appreciate your input!
0 votes Thank Flag Link Sat Oct 6, 2012
Read through some posts. Dodd-Frank was supposed to end a lot of the "garbage" associated with HVCC. Appraisers are still, however, receiving the same low fees they were since HVCC was instituted.

It was the HVCC regulation in 2009 (not the Dodd-Frank bill passed in 2010) that gave rise to the use of AMCs on all residenital loan originations.

Sorry for the confusion.
0 votes Thank Flag Link Sat Oct 6, 2012
I don't think it's the job of the appraiser to pull the economy forward.

Appraisers are asked to do the wrong job. What they should be asked is - is the contract price reasonable for the marketplace? It does nobody any good for an appraiser to declare that a buyer - in their sole opinion - overpaid for a $275,000 house by $1000. If you believe that Fair Market Value is what a willing buyer and seller agree on in an arms-length transaction - the house is worth $275,000 - not $274,000. And we really don't care that you think it's worth $279,000 either!

But let's not confuse things. Adam Smith wrote that "the invisible hand" works when we all work in our informed self-interest; let's not ask appraisers to "take one for the team." Just call them correctly; we'll be happy!
0 votes Thank Flag Link Fri Oct 5, 2012
That was a 5 star response. Couldn't have said it better myself.
Appraisers are an odd species. They aren't market participants, yet they're asked to provide their opinion of value based on sales comps provided by real estate agents. Broker Price Opinions have more merit (especially when the agent is active within the same market area) then some out of town appraiser trying to figure out which direction the market is headed in based on recent closings.

I will say one thing in their defense. There is a such thing as overpaying as well as asymetric information. If a buyer is willing to overpay, that doesnt neccessarily mean that his or her offer becomes the new fair market value. Had that person been presented with timely and accurate information, then that person may have offered something less (or at least in line with neighborhood averages).
Flag Sat Oct 6, 2012
You could flip this around and say that Realtors that ignore the comparable sales when they list a home are delaying the recovery. There is one Realtor in my market that will list anything at any price, I saw one from them recently that was listed at nearly a million, the house might be worth $400,000, repeat, might be...

Okie dokie, appraisers do make mistakes, the borrower should be the one that disputes it, the dispute should be in writing and contain proof. The loan officer is not allowed to see the appraisal unless the borrower wants them to review it. But that isn’t usually the best path, the Realtor representing the borrower should provide better comps, if none exist then why is the appraised value wrong? Last year I had a Realtor list a home at least $50,000 above market value trying to complete a trade, of course that didn’t work so well, trades can require 2 appraisals on the subject property of the mortgage. The agent complained, I requested comps, was provided comps that indicated a value that was $10,000 LESS than the appraisal. Go figure.

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
Web Reference:
0 votes Thank Flag Link Fri Oct 5, 2012
Katina Wright – The lender want to lend money and we lending at a lot of it.

Appraisals are hindering the recovery!

Most appraisals are now order through AMC aka Appraisal Management Company’s and this is due to HVCC aka Home Valuation Code of Conduct. The logic behind HVCC is good, but it turned independent appraisers to slaves of large AMC’s. Consumers are paying about 1/3 more for appraisals and many times appraisers are only earning about half of the appraisal fee prior to HVCC. As a result many experienced appraiser left the industry, and many the ones who stayed hired inexperienced apprentice appraisers to drive to properties, measure and take photos so they complete more appraisals to make the same amount of money they did prior to HVCC.

HVCC has been a huge failure! Consumer loose because; 1) Quality of the appraisal is way down because of the loss of experienced appraisers. There is no fear of losing business because it takes two weeks to complete the appraisal or you or your apprentice was in a hurry and only counted 3 of the 4 bedrooms 2) Consumers are paying the price, literally with inflated appraisal fees. 3) The remaining appraisers are under so much scrutiny and limited by the scope in what they are allowed to use and comps, etc…

Example: I had a purchaser go under contract to buy a home that was almost 5,000 square foot for $199,000.00, the home was like new, only about 10 years old in a nice subdivision in Paulding County. The home had been foreclosed on and purchased for arround $135,000, the new buyer painted the home, added hardwoods, granite counter tops, landscaping and staged the home. The home only appraised for $172,000.00. There were several reasons; This was one of the larger homes. There were a couple other homes on the same street that had recently been foreclosed on in the $160,000 range. We rebutted the appraised value and stated that our home was larger and nicer and it would take $10’s of thousands of dollars to bring the foreclosed homes to condition of our property. Reality is most people done have the cash to fix up a property after they just put down a substantial payment and/or they just don’t want to the hassle of fixing up the home themselves. The buyer and seller compromised on $188,000 sales price and the buyer brought the additional funds to closing. The buyer was smart enough and had the cash means to realize that there was no way to build the same for less than $40.00 per square foot and took advantage of the market. Now this is setting the home values in that neighborhood in the $188,000 range instead of the $198,000 range, which would infuriate me if I were a homeowner in that subdivision. Let’s take this a step further, if the seller had accepted the $172,000 sales price, the neighborhood would have been valued about $20,000 to $30,000 less.

