Lanx
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appraisers is the most worthless job in real estate, their opinion means nothing other than the bank saying ok we give you this much $.
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Home buying thread
- Thread starter Pasteton
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Oblio
Utah
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Again your opinion is just that. You ignored all my questions based on statements you made just to double down on your original opinion.
You contradict yourself in your comment above. Clearly their opinion is worth it to the bank, so which is it?
Whether you realize it or not an Appraiser is a safeguard for the buyer and the bank and to a lesser extent the seller.
As is yours, just a more extensive anecdote.
So.... we're right?
2007, existing home built ~1965 and most recently renovated ~2000, 20% down. (Edit: It was appraised at more than 15% higher than I ended paying for it, FWIW.)
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Oblio
Utah
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1. I see your point but will have to partially agree and partially disagree for obvious reasons.
2. The statement was a blanket statement about appraisers. I clarified it and said some, so your were correct "some" of the time.
3. 2007 was before the crash, 20% down was not the norm back then. That was the era of zero down. Again it was ordered by your bank that way based on your risk assessment. Out of curiosity was it a condo? Also, on the Appraisers USPAP disclosure did they disclose any prior work done at that address? Meaning did he or she appraise that same home recently?
Lastly, I assume you received a copy of your appraisal. Do you still have it? Are you sure it was an exterior only? Are there any interior photos in the report?
Single family home. I don't have the paperwork any more. I tossed it all a couple years after I sold the house in 2015.
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Fucker
Log Wizard
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Oblio
Utah
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Are you talking about Home Inspectors? The guys and gals that check mechanicals etc? They have nothing to do with value assessments.
Or are you referring to county assessors? They value your home for the tax purposes and use a very different methodology than residential appraisers for for lending purposes.
Fucker
Log Wizard
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I didn't say they do. Lanx said appraisers are the most worthless job in real estate, and my counter to that was inspectors.
Do try to follow along.
Blakkheim
Karazhan Raider
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We listed our house at the end of May. We listed it for about $30k less than what Zillow had it going for based on our agent’s recommendation. We were in agreement with the agent’s recommendation. We had an offer within 5 days and completed the sale in about 3 weeks. Other houses in our same neighborhood that were listing at around the Zillow valuation either ended up doing significant price drops (to below the Zillow valuation) before selling or have since been pulled all together. Anecdotal but take it for what it’s worth.
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Oblio
Utah
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Haha, I cannot tell you how many times I have experienced the general public mixing the two professions up. I have experienced it so much that I am programmed to assume people mean the wrong thing. You have my most sincere and humble of apology for lumping you in with the masses.
Regarding Inspectors, a real estate lawyer explained to me that inspectors have so many CYAs in their reports they have next to no liability for missing something. I asked a contractor that is studying to become an Inspector and he said that was pretty much his understanding. Can't say I know this to be true, just passing along gossip I heard.
Regarding Inspectors, a real estate lawyer explained to me that inspectors have so many CYAs in their reports they have next to no liability for missing something. I asked a contractor that is studying to become an Inspector and he said that was pretty much his understanding. Can't say I know this to be true, just passing along gossip I heard.
Kriptini
Vyemm Raider
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Working on an offer for a condo right now. This will be the first time I've ever put in an offer on property, and this would be my first property I've ever owned, so I'm excited. The conditions surrounding this property are pretty interesting. It was listed early last month for the Zillow/Redfin value I know you all very much love and respect, and has since received a significant price cut. Very significant. It's unquestionably under market value compared to every other condo in the complex, some of which were bought/sold recently close to their Zillow/Redfin values. It had an open house today that my realtor and I went to, and the thing we were both wondering about the property is "what's wrong with it?"
The listing agent didn't bother to show up to their own open house so we got to ask the current owners some questions. One of the questions we asked the owners is if they're buying another property on contingency of selling this property and the answer we got was "sort of." The owner is a husband, his pregnant wife, and the wife's sister, and from what they told us, it sounds like they have been trying to buy a bigger home but they're having liquidity problems. I.E., they need to be in escrow for the home they're selling to use as leverage for the home they want put an offer on. I'm not very experienced and this seems to be backwards to me (I thought that it was normal for buyers to have a contingency clause when they're in escrow after an offer was accepted, and not necessarily needing to be in escrow on the house they're selling first), but my realtor believes that their story is probably true.
