A few of the giants in the real estate sector have now made it their new, official practice to knowingly put you, the consumer, in harm’s way. Why? For the sake of fast and cheap. If you own a home or plan on buying one at any time, you really need to read this to protect your most valuable asset.
Can a computer see mold in the home you want to buy? Can a computer know that there are signs of termites in the basement? Can a computer method that compares your home to a 250-year-old farmhouse just because it sold recently and is close to yours, be accurate? Can a person who had no training or who sat through only one quickie crash course be qualified to know what may be lead paint, asbestos, or have a serious impact on home value? Fannie Mae and Freddie Mac think so. They have officially announced that they no longer prefer to protect the consumer with a real estate appraisal. They are opting first for computer-based alternatives or waivers instead, and opting for non-licensed, non-certified random people to ‘inspect’ your home instead of a properly trained professional appraiser. They dress up the new ‘methods’ with cute names and try to make it sound like such an awesome revolution and a great thing for all involved. As history has shown, these types of shortcuts harm the consumer.
Just as a home inspection helps to verify a safe home, a home appraisal protects you and your biggest financial interest. Having an appraisal is the only thing that protects YOU financially in the transaction. EVERY OTHER PARTY IN THE TRANSACTION MAKES THEIR PAYCHECK OFF OF YOU; this is why it is not to their benefit to let the appraiser perform a real appraisal. They need the loans to close. Period. You overpaying is no longer a concern. A few of the involved parties, the more you pay for the home, the more they make, so overpaying is a bonus to their bank account. However, none of them get paid if you don’t reach settlement. YOUR FAMILY IS THEIR MEAL TICKET. The appraiser is paid one flat fee. (In most cases up to 75% of the fee you are shown for the appraisal is paid to third-party companies who order and handle the appraisal, not to the appraiser.) Appraisers do not profit or benefit from your appraised value being at the sales price, above it, or below it. The appraiser’s job is to remain unbiased and provide an honest opinion of value based on real market data. We protect you and the lender from making a bad financial investment. If you choose to pay more than the appraised value, that is your choice to do so, but at least you were presented with the real core facts and data upon which to base your financial decision. It won’t be a surprise when five years later you refinance, and your home value is still below what you paid for it due to having bid above market value.
In one of the quickie ‘valuation methods’ known as a hybrid, an Uber driver from two hours away from the home was the appraisal ‘inspector’ and his inspection level was from the seat of his car only. So, a person with no verifiable real estate credentials did the ‘inspection’ for the home appraisal and only from the seat of his car. He never saw the rear of the home or the inside of it and has no known training. Yes, an Uber driver. Not that there is anything wrong with being an Uber driver of course, but do you want an uncertified Uber driver or the pizza guy as your ‘appraiser?’ Would you appreciate this level of disservice being done to you or your family? I feel like I’m watching The Waterboy and the other team just sent in their towel boy. “The towel boy ran into a laundry list of problems.”
Your home is your biggest asset and not a place to cut corners. If a person who is said to be an appraiser comes to your home, ask for their credentials and be sure they are a certified or licensed appraiser. If you want to know your purchase or refinance will be handled with quality, ask your loan officer or contact what type of appraisal is being done. If they say none, or some AVM or quickie online substitute, ask for a real appraisal by a real appraiser. As the consumer, you have the right to it. If they forbid or deny you an appraisal, that shows the integrity level of those you are working with. It may be a good time to interview other banks/lenders and compare. There are still plenty of good Realtors, loan officers, banks and lenders out there, with integrity, that have said they will choose to use real appraisers.