Blog photo: Kite surfing staging site at the windsurf shack (say that 3 times really fast), bend of Shoreline into Westline (or Westline into Shoreline…depending on which way you approach)! Taken 8-10-10 as the late afternoon winds were startin‘ to cook!
Blog post: Here’s the deal….there are so many new rules instituted by the BEAM (Bureaucrats, Entities, Agencies, and Morons) Team – I just made that up – that the problems created by their solutions make life for the regular homeowner a living hell.
Example: Let’s say you bought well before the market topped out. Let’s say you put a chunk of cash down. Let’s say you got a good loan back then but rates have gotten better and better over the past 8 years so you’ve refinanced. Let’s say you’ve made wonderful, significant improvements to the property WITH permits. Let’s say you have not over-improved the house relative to the neighborhood. Let’s say you’ve been gainfully employed during that time. Let’s say your credit is outstanding. And then this time when you go to refinance to take advantage of super low rates in the super low 4% range….the appraisal comes back whacked!
What do I mean by whacked? Like the value is maybe 100K less than what it should be because the ‘comps’ used were not so good and because the appraiser had no idea what he/she was doing.
What do you do? First you hope you’ve got a fabulous mortgage broker who will go to bat for you and challenge the appraisal. The BEAM Team rules do allow that. Second, you hope the mortgage broker has a great arsenal of Realtor contacts who know their neighborhoods, inside and out. Because without those two team players on your side you may not be able to accomplish what you want.
In the old days, your lender, banker, loan officer, mortgage broker would call on a handful of appraisers she/he had proper biz relationships with who could do accurate, timely, and sensible appraisals. Please understand I’m not talking about the crooks who dummied up the docs, faked and forged signatures, somehow even worked without proper licenses, and went to the bank by ripping off consumers big-time with loans that would eventually blow up in their faces.
And I’m not talking about homeowners who used their houses as Automatic Teller Machines and now have over-encumbered their properties. And I’m not talking about homeowners who came to the party with zero down and/or walked out at the close with loans that were 103% – 110% of the contract price!
But today we have the new normal. That means the mortgage broker must order an appraisal through a ‘neutral’ appraiser warehouse. Thus, a whole new layer of business and expenses have been created by the BEAM Team. And that translates into higher closing costs for you, the consumer.
So what do we see and what do you get? We see appraisers strutting into Alameda to do their stuff from Modesto (the most recent mess one of my clients is experiencing), or Tracy, or Pleasanton, or Anywhere, CA.
Here’s my beef (boef) dujour. Frankly I’ve said this for most of the years I’ve been in the real estate sales biz: appraisers need to know the inventory, trends, neighborhoods, subtleties, nuances, and issues of the areas in which they are doing appraisals! It would be a novel idea for them to see the interior of properties they are using for comps! The simple fact is that while the appraisers work under the rules of using nearby, recent, and similar square footage properties for comps, what they are doing because of a lack of knowledge and sensibility, is creating contrasts between properties, not comparisons.
IF the appraisers were required to know the inventory, they wouldn’t have to rely on the agents to feed them the info. They’d know it for themselves! Then it really would be a neutral valuation. Maybe they’d have to say when the last time was they saw the property (like never).
Instead of distancing the appraisers from the subjects they are appraising, the BEAM Team should require them to document their knowledge of the areas. Maybe it’s a two step process.
1. Work under an appraiser who knows the territory for some required number of appraisals, and
2. Concurrently document that she/he has been on broker tours in the area for some months, and continues to do so in order to understand the job!
Hey that’s a novel idea! Learn the inventory just like we in sales do and what’s more….like the buyers do! Have you noticed they are usually quite informed about the segment of the market they are interested in?
When the mortgage broker showed me the appraisal that came in for my client/dear friend, I went postal! The clown that wrote that up had no clue about anything other than location and square footage of what was out there. And even though he drove by the ‘comps’ and took a picture of each one, his info was no more accurate than what Bernie Madoff gave his investors.
What’s the end of the story? The last chapter has not yet been written. But I did put in writing all the reasons the comps were no good. I offered the real story behind one of the properties the appraiser used as a ‘pending’ comp. I could do that because I closed it last week. I verified the back story which I mostly knew, with the listing agent of another of the ‘comps’, and then I provided three closed sales, nearby, that needed to be adjusted slightly downward to COMPensate for the subject’s location on a busy street.
Folks, the price we are paying for these low interest rates come with frustrations, delays, reviews, duplicate documentation, and more frustrations. Be sure you have a good team backing you up, and that they aren’t going AWOL, hiding behind voice mail and email, and that they have solid reputations and referrals you can rely on.
Quick Glimpses (both of these tie into my rant):
-Here’s an interesting article about online valuation sites like Zillow.
-Here’s another about how closing costs have gone up.
-And one more about how the BEAM Team leaders work (my wording)
Alameda real estate this week….
My Sellers closed on their full bay view condo today at 1001 Shoreline #406.
Check out the closed sales: 1200 San Antonio is in that group, as is a private sale between tenant and owner on Southwood.
Active listings this week 176, 177 last report
Pending listings this week 89, 91 last report
Highest and lowest priced NEW listings (several are not new, just reinserted as new)
Broker tour 12 with 2 repeats
Alameda real estate awards this week….remember this is only my perspective!
Oh – a note to the folks who spoke with a loan officer today who asked if you had a real estate agent yet…and you mentioned my name saying said you liked the blog but didn’t even know if I’d work with you….give a call! I hope we can meet to see if we have a mutually acceptable basis upon which to do business. At the worst, you walk away with some pretty good market info. I think most of my clients think I’m either polite and at least okay at what I do…and hopefully they think I’m nice, honest, have a sense of humor, AND pretty good at what I do!