As we all look for ways to conserve and reduce spending I’ve noticed some pleasant unexpected results on a sporadic basis. Some business and service providers seem to be improving and even lowering costs in many ways to accommodate their customers.
Just recently, I went to a new dentist due to a benefits mandate and was amazed at how well I was treated. I referred several family members who had the same experience and even paid less than expected. Simply amazing, and quite pleasant to be a valuable asset to their business.
A week ago my daughter had the same exact experience with an Optometrist, strange.
Now you might ask, what in the world does this have to do with an update on appraisers?
Well, buyers are back, all across the country and once again competing for property especially at the low end price ranges - What better time to acquire real estate than when prices are low? Exactly what would improve housing values and the market? Why? With multiple offers come increased prices being offered, which is a desirable result that competition produces if you are a property owner.
Houston, we have a problem - it seems the new appraisal regulations passed a few months ago are creating havoc with everyone connected to real estate transactions whether purchase or re-finance. In this series I’m going to deal with purchases. If I seem a little cynical, I am. I warned about this months ago in an article titled “The Fire-wall That Doesn’t Work” so let’s take a look at results from the new regulations now that we have some:
- Costs to the buyer have increased 50%
- Time required to close a transaction has increased
- A layer of bureaucracy has been added which is not accountable to or able to be influenced by any participant of the transaction.
- Terminating or stalling transactions with poor quality or inaccurate appraisals
The problems:
- Appraisers who fear being accused by the end lender of inflating values are keeping values at the low end and not responding to the influx of willing buyers and sellers.
- Appraisers are earning 50% less for their appraisals than they once did and getting less work based on how the national assignment firms (bureaucracy) randomly distribute work.
- Unqualified or inexperienced appraisers will be assigned work equally with experienced professionals for the same fee although the results are dramatically different.
- Based solely on a bad review by an end lender or an assignment company, appraisers, in order to maintain their much needed income, are motivated to keep values lower such that purchase contracts are being sacrificed.
There is no real solution to this just yet because countless millions have been spent by a multitude of organizations setting these regulations and their structures in place. Unwinding it at this point will of course provide relief if done in a way that serves the consumer, American business, and free enterprise.
One firm has proposed a possible solution and we’ll discuss that next week in part 2.
