Georgia Appraisers Investigated

WXIA-TV, the Atlanta Business Chronicle’s broadcast partner, recently spoke with Bill Rogers, the Georgia Real Estate Commissioner, about an issue that’s garnered a lot of attention in the world of real estate recently—the abundance of low property appraisals.

A small blurb from an Atlanta real estate blog:

We are seeing more appraiser cases now because of the economy,” Georgia Real Estate Commissioner Bill Rogers told WXIA. “It’s coming to light that some of the appraisals are suspect. When prices are going up and real estate is active you don’t have a problem and the cases do not come to light, but they really are now, and now we have 200 appraisal cases.”

Rogers said most of the appraisals in question involve appraisals that are about 30 percent lower than the homeowner thinks they should be or what the lender thought they were, the station reported.

There wasn’t much to the post, but the topic was one that piqued my interest. Those of you who know me are already aware this is a hot button issue of mine, and I think it is one that warrants further discussion. Why? Because I feel confident the outcome of these investigations could potentially have a dramatic effect on Atlanta real estate transactions.

The only true determining factor of “market value” is the price a buyer is willing to pay and a seller is willing to accept during an arm’s length transaction. The sales price of a house should not be determined by an appraiser.

For sellers, the financial implications of a low appraisal are devastating; and in a market where sellers are typically upside down on their homes and already taking a beating during the negotiations over price, a low appraisal is more likely to kill a transaction, even if the buyer and seller were already on agreeable terms. Call me crazy, but shutting down legitimate transactions based on low appraisals is definitely not helping the housing market.

That said, I know a lot of great appraisers and feel their pain. They’re under a tremendous amount of pressure, and their valuations are reviewed under a microscope by lenders. Like many professions, there are good appraisers, and there are appraisers who likely deserve scrutiny.  But, the bottom line is that the role of an appraiser is to determine if the contract price is a reasonable representation of market value–not to determine the market price.

Appraisals have been a very challenging part of the real estate transaction in recent months and have caused many, many closings to go south. I believe these low appraisals have been a significant contributing cause to declining prices in some Atlanta neighborhoods. Some homeowners—many of whom are already hurting in the wake of the market crisis—are forced to reduce their asking price lower than a willing buyer agreed to pay based on an appraiser’s price. The buyer and seller’s agreed upon value of the home should be the determining factor in calculating price, not the appraisal amount.

I could write about this topic for days, and it is certainly a complex issue deserving of dialogue.  Regardless, it’s encouraging to see that there is at least a little push back from the real estate community. It will be very interesting to see the outcome of the Georgia Real Estate Commission’s investigations.

Has anyone had any specific appraisal issues recently that bear further discussion?  Or, questions about the appraisal process?  Post them here and let’s talk!

posted: Apr 26, 2012 | No Responses

Posted by:  Wakamo & Associates

Melissa Wakamo and her dynamic team of agents and support staff provide buyer and seller clients with exceptional service and proven results. Since the start of her real estate career in 2004, Melissa has proven to be a true advocate for her clients and has consistently performed in the top 1% of agents

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