Friday, July 7, 2017

The Estate Appraisals New York Under Fire Again

By Ronald Wallace

The collapse of the economy began with a reality wind blowing against the sub-prime mortgage house of cards. We are all living with the results of over-aggressive lending practices and over active government intervention. The following article takes us through Get yourself prepared for knowing estate appraisals New York.

The rationale for the invention and widespread use of AVMs was lower cost and greater speed that a traditional human generated appraisal. This is reasonable provided that the AVM product does indeed deliver this. There is no question that AVMs are much faster. They generate a report in a matter of seconds. But as in every other form of computation, the old axiom of "garbage in garbage out" applies and the sales information used by AVMs is often scattered or unreliable.

An AVM would not be suitable in the case where the subject home is customized. That is it located in an area with considerable variation, where the home is in a level of condition. AVMs have their place in the real estate industry but so do humans and AVMs have been cited as a good reason to get rid of traditional appraisals.

One criticism of traditional human evaluations is that they are not a "value-added" product, meaning that an evaluation report does not add any monetary value to a transaction in dollars and cents. But appraisals were never intended to add anything to a transaction in that way, any more than a regulation does. The value of the assessment lies deeper than the numbers on a closing statement.

Foreclosures: Some high-risk loans that have adjusted have gone into foreclosure. The other shoe, are the ones that will adjust over the next 24 months. As foreclosures escalate, home sales will increase - this does not indicate market conditions are improving, just that some buyers are picking up properties that banks and individuals are dumping on the market.

An appraiser has to cover all out of pocket expenses the same as any business person (education, health insurance, MLS fees, liability fees, business insurance, state fees - the list goes on). In addition a good appraiser may spend anywhere from 3 to 6 hours in preparation (looking for comparable, etc.), have a 45 minute or more drive time to location, 2 hours driving comparable and taking pictures and then another 1 -3 hours writing the report and then if the bank wants more info or kicks anything back they have to invest the time to answer questions, etc.

Also, is they get your request from another appraiser or one of these new rips off government created middlemen called AMCs - they may have to split the fee. These are all just the costs of doing business. So when someone stops by for 30 to 60 minutes with a tape measure know that it's the tip of the iceberg and you're getting a good deal.

As the traffic cop, the assessment is a filter that things pass through to weed out problems. The advent of a large number of assessments coming in below sales prices tells us that something is wrong in the markets and that the system is not working. Chaos is developing, or perhaps hyperinflation is causing prices to accelerate too rapidly. The assessments are telling us things are out of control.

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