I personally think the home values should be market driven and a home should be worth whatever someone is willing to pay. This is why consumers hire Realtors, to find home that meets their needs and ensure they are paying a fair price.


Larry F Delbridge II NMLS Loan Officer# 114090
Loan Officer | Team Manager
National Direct Lender | Direct Seller/Servicer Fannie/Freddie , FHA , VA & USDA
404.493.2288 Cell
888.703.3070 Fax
Georgia Mortgage License # 6521
Primary Residential Mortgage Corporation NMLS # 3094
5755 North Point Parkway, Suite 38 Alpharetta, GA 30022
0 votes Thank Flag Link Fri Oct 5, 2012
WOW...this exact thing just happened to me. The appraiser documented 3 OLD sold comps REO $86K, REO $80K, and non-REO $120K. 2 Actives $120K each yet the value of the subject was not the contract price, which is below market value.

I know banks don't want to lend money but this was insulting. The subject is an updated brick ranch in an area with PLENTY of non-REO recent sales. The comps...2 - story wood siding and one stucco and one that actually looked like the subject. I was livid...your comps average $96,000 but your opinion of value is $85,000...OK.

Why are appraisers given the purchase and sale agreement? Why can't they just blindly provide a fair assessment of a home's value? Why do they take it upon themselves to destroy a transaction or do they have directives from the lender?

Unless they are also underwriting the loan, who are they to determine a buyer's ability to repay to the tune of destroying a deal with a pen stroke (key stroke). The issue rings very true with a comment Romney made during the Presidential debate..".the lenders don't have a handle on what classifies as a good loan risk in their own internal processes"!!

Unfortunately, the lender is the only one who can challenge the appraisal and quite frankly they seem to not care about rocking the boat even if you arm them with DATA. To add insult to injury the appraiser is also a Realtor. I can only hope KARMA visits regularly and returns the favor 10-fold.
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0 votes Thank Flag Link Thu Oct 4, 2012
Sounds like a crazy experience. Different AMCs have different guidelines. Some discourage the use of REOs and Short Sales (except when the market is almost entirely short sale and REO driven). I've done BPOs where even with all of that, to find and use non distressed property values whenever and wherever possible in order to arrive at fair retail market value.

Bank of America is appraisal only in NJ when evaluating short sales. Some out of town appraiser that didn't know what he was doing, grossly overvalued our basement condo listing. He didn't even adjust for the fact that all his comps were above grade while our listing is below grade. I think it has a lot to do with as many others have pointed out: Most of the really good appraisers threw in the towel once their fees were slahed in half.

Now we have to deal with a lot of knuckledraggers. Not really good for the recovery, now is it.
Flag Sat Oct 6, 2012
I also have a recent track record like Beppy's and I believe that "recovery" is a false pretense.

Hyper local is what matters most and when distressed supply rises again, particularly above $200000, and interest rates rise and white collar unemployment continues to plague the USA, recoveries will only come to some hyperlocal submarkets.

As I've told many investors thinking that 2007 prices are coming back to their exurban cul de sacs...there will not be a recovery for many submarkets.
Web Reference: Http://
0 votes Thank Flag Link Wed Oct 3, 2012
on a big scale, you are absolutely right. 2007 prices benchmark is not the ultimate goal to fight for, just want to take it day by day and do my absolute best for my listing clients... Looking for some wisdom words from all of you who had successfully contested appraisal
Flag Sat Oct 6, 2012
Hello Ms. Barash, I think they can, yes, contribute to delay ... guess I've been blessed, however, my last several appraisals have come in either above contract price or at it.

Elizabeth 'Beppy' Walton, Realtor
Keller Williams Buckhead
C/404 234 9418; eFax/404 604 3965
0 votes Thank Flag Link Tue Oct 2, 2012
ABSOLUTELY!!!!! I just sold a condo for FULL PRICE and the preliminary appraisal came in 45K under the contract price. After much work on my part, as well as the selling agent, we got the appraisal to within 5K of our price. When you sell a property at full price THE MARKET HAS SPOKEN!!!!!
0 votes Thank Flag Link Tue Oct 2, 2012
You are, indeed, Ms. Walton! I asked you all for a feedback because this year was really about low appraisals for me and my fellow agents. My brokerage ended relationship with in-house lender (one of the big national lenders) due to recurring issues with appraisal...
Flag Sat Oct 6, 2012
Way to go, Cathy! How did you do that? Pointed out better comps? I learned that this is the only way to contest the appraisal. Apparantly, agents are not suppose to contest the adjustments made...
Flag Sat Oct 6, 2012
Appraisals are absolutely slowing the recovery. This is thanks to HVCC aka Home Valuation Code of Conduct.
0 votes Thank Flag Link Tue Oct 2, 2012
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