Of course the inspections will ultimately confirm whether or not they're hiding some other problem with the condo, but if nothing's wrong with it, if my offer gets accepted, and assuming I close, on paper I'll be richer by an amount equal to 4% to 15% of the condo's total value (depending if you want to estimate conservatively or Zillow/Redfin-y) so... that seems cool.
The listing agent didn't bother to show up to their own open house so we got to ask the current owners some questions. One of the questions we asked the owners is if they're buying another property on contingency of selling this property and the answer we got was "sort of." The owner is a husband, his pregnant wife, and the wife's sister, and from what they told us, it sounds like they have been trying to buy a bigger home but they're having liquidity problems. I.E., they need to be in escrow for the home they're selling to use as leverage for the home they want put an offer on. I'm not very experienced and this seems to be backwards to me (I thought that it was normal for buyers to have a contingency clause when they're in escrow after an offer was accepted, and not necessarily needing to be in escrow on the house they're selling first), but my realtor believes that their story is probably true.
Of course the inspections will ultimately confirm whether or not they're hiding some other problem with the condo, but if nothing's wrong with it, if my offer gets accepted, and assuming I close, on paper I'll be richer by an amount equal to 4% to 15% of the condo's total value (depending if you want to estimate conservatively or Zillow/Redfin-y) so... that seems cool.
Blazin
Creative Title
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I could tell you were an appraiser so was poking at you with a strong stance, however I don’t make definitive statements about any topic that I don’t have a strong understanding of. I thoroughly know the appraisal process.
Lets put it this way , it’s very similar to methodology used for stock analyst, there is all sorts of regimented rigor employed . Complex industry knowledge that is applied, and at the end of day all that effort is for naught .
just because something is common practice doesn’t mean it is useful. Banks don’t use appraisals because they want to but due diligence regulation and prudence require it. It shows the bank is employing discipline and trying to be smart about its investments but the market impact of that effort is extremely minimal.
You may be an excellent appraiser maybe the best in the world and yet your opinion (expressed through your methodology) has no substantive impact on the real value the market will apply only the point that supply touches demand and a price is established can do that.
You keep telling those here their experience is anecdotal but not acknowledging your own strong bias. Reminds me of asking a Merrill lynch broker in the late 90s about online trading, of course they hate it, it’s a threat to their livelihood . Zillow and other aggregators of real estate value is a threat to yours, so of course you hate it and think it sucks, and maybe it does but a threatened professional is the last person you should ever ask for an opinion.
Some may take an attack on their profession personally as an attack against themselves so for what’s it’s worth I am not attacking you, it’s a respectable job and I’m sure you are good at it, it’s also going to be a job that the market will seek to replace and fully automate in the next 50 yrs because of its inefficiencies
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Blazin
Creative Title
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One more note, I do believe appraisals have a role and that is to value a property that has not been marked to market via an open sale either ever or for a considerable period. So in this instance a professional “guess” at its value has some tangible worth. However a quite significant number of appraisals are performed AFTER a property has been sold.
I’m not going to spend the five paragraphs explaining why this doesn’t have substantive value nor argue the perceived benefit of it. I’m perfectly comfortable with people being wrong simply because they have confused status quo and practice with functional value . Only bringing it up to at least show the rub or sticking point between our different views. If I’m wrong then appraisers should be some of the wealthiest people on earth for their ability to seek value beyond the markets .
I’m not going to spend the five paragraphs explaining why this doesn’t have substantive value nor argue the perceived benefit of it. I’m perfectly comfortable with people being wrong simply because they have confused status quo and practice with functional value . Only bringing it up to at least show the rub or sticking point between our different views. If I’m wrong then appraisers should be some of the wealthiest people on earth for their ability to seek value beyond the markets .
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Sanrith Descartes
Veteran of a thousand threadban wars
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Before you put any offer down on a condo do your dd on the HOA financial statements. If you dont know how to read then get someone who can. Nothing worse than getting a "good deal" on a condo and finding out 3 months after close there is a massive assessment for a new roof or that the HOA is bankrupt.
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Or as I recently found out meth users who leave food out/horders. We moved a family member into a nice condo in a nice place only to find out there was a rat issue going on the past few months before buying the place. We only really found out when a pipe broke and they had to cut into the ceiling to fix it. Seems rats decided to eat the fixtures away and that is what caused the leak. While they were redoing the piping with the ceiling open it just allowed the rats to get into the condo. 2 couches, 2 beds, and a dresser later there are still some in the building. I would check their pest orders as well. I would have never thought of it until this happened.
