So I get this email from Ann O’Rourke, an “A” list appraiser located in California. The email is sent to me and about 85 thousand other close friends who have signed up. I have mixed feelings about this method of communication, but here is what she says:
When will “skippy” appraisers stop?
Why was FIREEA enacted? Lots of money was lost by the financial industry.
The taxpayers had to pay for the S&L bailout. The problem was lending on
speculative commercial deals. No commercial appraisers went to jail, that
I know of.When will there be crackdowns on unethical appraisers? When Wall Street
(and others) lose lots of money due to bad loans.It’s all about money. If the big boys are making money, who cares about
unethical appraisers?What about mortgage brokers? Difficult to say what will happen to them. No
E&O, hard to find, mostly unlicensed, etc.What do you think?
Notice she ends with a question, as if she is interested in a response. While she may be interested in theory, because of the email news letter method, she is (most likely) not able to read or respond to a “reply” email. And even if she did read and respond, it would not be available to the other 85 thousand people on the list.
Having griped about the method of communication – I agree with her comments.
If anyone reads this and wants to comment – feel free – that is the strong point of a blog vs an email to a big list. It’s the wave of the future – Web 2.0 – allows for a 2 way (sort of) conversation.
The control added to the mix by the moderator allows for a useful conversation – as opposed to a free for all which is no good either.
Phil,
I agree with Ann, and I would add that a lot of us are not so used to the blog thing. I’ve really just caught onto it in the past few months – come to think of it, when my business slowed so much that I have the time to practice and so on. The problem I’ve found with blogs is that when one wants to print or save something, the entire thread comes rolling out of a printer that seems to have gone insane. So I didn’t do that for a while.
The nature of an email is a bit different, though when I’ve had crashes it’s worse I’m guessing, as it disappears. But a specific email can be a lot easier to find than a section or individual blog post.
Back to Ann’s ideas or email, yes, but there’s more. One big thing that started the downhill slide of quality appraisers and L/O’s was the commission thing. Before that, they were local bankers, and we went to them for auto loans, home loans, college funds and so forth. Now they belong to the shark category more and more, being fierce competitors rather than financial advisors with a person’s full picture and best interests in mind.
“Get-Me-A-Loan.com” created more trouble, in several ways. They became less accountable to the public they are to serve, and more self-serving than ever – the guilt factor was way down, as they never had to look these people in the eye, ever. The other thing is that they don’t know an appraiser (except that same way, so the good ones can hang up or ignore them, and they go away to the ones who beg for work by cutting fees and turn time, and stretching values. It’s easier to manipulate homeowners and appraisers long-distance. The check is in the mail, so to speak.
Traditional, local L/O’s also hear a neighborhood name and know a bit about it. Gone are those days, and the speed-dial comp check becomes so popular, it eclipses almost every other service request. Check my home page for an alternative, albeit one that takes some commitment and a tiny investment up front to get the appraiser to do much of the research up front. It’s worth a try, I think. Two of my last remaining clients (I fire them routinely for Stupid Lender Tricks – by the way, I call all the crap in the MLS listings, waxing poetic about the home including “all appliances”, by the name Stupid Realtor Tricks)
And that’s another contributor. People put blind faith in “my realtor” – and it’s not even Their realtor, but is working for the one who Pays them! The typical buyer sadly believes this person has Their best interest at heart. I have an article about that too. Can you spell Fiduciary Relationship? No, in English, please. Sorry, that’s not politically correct, but Miami is a (oops better not say third-world country) where they prey on their own. I grew up in Belize & Nicaragua. I really do know whereof I speak. I’m in favor of helping them avoid mistakes and foreclosure.
So the commission-driven realtors & mtg brokers, paid 20 to 50 times what appraisers gross, are largely responsible for the demise of the appraisal profession. On that we can agree. Our clients don’t care about the process used to close loans, only that they close. Now that AMCs and AVMs are so “advanced”, we can problably throw the appraisers out with the foreclosure bathwater this time, at last.
