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Posted on 8/4/18 at 9:27 am to oOoLsUtIgErSoOo
quote:
Which will magically always be pretty much exactly what you are paying for it.
Not true. My parents made a huge mistake years ago right after Katrina. I told them to have their own appraisal done since they wanted to do FSBO. They thought it was silly to pay an appraiser because they knew what their house was worth.
The house appraised for $40k more than they agreed to sell it for.
Their current house would have been paid off 8yrs ago had they sold the other one for what it was actually worth.
All because they wanted to save a few hundred bucks
This post was edited on 8/4/18 at 9:32 am
Posted on 8/4/18 at 9:34 am to nugget
quote:
And wouldn't the appraiser be indirectly incenivided for it to come back over purchase?
Would they? The person paying for the appraisal would want it as low as possible. As a seller your appraisal doesn't really mean anything.
Posted on 8/4/18 at 9:34 am to nugget
Appraisals are a bit of an odd gig.
They are there to minimize risk for the mortgage companies. Period.
However, can you imagine the potential for under the table deals to be cut if the very same mortgage company is also setting the appraised price?
Whether you like them, or do not like them, appraisers have their place. No, I am not one. This is one of those things that we all have to deal with because of the potential for thieves.
They are there to minimize risk for the mortgage companies. Period.
However, can you imagine the potential for under the table deals to be cut if the very same mortgage company is also setting the appraised price?
Whether you like them, or do not like them, appraisers have their place. No, I am not one. This is one of those things that we all have to deal with because of the potential for thieves.
Posted on 8/4/18 at 9:35 am to TechDawg2007
quote:
Appraisals are such BS. The house is worth what a person is willing to pay for it.
The appraisal is for the mortgage lender, not for the buyer. They need an estimate of how much they can sell it for in a foreclosure and that has nothing to do with how much the buyer is willing to pay.
There's definitely some pressure to push up the appraised value a bit to match the purchase price but it won't get outrageously out of line. If you want to pay a million for a house that appraises for $200k you are not getting a mortgage for a million.
Posted on 8/4/18 at 9:36 am to SG_Geaux
One thing that people need to realize is that there are several types of "values". When doing a normal mortgage appraisal, you are predicting market value based off of an arm's length transaction. A lot of sales aren't truly arm's length transactions. For instance, the seller is in a rush to sell or the buyer's wife is in love with the landscaping.
Posted on 8/4/18 at 9:37 am to fightin tigers
quote:
Would they? The person paying for the appraisal would want it as low as possible. As a seller your appraisal doesn't really mean anything.
Appraisals coming back low can cause the deal to fall apart. If there's no deal then the bank doesn't get to make money in the mortgage.
Posted on 8/4/18 at 9:38 am to IT_Dawg
quote:
paid $450,000 didn't know that...defaults on his loan after the 1st payment.
I’d like to know what bank lends $450k to a guy who defaults after the 1st payment. I’m gonna take them for $500k and skip the country.
Posted on 8/4/18 at 9:43 am to foshizzle
quote:
The appraisal is for the mortgage lender, not for the buyer. They need an estimate of how much they can sell it for in a foreclosure and that has nothing to do with how much the buyer is willing to pay.
There's definitely some pressure to push up the appraised value a bit to match the purchase price but it won't get outrageously out of line. If you want to pay a million for a house that appraises for $200k you are not getting a mortgage for a million.
Say a house that sells for $400k to someone putting 20% down appraises for $380k. The bank only needs to sell it for $320k in foreclosure to break even. Why would they not lend the $320k in that situation because of a low appraisal?
Posted on 8/4/18 at 9:43 am to El Segundo Guy
El,
Brings up good points that most people don’t realize and few home owners can look at their property objectively. I would be worried if I was in the residential appraisal field with the increase use of automated valuation systems. Appraiser can generally swing values several percent one way or another based on comparable and adjustments, and as long as they don’t add features to the subject or the comps that don’t exists.
