
Add to this the fact that all the foreclosures and short sales are suppressing property values. In the past such sales would not impact the appraised value of a property. However, when these transfers account for such a large percentage of the transactions they cannot be completely ignored.
Finally, the Dodd-Frank Act passed last year now regulates the appraisal process, such as adding Independence requirements and regulating the fees charged. In response, many lenders, particularly the larger mortgage lending operations, now farm out appraisals to an appraisal management company who arranges for the appraisals and takes a cut of the fee. The appraisers are pressured to keep the fees low but still churn out appraisals quickly. Experienced appraisers are being shunted aside for ones that are cheaper, less experienced and often unfamiliar with the community where the appraised property is located. Their appraisal reports are more susceptible to inaccuracies and as a result further suppresses the valuation of the property.

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