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Sludig
Golden Baronet of the Realm
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Super small town area for me, where literally one bank knew who I used from another bank, and bobby knows jim that lives under the radio tower, all that kind of thing. (Neighbors have 2 different relations with former owner and the folk I found independantly for pest and lawn all interknew each other.
Long story I could get into short. I guaran god damn tee I feel like the local appraiser was told by the bank lender what number they needed to come in at, and so despite paying high with my colorado money in rural oklahoma, it appraised for $1k under my bid.
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Oblio
Utah
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What does this mean? This statement sounds like you think you are an expert in residential appraising. Is that what you are saying? Are you claiming to be an expert? If yes, how did you gain this knowledge?
If you are going to stand by this statement then I have a number of questions I can ask that will speak to the validity of your statement. Do you stand by this statement or would you like to clarify what you meant?
Regarding Zillow, it is no threat to me. The problem with Zillow is that homeowners take Zestimates as gospel. Your point about automation (AVMs) was mostly correct, but its not Zillow that will replace appraisers. As I eluded to before you and you regurgitated later Zillow has no clue on quality, condition or room count of a home that has not been marketed. Same is true for AVMs. Zillow and AVMs don't have the first hand knowledge of the homes' details and that is why I am skeptical about being automated out of business. Now do AVMs take a big bite out of the pie? Yes, they do.
AVMs have been common since the 1990s and probably were used even before then. It is my understanding that AVMs were used on roughly half of all mortgage applications over the past few years. So to your point the automation is already here and has been here for sometime. AVMs played a role in the last nose dive and they will surely play a role in the next one. AVMs like any automated process are only as good as the data they are given, garbage in garbage out. In a weird way the inaccuracy of AVMs is actually helping to contribute MY job security. However, rough times are ahead for "number hitter" and "box checker" appraisers. When the short sales and foreclosures start unskilled appraisers will be in for a world of hurt because they don't understand how to analyze the market and how market participants reacted or why they reacted the way they did. Which again goes to my skepticism about "ME" being automated out of business.
Now that I have pointed out the difference between Zillow and AVMs do you understand how your analogy to day trading was wrong and thus your assumption about my bias was wrong too. I stand by my statement that for most people their knowledge of appraisal is anecdotal because they see what, maybe 5-10 appraisal reports in their life time? I have thousands of hours in appraisal ana;ysis and hundreds of hours in appraisal education. I am hesitant to call myself an expert because I am still learning and I always strive to do better, but if the 10 thousand hour thing is true then I am close if not already there.
Right back at you and your last sentence shows that you really don't understand what appraisers do. We are not speculators we do not predict markets we capture data up to a moment in time (effective date) analyze and interpret that data determine how market/market participants reacted in the past up to that effective date. I don't set the market I interpret the market, there is a huge difference and it is lost on most people. Based on your statements it appears to be lost on you as well. Like I said before Blazin, I know you are smart dude and I have respect for your knowledge on a number of subjects. I understand your point of view and I understand how someone as smart as you could have filled in the gaps based on your experience with appraisals and other fields. You clearly know enough to sound knowledgeable to the average Joe, but at the end of the day it is obvious to a competent appraiser that your knowledge pool is shallow.
These were really short answers to subjects I could go much much deeper on, not to mention all the other comments that I did not address in this response. If you really want to hash this out I am up for it, but we will need to establish some common ground and agree to certain definitions to be able to have a productive conversation. Or you could just "like" my post and move on because we both have better things to do
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Relevant to this discussion, and I think related to Blazin's point:
tldw;
"Expertise" is only reliably useful if the following conditions are true:
1) You are operating in a repeatable environment
2) You are repeating the same process many times
3) You get timely feedback on the success or failure of your efforts
4) You practice intentionally at the limits of your ability
These are not all true, for example, in an endeavor like stock trading, which is why the vast majority of investment advisors fail to beat market averages over time. Same goes for radiology or diagnostic medicine.
Perhaps I misunderstand badly, but it doesn't seem to me that 1) and 3) are particularly present in appraising, either. Every house and every market geography/time are different, and there is little to no feedback on the accuracy of appraisals. If there were, the "number hitters" would fail out of their jobs in short order. Nothing personal, Obilio.
tldw;
"Expertise" is only reliably useful if the following conditions are true:
1) You are operating in a repeatable environment
2) You are repeating the same process many times
3) You get timely feedback on the success or failure of your efforts
4) You practice intentionally at the limits of your ability
These are not all true, for example, in an endeavor like stock trading, which is why the vast majority of investment advisors fail to beat market averages over time. Same goes for radiology or diagnostic medicine.
