^[1]

The New York Times Real Estate goes gonzo this weekend with a nice write-up ^[2] AND a large color artwork on perhaps the least understood part of the home buying process.

No not the radon test…

The appraisal. Can’t live with them, can’t live without them.

Here’s my stream of consciousness on the topics brought up in the article:

• “Sale and “Comparable” are not interchangeable terms. Really.
• There is no ratings category for (like totally) “super excellent.” The checkboxes provide good average fair poor with “good” at top end (but fear not, “super excellent” is marked “good” and like total adjusted for).
• Not all amenity nuances that are important to you as a seller (ie chrome plated doorknobs), are important to the buyer.
• Not all amenity nuances that are important to you as a seller, are measurable in the market given the limited precision that may exist.
• Not all appraisers have actually been anywhere near your market before they were asked to appraise your home, so technically they shouldn’t be called appraisers. Since their clients don’t seem too concerned about this, something like “form-filler” seems more appropriate.
• Most appraisers who work for appraisal management companies ^[3] are not very good, but some actually are.
• When an appraiser makes a time-adjustment for a rising market, understanding whether a bank will accept that adjustment or not is (should be) completely irrelevant and quite ridiculous (unless they are “form-fillers” and not actual appraisers). I have always believed that the appraiser’s role is to provide an opinion of the value and that occurs in either flat, rising or falling markets.
• HVCC ^[4] was a created with best intentions by former NY AG Cuomo by attempting to protect the appraiser from lender pressure, but it has literally destroyed the credibility of the appraisal profession by enabling the AMC Industry ^[3].
• The 12% deal kill average of an AMC ^[5] an arm’s length sale properly exposed to the market is absolutely an unacceptably high amount and a major red flag for appraiser cluelessness about local markets.
• I’ve never heard of a major bank since the credit crunch began who would throw out the original appraisal found to have glaring errors that would severely impact the result. My quote on this nailed that sentiment with brutal precision, if I do say so:

“You have a better chance of winning Powerball than getting a lender to abandon the first appraisal.”

Understanding the Home Appraisal Process [NY Times ^[2]]