The biggest issue out of our control is the appraiser dilemma. Since the lending industry tried to eliminate most of the appraisers ten years ago the pool of licensed and qualified appraisers has shrunk. Little new blood has come into the industry and we are left with a grizzled group of veterans no protected by a stringent and onerous HVCC policy that allows for mediocrity and bad behavior. So when volume spikes like this past year we are left with more volume and a shrinking difficult pool to service it. To the appraisers defense the scrutiny of their product would be discouraging for any professional such that they are doing double the work with no raise.
So when the 30 day closings come in resulting in a rush appraisal order sent to a shrinking group of overworked and underpaid veterans who aren’t worried about impressing anybody, you can see the result. There are multiple order refusals from the best appraisers before you get the weak one who is desperate enough to take the deal and meet the rush. These days with a shrinking housing inventory and difficult comps and offers finally going for asking with multiple bids, supporting values are hard pressed. But we need every comp we can get to start moving from declining markets to increasing, so we are shooting ourselves in the foot by not doing everything we can to support the market price that two independent parties came to on their own.
Currently there is still the idea that if you don’t like one lender’s appraisal you can go to another one and use their appraisal. This too will end as ALL appraisals are now sent to the Fannie database directly by the appraiser. They will have a record of it and go back to that second lender and ask why their appraisal was off compared to the first one. This will result in lenders searching back and going off the original if lower so as to cover them. The key is to do it right the first time with the best people available.
Again, the government believes the borrower needs all the time they can get to make the right decisions and 60-90 days is to be expected. So please inform the real estate community that they are affecting the quality of their appraisals and the likelihood of completing their transactions by rushing deals that shouldn’t be rushed. By rushing you will be more likely to get the weakest appraiser that is not local. He/She will be forced to do a challenged job in the most challenging market to appraise in our lifetimes.