Brings up good points that most people don’t realize and few home owners can look at their property objectively. I would be worried if I was in the residential appraisal field with the increase use of automated valuation systems. Appraiser can generally swing values several percent one way or another based on comparable and adjustments, and as long as they don’t add features to the subject or the comps that don’t exists.
Posted on 8/4/18 at 9:51 am to DieSmilen
If Zillow 'Zestimates' are an example of automated appraisals then we are a long way away.
Posted on 8/4/18 at 9:53 am to nugget
I'll come here to defend my profession. Most of the responses are responding about home appraisers, which can be significantly different from appraising apartments (depending on what you mean by apartment). I do commercial work only, i.e. no houses, and focus in multifamily properties ranging from 6 units to 1,000 units. This work will likely not be fully automated anytime soon whereas I could see home appraisals becoming more automated. They just made it easier to become a certified general appraiser by making the "trainee" period 1.5 years instead of 2.5 years (of course I just finished my 2.5 years when they decided to do this 
).
The thing I like about appraisal is that it is "fee-split" based, so the more work you do the more you get paid. I can put in two hours on a Saturday morning while my SO is asleep and get a couple hundred dollars worth of work done. I've never had to ask off work and I can work remotely.
The downside of that is there is no such thing as PTO, you won't make much money at all as a trainee, and there is nobody to do your work if you don't do it.
The work is also relatively interesting. You often work on active deals that other people have no knowledge of (renovations, planned developments, etc.) so you know what is happening before anyone else. Commercial appraisal work has become much more of a white collar profession than it used to be and is much more white collar than home appraisers.
More than happy to answer any questions you might have.
). The thing I like about appraisal is that it is "fee-split" based, so the more work you do the more you get paid. I can put in two hours on a Saturday morning while my SO is asleep and get a couple hundred dollars worth of work done. I've never had to ask off work and I can work remotely.
The downside of that is there is no such thing as PTO, you won't make much money at all as a trainee, and there is nobody to do your work if you don't do it.
The work is also relatively interesting. You often work on active deals that other people have no knowledge of (renovations, planned developments, etc.) so you know what is happening before anyone else. Commercial appraisal work has become much more of a white collar profession than it used to be and is much more white collar than home appraisers.
More than happy to answer any questions you might have.
This post was edited on 8/4/18 at 10:09 am
Posted on 8/4/18 at 9:57 am to nugget
Underwriters care about appraisals and they are some of the dumbest humans I’ve ever had to deal with
Posted on 8/4/18 at 10:01 am to TheAstroTiger
No they really aren't. I would say 85% of appraisals will meet the accepted contract price- but I have had deals lost because of comps. I'm not saying they are right, but they are certainly not pointless, at least to the people providing the money.
ETA: Sorry- the post I was replying to:
ETA: Sorry- the post I was replying to:
quote:
The intended purpose of an appraisal is to protect the mortgage company. Obviously they will bump the appraisal higher based off of selling price so they really are pointless now.
This post was edited on 8/4/18 at 10:04 am
Posted on 8/4/18 at 10:13 am to nugget
There is a bunch of ingnorant shot in this thread.
First of all residential and commercial appraisals are 2 entirely different things. Commercial appraisals are not going anywhere and will continued to be relied upon for the foreseeable future.
Residential appraisals will become more and more automated. But having said that, people think they know everything about what they do but don’t understand nuance. The bank doesn’t care what one person is willing to pay for something, they care about what others have paid for similar assets, but rarely are 2 houses alike. Lot size, amenities such as pools, attached garages, proximity to utilities (sewer, power substations, etc) have an effect on value. Often people without an appraisal background just think the house down the street sold for $x, so my house is worth the same. The bank isnt just giving money away, they need at least a sanity check on the price of the house. Now these are supposed to be independent, but doesn’t always work that way so I can understand if someone finds an issue with that aspect of the industry.
Commercial appraisals use more income approach than comparable sales in valuation which requires much more judgement.
My dad is an appraiser. Likes the flexibility in taking jobs. Has done it for a long time and has a general license which is hard to get (takes a ton of time as an apprentice and a mentor). Has needed to defend his valuations in court many times and has had both banks and buyers/sellers pissed at him because of appraisals he came back with.
