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New Appraisal Guidelines The Baby and The Bath Water

The Real Estate Blame Game Moves On To Appraisers

The Real Estate “Blame Game” has become our current national sport.  So far, we’ve raked the Buyers, the Realtors and the Brokers and the Mortgage Companies over the coals.  This week we’re moving on to the Appraisers and legislating the free flow of information.

As of May 1, 2009 there will be new property Appraisal guidelines but not Hear No Evil everyone agrees that we need new Appraisal guidelines as reported in the Wall Street Journal yesterday.

If it’s not the Realtors and the Broker’s fault for pricing and marketing real estate for what it would sell for, then maybe it’s the Appraisers “fault” for appraising the property according to the then existing market activity of what buyers were willing clamoring to pay for property.

Of course there is a need for some Mortgage and Lending reform and the National Association of Realtors supports the Mortgage Reform and Anti-Predatory Lending Act of 2009,  H.R. 1728. You can read  NAR President Charles McMillan’s testimony in support of Lending reforms with modification.

Under the new guidelines, Appraisers will no longer call me about one of my sold and settled listings to help them compare the features and benefits to one of their current “subject” properties. I will no longer be able to meet an Appraiser at my Sellers property to share the comparable sold’s that I used to price the property. The Mortgage Company will not be able to call the Appraiser for any reason, much less, to ask for a “rush” for a special relocating family trying to get their children into school before the start of the school year.

Awhile ago a Philadelphia Center City Real Estate Agent  sold one of my  suburban Main Line homes to a Buyer living in Center City who used a Philadelphia Center City Appraiser. I only knew this because the Realtor and the Appraiser asked me for comparable sold information. I met the Realtor and the Appraiser at my Listing. As a representative of  the best interests of my Seller, I shared the comparable solds that I had used to price the property.

Just to be clear, I’ve never wrestled an Appraiser to the ground nor tried to tell him how to do his job nor do I know of any Mortgage people who’ve done that. The only time I talk to Appraiser’s is when they call me.

On occasion, I’ve shared my knowledge and the benefit of my experience about the neighborhood and other homes that had sold in the area to everyone’s benefit.

Why Legislating Appraisal and Lending Free Speech Is A Bad Idea

  1. *Appraiser can’t know the circumstances of every sale
  2. *Realtors see more properties every day than Appraisers
  3. *Drawing from a pool of Appraisers? Are they equally capable in all markets? Who controls the selection pool?
  4. *Appraising and pricing property is as much art as science. Four bedrooms and two and a half baths doesn’t begin to tell the story of market value differences.
  5. *Real estate transactions depend on the free flow of information between Professionals guided by professional confidentiality safeguards already in place.
  6. The best Appraisers may leave the business when their competitive skills are no longer rewarded

But no more talking. That’s over! With potential fines of $10,000 every Realtor, Broker and Appraiser will become a target for some consumers who already believe they “paid too much” for the property.

Give this real estate market a year or two of working under these guidelines and in my opinion we’ll soon be talking about the “Law of Unintended Consequences” and “throwing the baby out with the bath water”.

What do you think?

Contact or Call Judy Peterson Realtor, with ALL of your Real Estate Questions, 610.889.5509 Prudential Fox and Roach Realtors Devon Home Marketing Center.

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