THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, July 13, 1996 TAG: 9607110300
SECTION: REAL ESTATE WEEKLY PAGE: 20 EDITION: FINAL
TYPE: Forum
SOURCE: BY THOMAS TYE, SPECIAL TO REAL ESTATE WEEKLY
LENGTH: 92 lines
A recent column by Robert Bruss attempts to identify problems related to real estate appraisals. The points noted are rather one-sided, confusing, riddled with errors and leave out several major points that are quite significant to users of these services.
Judging from his sour comments, Mr. Bruss must have had a bad experience with an appraiser. He implies appraisals are biased and subject to change depending upon the needs of the end user. However, appraisers, by law, can't be advocates for their clients, or any party for that matter. They must provide an unbiased opinion of value.
In his June 8 article, no mention is made of appraisals being relied upon for buying a house. Instead, they are presented as obstacles to getting loans.
Yet, families move here from other areas have no idea of property values. They must rely on honest, accurate and well-prepared appraisals to ensure they don't overpay.
Unfortunately, when dealing with a house even 5 percent or 10 percent overpriced can result in a loss of tens of thousands of dollars.
Mr. Bruss repeatedly insinuates that lenders and appraisers are in cahoots. This makes no sense. Having valued more than 10,000 properties in the past 17 years, I have yet to have a lender ask me to be conservative on a property's value.
This is understandable since lenders get paid to make loans. Lending money is their business - they want loans. They don't get paid for just attempting to lend. Rather my experience has been quite the opposite. From time to time we are asked to reevaluate a property to see if the value can increase to support a higher loan.
Mr. Bruss states that either an agent, homeowner, or buyer should meet the appraiser and insist on receiving identification. Asking for a business card is customary but demanding a photo ID from someone whom you have invited into your home strikes me as being unnecessary and more confrontational rather than businesslike.
After writing that appraising is a dying industry and that computers now do appraisals, the columnist notes some items to avoid obtaining a ``low appraisal.'' He states that ``since appraisals are becoming highly computerized and impersonal, homeowners must insist on obtaining a fair appraisal.''
Yet if a computer is providing the value, Mr. Bruss' suggestions are worthless. Do you ask, as Mr. Bruss implies, the computer for a photo ID, or tell it what you think the property is worth?
He also states that if an unlicensed person is sent to your home, that person is probably low paid and not very well trained. Mr. Bruss is confusing an evaluation with an appraisal.
In Virginia, an evaluator cannot provide an appraisal. An evaluator can, however, provide an evaluation, which is a watered-down appraisal. The banking industry has lobbied hard to use unlicensed people to do their work in an attempt to save money.
The public should not confuse an evaluator with an appraiser. Using these untrained people is not in the best interest of any borrower.
Mr. Bruss states that the appraiser ``views'' the lender as the client. Here again is a major source of confusion. When a lender orders an appraisal, the lender is the client and legally the appraiser can't provide the report to anyone else or even discuss the value without the client's permission.
The appraisal is confidential as with any document that involves a payment for professional services. I am quite surprised as an attorney, Bruss would not know this. Further, federal banking regulations prohibit borrowers from ordering appraisals to be used to obtain loans.
Mr. Bruss writes that if a house is valued unreasonably low, the seller should protest loudly to the lender who probably won't hire that appraiser again. This is ironic since Mr. Bruss also says appraisers are pressured by lenders to report low values. If this were true, low appraisers would be rewarded, not penalized, since they would achieve Mr. Bruss's ``goal'' of providing low values. His statements are extremely confusing, contradictory and makes no sense.
The item that I take most issue with is that lenders use real estate appraisers to get out of lending in minority neighborhoods. This is a shocking statement. Never, in all the years I have been appraising has anyone even inplied anything like this. Not only is that immoral and unethical, it is illegal. I personally challenge Mr. Bruss to report immediately any knowledge of these practices to the appropriate authorities.
Appraisers must use factual data to estimate a homes worth. This is required by the Standards of Professional Practice to which all appraisers must adhere.
Providing an appraiser with information about your home or nearby comparables can be helpful and, like any profession, there are those who are more qualified than others.
Membership in the Appraisal Institute, the leading professional organization for real estate appraisers, usually signifies a higher level of professionalism, experience and education, than those without this affiliation. MEMO: Thomas Tye is a Member of the Appraisal Institute and a Senior
Residential Appraiser. He has appraised commercial and residential
property in Hampton Roads for more than 15 years. by CNB