In recent years there has been a criticism of the real manor assessment industry and some deservedly so, but the evaluation is a critical function of lending because it establishes the value of the collateral. For many decades this function was handled by human appraisers, but in recent years computer generated valuations have come into being. The following article talks us through the estate appraisals New York under fire again.
Banks: Follow the money, and it will always lead you to the culprit. In this case the banking industry. They overextended themselves through high-risk loan practices and then packaged the loans as products and sold them to other institutions - essentially spreading the infection. While overall loan rates remained low over the preceding three years with the dramatic rise in fuel costs in early 2008, credit became tighter, and these higher non-market based loan rates jumped as their entry level adjustable period ended.
The banks couldn't refinance everybody because they had no real money or solvency when compared with the debt of the loans. No money = no credit. No credit meant everything that used revolving credit to finance itself such as credit cards, small business, large retail businesses and home owners/buyers found they high and dry.
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.
The very presence of a visible policeman on the road does a great deal to hold down violations and accidents. If the police are writing too many tickets, we know something is wrong and that the system is not working, but when tickets are at a minimum, we know that the system is probably working. The same is true with real estate appraisers.
Appraisers: Real estate evaluators are conventionally approved by the state they operate in and judge within a given topography, so they advance over time a brilliant "feel" for market value. They are usually autonomous commercial folks who do assessments on a fee basis - no appraisals equal any money. Appraisal fees for regular homes can run from 200 to 400 dollars depending on the area and amount of work.
Banks: Follow the money, and it will always lead you to the culprit. In this case the banking industry. They overextended themselves through high-risk loan practices and then packaged the loans as products and sold them to other institutions - essentially spreading the infection. While overall loan rates remained low over the preceding three years with the dramatic rise in fuel costs in early 2008, credit became tighter, and these higher non-market based loan rates jumped as their entry level adjustable period ended.
The banks couldn't refinance everybody because they had no real money or solvency when compared with the debt of the loans. No money = no credit. No credit meant everything that used revolving credit to finance itself such as credit cards, small business, large retail businesses and home owners/buyers found they high and dry.
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.
The very presence of a visible policeman on the road does a great deal to hold down violations and accidents. If the police are writing too many tickets, we know something is wrong and that the system is not working, but when tickets are at a minimum, we know that the system is probably working. The same is true with real estate appraisers.
Appraisers: Real estate evaluators are conventionally approved by the state they operate in and judge within a given topography, so they advance over time a brilliant "feel" for market value. They are usually autonomous commercial folks who do assessments on a fee basis - no appraisals equal any money. Appraisal fees for regular homes can run from 200 to 400 dollars depending on the area and amount of work.
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