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Yes... FHA loans mostly. It's a problem because nitpicky repairs end up being flagged as a loan condition so must be done to close, irregardless of other inspection negotiations or waivers.
And they're not value issues! They should be insurance issues. Things the buyer can take care of when they are getting settled.
Your beef is with FHA or the state regulators. If a lender orders an FHA appraisal, the appraiser must state whether the property complies with FHA guidelines, which are supposed to be no different than conventional, these days, but I don't think anyone is buying it. On some items, the State sets the requirements and it has nothing to to do with Fannie or Freddie or investor requirements. So, anything code or safety will be flagged.
Some random drive-by appraisal incidents:
I just had an ugly appraisal on a home where the roof should have been required to be replaced. In the photos, you could see the shingles curling in some areas. But the appraiser put a subject to requirement on it, probably in the spirit of trying not to overreach (FHA or VA it would have required a new roof), just an area that amounted to about $300 of work. She also brought in the report about $8000 under sales price. The home had obvious deferred maintenance. This was the 2nd time since Dodd/Frank and appraiser independence went into effect that I have had a borrower (this time it was the spouse) call the appraiser and completely chew the appraiser out (the buyer's wife was upset on the conditions and kept repeating shouldn't have a roof requirement - or any other requirement, just reflect the needed work in the value. All repairs were safety related). The appraiser never said a word to anyone about the ass chewing received. But when talking to this spouse, I shared a little story where a borrower had called the appraiser and how it created a world of heartache for us as a lender. I did not know at the time she called, but when I asked if she had called the appraiser, she immediately said "no comment." From the surly way she addressed me, I just knew she had gone off on the appraiser (and why I had shared my story with her).
The story I relayed to her was about a VA appraisal in rural Virginia. Low appraisal. Buyer was beyond ticked off. Called and ranted at the appraiser, harassed her for a week. It got back to me the appraiser had been in tears over the confrontation. The episode made it's rounds to management and to other local appraisers. My UW called our regional VA office, who basically said they were there to serve the Veteran. The file went to closing and the buyer later ran for a US Congressional seat. (I donated to his opponent's campaign). He won. Just another entitled ahem in office.
Some people are irrational when things do not go their way. Just keep your head down, don't fan the flames. They will burn out, eventually.
I do know it's probably not the appraisers volunteering to take on these extra tasks. A roof should be a value issue. Pans under the water heater, or CO detectors when there's no flame source in the house... not. Those should be insurance issues, if they need to be issues at all.
I agree with not expecting an appraiser to also be a home inspector. As a consumer, having an appraiser adjust for “general condition” which is often largely house age related seems sufficient. Meanwhile the buyer should get an inspection if wanting to see more details.
I always thought the main things to look for in comps was the location and size...so if those are comparable, why couldn't these 2 be comparable? (I'd assume the main difference would be condition)
A comparable also assumes that the same buyers are looking at both houses. For the most part, $750k buyers are not looking at $450k homes and vice versa.
The first sentence, as a stand-alone sentence, is misleading. Prices have no bearing upon whether the property itself is comparable. As you pointed out later on in your rant, however, even though the properties may be comparable, that sale should not be used in the appraisal since the price is out-of-line with other sales.
NOTE: An acreage parcel near me recently sold for nearly twice its actual market value. I hope that no appraiser tries to use that as a comparable, because the person who bought it had no concern about the price--he just wanted to see that it was not developed since it was close to his house. As a multi-millionaire, price was not a concern.
Yes, that's true.
I was not clear. I appraised a $450,000 home. Agent gave me a $750,00 sale. The $750k sale sold in line with it's comparables, it was not an outlier. It was on an acre lot, vs a 7,000 sf lot.
Comps also need to have the same buyer pool. If you have a buyer qualified for $450, you don't take them to see homes listed in the $750 range.
And, when there is a huge price gap, there is a reason, and you typically have two different sets of buyers.
Your acreage sale is the perfect example why we typically don't use outliers.
I do know it's probably not the appraisers volunteering to take on these extra tasks. A roof should be a value issue. Pans under the water heater, or CO detectors when there's no flame source in the house... not. Those should be insurance issues, if they need to be issues at all.
We HATE when we have to play home inspector. Lenders and AMC's are dumping all kinds of additional tasks on us, to pass on the blame and the responsibility.
The roof as a value issue should be addressed in the sales contract.
As an appraiser, I have limited choices regarding a roof, it either needs to be replaced/repaired, or it still has some life expectancy.
If there are stains on the ceilings and visible evidence of a possible roof leak, or it looks really bad from the ground, I can make appraisal "Subject to" a roof inspection, by a licensed professional.
If you give me a report showing the entire roof is bad and needs to be replaced, then I, or the lender, will make replacement a condition of the appraisal/loan.
The bottom line is just suck it up. Every job has its good and bad points. No one cares how much work you put into an appraisal. All they do is turn to the last page to see the value. If it's not what they need, then they read it.
The bottom line is just suck it up. Every job has its good and bad points. No one cares how much work you put into an appraisal. All they do is turn to the last page to see the value. If it's not what they need, then they read it.
How sweet!
No, I love my job, I love the work. I don't care if you read it, agree with it or anything else.
What I hate, is having to stop doing my job, in order to explain it to someone who should know better.
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