Lender AMC’s are the next big deathknell of honesty. But Nobody realizes, not even industry participants/insiders, that the biggest problem in the last decade was Mortgage-Backed Securities. When mortgages went to Wall-Street, it was over, as we knew it.
PMI was created in response to the RTC thing decades ago, as an alternative to the government bailing out S&L’s when they made the same mistakes, in different and less technologically-advanced ways, years ago. We see taxpayer dollars bailing out hazard insurance companies increasingly over the past 5 years. PMI companies are next to go down, and we will again pay for it. Meanwhile most of the money made in the boom was by Realtors, Mortgage brokers, Lenders and AMC’s. Most of the money lost was by homeowners/taxpayers and appraisers. My personal finances are negative today because I’m honest and talk about all this.
And now we have the condo conversion, enabling developers to dump properties and saturate the market at lightening speed, completely confusing appraisers who’ve lost the art of absorption rate analysis anyway. This creates the ability to Hit and Run, with DSL speed. Look where newer apartment buildings exist, and you will see the next condo glut. Can’t we see patterns? Isn’t that what appraisal is essentially About?
The other thing that’s related is currency, trade balance and national debt. Real estate was historically non-liquid. It can still be argued that way, but with AVM’s, MBS’s and SLT’s, it’s sped way up. You can be upside down in a property before the 1st payment is made, today, thanks to all these “advances”. I’ve long said, “there are No open-heart emergencies in the real estate industry.” We can’t have closings that are delayed by foreclosure filings, now – get real, appraisers, you’re queering my deal here.
What if the country is rumbling about balancing the budget, people are not too happy and the govt wants to fix that? We already have huge plastic debt and bankruptcy is a national pastime. Remember about 2000 when people talked and read about running the cards up and filing? Remember, we have a ton of people in Our market, and in a Lot of markets during the boom, that previously were not “investors”, so they’re all ripe for a winning lotto ticket or turning their homes into ATM’s.
Ok, let’s lower the mortgage rates – yeah, Below Prime, and keep them there as long as it takes to gain a reputation for the most prosperous time, of the most home value appreciation and highest rate of homeownership Ever…. Now that people are busy spending like there’s no tormorrow, we can go on with business and do what we want, because when citizens are deep in debt, they won’t mind if we just print more money.
US and EU’s debt as a percentage of GDP appear to be about Triple China’s. But I guess that’s not a problem because I can’t do anything about it. Let’s watch “Flip That House” or the Oprah show. They’ll show us how to stage our home so that it will sell, hopefully before the foreclosure happens. You know what, let’s not spend the money on paint. The appraisal came in low and it’s been listed for 6 months. They gave us back money at the closing, so all we’re out is the payments we made since the tenant moved out. Let’s just walk away. Foreclosure and bankruptcy have lost their stigma, and we’re too busy partying as a country, to notice the boom’s darker side and unsustainability. Everyone’s dogma reads, “Real estate only goes up”, so they believe it’s safe. Not when there’s no equity.
Let’s add for Florida and other boom markets, Huge property tax increases. Now Florida and other Hurricane prone areas, Hazard insurance. That triples and now the Payment is no longer 10 to 25% escrow, but more like Over Half, in some cases, due to negative am and other SLT’s – Where were lenders when they gave out brains? When rates & payments already make Everyone qualify, how about requiring a Down Payment, or Proof of their income? No, we created the stated income loan, and the Zero down, neg-am – it wasn’t out of control enough by then!
Yeah, but it’s ok – irresponsible lending can always be blamed on the industry group with No Lobby and “divested” or “separate” AMC’s in control. It’s internally called the Scapegoat department, and they’re all independent contractors, so the lender has no Responsibility that can be pinned on them! Brilliant business structure, very similar to the LLC…
Those schmucks work for nothing, so they won’t be Able to fight back – and we can replace them very Cheaply – we’re like Cannon-fodder, hey we have a lot in common with the soldiers. In God and the American Dream we trust. Roll out the crooked appraiser rhetoric. They Make us crooked (to survive) and then they Call us crooked. What a country!