(Original Text, "Joe Appraiser on Easy Street" Posted in 2007 by Gary E. Geraci)
Like most
in this profession, to make any money as an appraiser I take a bulk of
assignments from lenders.
My job is
simple. I write glowing appraisal
reports so that loans get approved.
Period. I don’t worry about doing
detailed inspections of the property and I don’t like to photograph things that
could lower the value of the property or raise red flags with the lender’s
underwriting department; things like cracked slabs, mold, etc. Reporting things like that kills deals. I don’t do detailed write ups either. Why
bother? It takes extra time and my
client’s look at one thing and one thing only: the final appraised value. To them, everything else in the report is
regulatory boilerplate, fluff.
I keep
friends with lenders, loan officers, mortgage brokers, and real estate
agents. I network within their circles,
eat and drink well; slap backs, trade stories, and exchange numbers. I am a go-to guy, the guy on the team that
won’t hold things up. I want to keep my
friends happy because they send me lots of business. More than I can handle. I write 10 reports a week by myself. At $250-$350 a pop you do the numbers. I’ve even molded a couple of apprentices in
the office to do another 15 reports a week.
We are in the business of producing “deal winning” reports within 48
hours. In the fiercely competitive world
of lending, killing deals only makes clients unhappy and sends them to the
competition.
Loan
underwriters like me because I take the burden of risk off of their backs. If a family needs money I am not going to
write something up that kills their refinance deal. On paper, any property can be made to look
more valuable than it really is. It
doesn’t matter to me that the family might not make enough money to make the
new mortgage payments. At times, clients
provide me recently sold, supportive “comparable” property information for use
in my report. I use these in my report
to create value because its quick and it supports the value that my client
needs to make the deal happen. Should a
deal go bad later, it’s not their back and very unlikely to be mine
either.
Real
estate investors like me because I can salvage their deals. Many “flippers” have gone over budget or have
over improved a place beyond what the market is now willing to pay for the
place. Any naïve soul trying to buy the
place at a price well above market value usually needs a bank loan to complete
the purchase and that’s where I come in.
I’ll produce a reported property value that seals the bank deal.
Face it,
today, an appraisal report is a commodity product, a quickly produced report
that hits a predetermined collateral value and minimizes any property
deficiencies. The industry simply
contracts out for this now, gets exactly what it wants, and yet still covers
its own back in the process. Most
mortgage loans it takes in will be packaged into a security offering, moved out
of the institution, and sold to the government and increasingly, private sector
investors. With the new influx of
capital, the process repeats over and over again.
What’s the
harm? Technically and legally my value
is just an “opinion” of value anyway. If
I don’t give a client exactly what he wants, all of the time, he simply finds
another appraiser who will. I don’t have
a crystal ball but I know how the real estate business works. In a few years the property will have
appreciated, whether artificially or not, to a value high enough to cover my
inflated value. I don’t lose any sleep
over these deals.
“We must always take sides. Neutrality helps the oppressor, never the
victim. Silence encourages the
tormentor, never the tormented.” ---Elie Wiesel
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