Appraisals Change on Long Island New York?

March 8th, 2008 category: East End LI Foreclosures, Real Estate News, Real Estate Philosophy

The following article by Patrick Rucker-ReutersUK, found here, is a good thing for consumers in New York.

“The two largest sources of U.S. mortgage financing agreed on Monday to sponsor a new home appraisal watchdog to prevent inflated home values.”

It’s rather surprising that it’s taken this long to comprehend the obvious: that appraisers connected with banks might have an ethical dilemma to self determine. Under-appraise, and impact the loan for the buyers bank (jeopardizing the purchase agreement); over-appraise, and all is well. Until market conditions change.

While the initiation of this new law in NY appears to be largely the result of those that received over appraisals in a market that seemed limitless with the respect to increases, having this law in effect in a downswing would appear to be equally beneficial to buyers and sellers of real estate in New York.

An independent appraisal in a down market will prevent overly cautious lenders from using “their own” to make judgements that will impact the price in the lenders favor. This market is subjective, and consumers don’t need banks to establish “value”- particularly if that value has, attached to it, a huge self created “sting” due to loans provided that made little sense to the consumer and are now impacting lending institutions negatively.

Separating market value and lending companies, in hindsight, seems so, well…COMMON SENSE.

For sellers today, while “declining market status” in Suffolk County, New York, will surely impact an appraisal, there is nothing “right” about assuming that a badly burned lender (and it’s fleet of connected appraisers) will not make it worse by having their own agenda present. That agenda, by the nature of the market, is likely (opinion) err on the side of caution, irrespective of the impact on sellers and buyers.

An independent appraiser, who has no future benefits with a lender via additional business, will have the ability to appraise a property without bias (or pressure in either direction). Sellers will sell at market value; buyers will buy at market value. Now, if we can just find a consistent measure of price in an inconsistent market…

Eliminating the connection of appraisers with lending institutions eliminates a major relationship that should never have existed in the first place. Good for New York.

© 2008 OptionsRealty
Photos © iStockPhoto

This entry was posted on Saturday, March 8th, 2008 at 1:42 am and is filed under East End LI Foreclosures, Real Estate News, Real Estate Philosophy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

6 Responses to “Appraisals Change on Long Island New York?”

Bernard Fisher Broker Says:
March 9th, 2008 at 10:53 pm
LONG ISLAND HAS A GREAT MARKET FOR REAL ESTATE

BERNARD FISHER

http://WWW.FISHERNYC.COM
laurie mindnich Says:
March 9th, 2008 at 11:05 pm
Thanks, Bernard- we share pertinent material whenever possible; I appreciate the comment.
Layla Says:
March 13th, 2008 at 2:50 pm
That’s a great idea. There needed to be some changes made to appraisal industry in the Long Island area. It will be interesting to see how the new changes will affect the standards.
laurie mindnich Says:
March 13th, 2008 at 6:41 pm
Layla, I agree- while banks absolutely need a valuation, they don’t need to have a relationship with appraisers that compromise the reality of the appraisal, good or bad. Thank you for your comment!
Glenn A.Gabberty, SRA Says:
July 6th, 2008 at 1:28 am
As much as I dislike being the forebeaarer of negative news, it is my opinion that the answer to the lending debacle both on Long Island as well as nationwide (short-term, at least) will be the formation of more appraisal management companies. These companies pay state certified (usually non-profesiionally designated) appraisers a fraction of the appraisal fee and as a result, I foresee more of the same incompetence that created this mess to begin with. These companies will get what they pay for, like anyone else. I am presently the V.P of the Long Island Chapter of the Appraisal Institute, but can only speak for myself. In my 28 years of appraising on Long Island, especially on the East End, it is my experience that the problem lies within the ridiculously low requirements in becoming a NYS certified appraiser (I have fired a countless number of them over the years due to inadequate education they received in some of these proprietary appraisal schools and a lack of professionalism). Its about time that users of appraisal services pay attention to professional designations, and I am referring to the very few that are legitimate. Otherwise, it will be more of the same incompetence.
laurie mindnich Says:
July 27th, 2008 at 8:58 am
Thanks, Glenn. Being a seasoned participant in the appraisal industry, your input is of huge value. I’m not surprised that part of the problem is lack of training- seems to be an undercurrent in the real estate venue on Long Island…

Quick Search

Links