Posted on: 12th Sep, 2007 05:40 am
Real estate appraisal is one area where you'll find a lot of scams and frauds happening. Not that all appraisers are involved in it. But there are a few who bring a bad name to the entire industry.
Scams you may come across…
It is assumed that most appraisers are independent in carrying out an appraisal. But there are some who are under the pressure that they'll have to bring the appraisal figures up to what the lender wants or else his assignments with the lender are over. The entire system is carried out such that the mortgage company would control the appraiser's work.
However the lender may be hiring appraiser but it is the homebuyer who's paying for the appraisal report. Again it may so happen that the appraised value of the home falls short of the sale price. Then there is the chance of the sale contract being broken because the buyer cannot afford to get a loan worth the sale price.
At times, in order to make it a successful deal, the buyer is often given an inflated appraisal. In such cases, they buy a home that costs much higher than it's worth. And the result is, after a few years, when they try to sell it, it becomes quite difficult. This is because it is then that the buyer comes to know of its actual appraised value and realizes that the earlier value was an inflated one. And, if he has to pay off his mortgage by selling the home, then he won't be able to gather enough funds through the sale.
How to avoid such scams…
Scams you may come across…
It is assumed that most appraisers are independent in carrying out an appraisal. But there are some who are under the pressure that they'll have to bring the appraisal figures up to what the lender wants or else his assignments with the lender are over. The entire system is carried out such that the mortgage company would control the appraiser's work.
However the lender may be hiring appraiser but it is the homebuyer who's paying for the appraisal report. Again it may so happen that the appraised value of the home falls short of the sale price. Then there is the chance of the sale contract being broken because the buyer cannot afford to get a loan worth the sale price.
At times, in order to make it a successful deal, the buyer is often given an inflated appraisal. In such cases, they buy a home that costs much higher than it's worth. And the result is, after a few years, when they try to sell it, it becomes quite difficult. This is because it is then that the buyer comes to know of its actual appraised value and realizes that the earlier value was an inflated one. And, if he has to pay off his mortgage by selling the home, then he won't be able to gather enough funds through the sale.
How to avoid such scams…
- First of all, whether it's an appraiser hired by the lender (as done in most cases) or one appointed by the homebuyer, try to gather details of his company profile and experience.
- Check all documents provided either by the appraiser or any person involved in the home buying transaction.
- If you have appointed an appraiser, ask the lender if the former is acceptable to him.
- Know your rights as a homebuyer…
As a homebuyer, you have the right and you should ask for a copy of the appraisal report even if your home is appraised by the lender's appraiser. Once you go through the report, you will come to know about the sale prices of neighborhood homes and why they've been sold for more or less. Apart from this, you will come to know about what improvements can be done on your property to raise the appraised value.
hi,
thanks a lot samantha this info was really useful to me and will surely proove beneficiary to other members.
thanks a lot samantha this info was really useful to me and will surely proove beneficiary to other members.
This is really a great information on appraisal. It will surely help many homeowners to stay alert from such appraisal scam. Before doing an appraisal on home, if a person considers all these points as mentioned by Samantha, he will be benefited.
Hey Samantha!
Let me come to the rescue of my industry! kidding, but there are a few things I'd point out.
You won't be scammed if you are well informed and go with an honest and ethical lender or Realtor. If you decide to use a broker, use due dilligence and make sure they are reputable before you even contact them.
Appraisal nearly scams always include other parties, such as a loan officer or Realtor. Again pick reputable people in the lending industry and you should be good.
Fraud in the entire real estate industry is huge, in two months we'll have an incredible new site that should block 99% of all fraud if the transaction is taken place on our new site. I'll post when it launches.
]Very important! ] If have a RIGHT to a copy of the appraisal, BUT the appraiser can only discuss or provide a copy of the appraisal with whoever is named the client on the appraisal report, period. The is 95% of the time the lender, which means you as a home owner must get a copy of the appraisal from your lender, NOT the appraiser! We get calls constantly from people who want a copy of their appraisal and we are required by law not to disclose anything about the appraisal to anyone (including the homeowner) except our client as defined on the appraisal. That does not stop the homeowner from getting angry at us, but life must goes on. :)
Let me come to the rescue of my industry! kidding, but there are a few things I'd point out.
You won't be scammed if you are well informed and go with an honest and ethical lender or Realtor. If you decide to use a broker, use due dilligence and make sure they are reputable before you even contact them.
Appraisal nearly scams always include other parties, such as a loan officer or Realtor. Again pick reputable people in the lending industry and you should be good.
Fraud in the entire real estate industry is huge, in two months we'll have an incredible new site that should block 99% of all fraud if the transaction is taken place on our new site. I'll post when it launches.
]Very important! ] If have a RIGHT to a copy of the appraisal, BUT the appraiser can only discuss or provide a copy of the appraisal with whoever is named the client on the appraisal report, period. The is 95% of the time the lender, which means you as a home owner must get a copy of the appraisal from your lender, NOT the appraiser! We get calls constantly from people who want a copy of their appraisal and we are required by law not to disclose anything about the appraisal to anyone (including the homeowner) except our client as defined on the appraisal. That does not stop the homeowner from getting angry at us, but life must goes on. :)
Samantha's message is very useful and mikeshapiro's complementarity also very good. I have copy this in my netnote. It's very useful ,I hope everyone to provide some useful messages,news,report,fraud story to us, lest should being cheated. thanks.
I was a victim, I bought a property for 235k and I just find out that the property only worth 100k.
Hi Juan,
Are you sure it was a scam in your case? i'm saying this because throughout the nation, home prices have depreciated. So, it's not surprising if your home value drops down to 100K from 235K.
Take Care
Are you sure it was a scam in your case? i'm saying this because throughout the nation, home prices have depreciated. So, it's not surprising if your home value drops down to 100K from 235K.
Take Care
You can't pick the appraiser. Also you should hire a appraiser before you make a offer. He is then independent and is working for you, not the bank. But you don't want to pay for real independent advice, you suffer the consequences. The realtor is hired to sell. And sell they do. Don't care if you paid too much. They get a commission check. Hiring a appraiser yourself working for you is the best thing to do. Also he should be able to give trend analysis on the market. Appraisers are like any professionals, they vary in expertise and knowledge level. Ask a couple of realtors for who would they use if they were going to buy a house. For a way to long the realtor or the loan orginator picked the appraiser. How many appraisals do you think he will get after he kills the deal. The realtor tells the loan orginator no more business with you. The loan orginator tells the appraiser no more business. They then tell all the other loan orginators don't use him. So if your are a honest appraiser better have another line of work to go into after you kill the deal. I've been in this business for 15 years and always has been the same. I do most of my work for individuals, investors, and attorneys.
Hi Kevin!
Welcome to MortgageFit Forums!
I was reading some of your posts regarding appraisal and found them informative. Are you an appraiser? Why don't you join the community? Here you will find a number of industry professionals and I am sure you will definitely enjoy participating in the community.
Thanks
Welcome to MortgageFit Forums!
I was reading some of your posts regarding appraisal and found them informative. Are you an appraiser? Why don't you join the community? Here you will find a number of industry professionals and I am sure you will definitely enjoy participating in the community.
Thanks