First of all residential and commercial appraisals are 2 entirely different things. Commercial appraisals are not going anywhere and will continued to be relied upon for the foreseeable future.
Residential appraisals will become more and more automated. But having said that, people think they know everything about what they do but don’t understand nuance. The bank doesn’t care what one person is willing to pay for something, they care about what others have paid for similar assets, but rarely are 2 houses alike. Lot size, amenities such as pools, attached garages, proximity to utilities (sewer, power substations, etc) have an effect on value. Often people without an appraisal background just think the house down the street sold for $x, so my house is worth the same. The bank isnt just giving money away, they need at least a sanity check on the price of the house. Now these are supposed to be independent, but doesn’t always work that way so I can understand if someone finds an issue with that aspect of the industry.
Commercial appraisals use more income approach than comparable sales in valuation which requires much more judgement.
My dad is an appraiser. Likes the flexibility in taking jobs. Has done it for a long time and has a general license which is hard to get (takes a ton of time as an apprentice and a mentor). Has needed to defend his valuations in court many times and has had both banks and buyers/sellers pissed at him because of appraisals he came back with.
Posted on 8/4/18 at 10:16 am to yellowhammer2098
quote:
More than happy to answer any questions you might have.
How much did you make as a trainee? Was it hard to find someone that would accept you as a trainee? I've looked into possibly doing it. I make good money now and have quite a bit of passive income through rentals so i can handle making low pay for a while. My problem is I'm gone from home about 220 nights per year. I'm getting married in the spring and don't want to deal with all of this travelling once we are married.
Posted on 8/4/18 at 10:27 am to nugget
I made $35k my first year as a trainee and $40k (annualized) for the next six months. Went on a fee-split about a year and a half after starting and made ~$60k that year, ~$80k the next, on pace for ~$115k so far this year (I've made about $70k YTD). It will basically top out at $125k unless i take on a trainee myself, which I can't do for two more years (have to have your CG for 3 years in most states before you can take on trainee).
I have spent a total of one night away from home for work and it was to go to a company meeting.
It definitely isn't easy to find someone who will take you on as a trainee. I did it straight out of college and was applying to companies in Dallas, Houston, NOLA, Atlanta, etc. You are pretty useless when you first start and a lot of appraisers don't see the point in hiring a trainee (short-sighted IMO). I wanted to work for a national company so that limited my options somewhat but I'd definitely go that route again if I had to do it over.
I have spent a total of one night away from home for work and it was to go to a company meeting.
It definitely isn't easy to find someone who will take you on as a trainee. I did it straight out of college and was applying to companies in Dallas, Houston, NOLA, Atlanta, etc. You are pretty useless when you first start and a lot of appraisers don't see the point in hiring a trainee (short-sighted IMO). I wanted to work for a national company so that limited my options somewhat but I'd definitely go that route again if I had to do it over.
Posted on 8/4/18 at 10:38 am to nugget
Just had to have one done for a HELOC. Had the guy come out and do a pretty thorough job, but then came back with a really low-ball figure. Comps within a mile or whatever were not very comparable. He also didn't add in our new backyard addition because the cement hadn't been poured yet (was being done the next day due to rain, but the forms were all set up and ground cleared). Said he had to count it as "covered storage". I sent in a request for a reconsideration of value showing the finished project and about 7-8 comps that were $10-20k more than the ones he used, including the home at the entry to our 5-house neighborhood that is smaller than ours, valued less by the tax assessor, and sold last August for $10k more than the value he gave us.
They came back with $12k more on the appraisal the next day.
They came back with $12k more on the appraisal the next day.
Posted on 8/4/18 at 11:01 am to nugget
Be careful here. I got my arse lit up on the money board a few days ago for asking essentially the same thing and them saying that the market doesn’t matter, only the appraisal does.
Posted on 8/4/18 at 11:17 am to nugget
Residential is crap. It's not worth the investment required to become licensed.
Commercial on the other hand is fun and very profitable.
Commercial on the other hand is fun and very profitable.
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