Perhaps I misunderstand badly, but it doesn't seem to me that 1) and 3) are particularly present in appraising, either. Every house and every market geography/time are different, and there is little to no feedback on the accuracy of appraisals. If there were, the "number hitters" would fail out of their jobs in short order. Nothing personal, Obilio.
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Blazin
Creative Title
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So off the mark I think the conversation ends here, but yes I am an absolutely an expert /professional in the real estate industry. I would rarely engage in topics where my knowledge pool is shallow, I'd be listening. I appreciate you sharing your thoughts though and as I said I'm sure you are quite competent in your field and my opinions on it have nothing to do with you.
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Oblio
Utah
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Oh I don't take it personally, if I took it personally I wouldn't last long in the business.
Believe it or not #2 is the exact reason I left my first mentor and went to my second one. My first mentor had been in the business for 30 years and everything he did was by "feel" based on his "experience." I hated it, I learned nothing from him because I did not have his 30 years to understand his "feel" on an adjustment. Anyway, fast forward to my second mentor who taught me a very repeatable formulaic method from which I could interpret the market and derive market based adjustments. Sadly what I have come to realize over the years is that the least skilled appraisers are often the ones the ones that have been in it for 20+ years. After 2008 the industry really changed a lot more was expected of appraisers, many that had been in for years did not bother to educate themselves or try new techniques, they just kept doing what they always did because they knew better. Sadly those same people are training a lot of the next gen and so the cycle will repeat itself.
As far as #3 goes the only time I get "real time" feed back is when my interpretation of the market leads me to an opinion of value that is less than the agreed upon contract price. As much as it is a pain in the ass to have to do the extra work, these instances are actually a great exercises and truly test to the methodology I was taught. Let me say this, I am not infallible, I am capable of making an error that could skew my analysis. I am capable of missing that one comp that would have supported the contract value which is why there is a process for these disagreements. The process is called "A Request for Reconsideration of Value" and it typically comes in the form of providing me with comparables that the Realtors believe support their contract price. I will analyze these comps to see why I missed them or chose to not use them. If I missed them it is usually because their data was input incorrectly into the MLS (garbage in garbage out). Sometimes it is because the Realtor is using comps that are outside the neighborhood I could right paragraphs on this, but I will save your eyes and say location, location, location. So anyway once I get the new comps I plug them into the grid and run the same formulaic repeatable process to see if it actually supports the value. I have only changed my value one time and it was because the of the example I gave a above, where a home was mismarked in the MLS as a Condo when it was actually a TownHome, I still could not support the contract price but it did raise my opinion value. IMHO a good and competent appraiser does not want to be right, they want the data and analysis to be right so they can provide a competent supported product. I am not saying the method I use is the only way to do things, there is more than one to skin a cat. My method is repeatable and formulaic, not just by "feel."
And to your last point about "number hitters" it takes down turns to weed them out. When shit hits the fan and banks require appraisals with multiple values the "number hitters" will either put in the work and gain the knowledge they need to survive or they won't and they will fail which can take many forms.
Oh, regarding #1. I am only competent in the markets I cover where I have geographical competency. So I cannot really speak to some suburban neighborhood outside of Chicago or Atlanta etc.. However, the method I was taught would work in any market (environment). Hope that makes sense.
It all makes so much sense now, you are a Realtor and I have no doubt a really successful one. To be clear though, you are not an expert in residential appraising and it was obvious based on your statements. By no means am I saying the methodology I apply is beyond you, you are a smart dude and I think you would pick it up pretty quickly. I would be happy to share the method that I was taught if you ever wanted to jump on discord.
Lastly, I will just say this about Appraisers in general. I have been an Appraiser for less than a decade and my prior 20 years was mostly in banking and finance with an emphasis on mortgage origination (I did have 5-6 years doing commercial leasing). I got into this profession for a couple of reasons, believe it or not job security was at the top of the list. When I started most appraisers in my area are old and near retirement and many are now retired. Also, as I eluded to before they do not want to learn new tricks. There is a reason my fees are significantly higher than most my peers, there is a reason I seldom get the easy cookie cutter assignments, there is a reason local banks send me a county or two away for double the fee they would pay an appraiser in that county. That reason is competency. I am not even claiming to be an expert, but I am claiming to be competent. I agree with you guys there are a lot of bad appraisers out there, and hopefully one positive that comes from this recession is we will trim the fat.
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