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Steven Smith
Interests: Photography, gardening, painting.
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Hunter, what you are talking about is at the beginning of the appraisal process. What I wrote about is after a proper Scope of Work has been done, appropriate comparison properties have been identified and verified as to details from motivation or terms/concessions, personal property, etc. Then when the adjustments process starts, the Sequence of Adjustments. I am sorry if that point was not clear. Steven R. Smith, MSREA, MAI, SRA Redlands, CA 909 798 8855 Subscribe to InlandCAAppraisersForum Powered by
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I like the analogy and like a good pizza, and even know a little about them. Once when a sales manager, I interviewed a person who had a sales background. He was a Mfg. Rep. so I asked what he sold, and his first response was Instant Cheese. Not being familiar, I asked how it worked and who used it. Well, it comes in dry form, with a shelf life of over a year. When needed, it is mixed with water, chilled until it sets, then sliced or grated for pizza's, taco's, hamburgers, etc. A key ingredient in this Instant Cheese, is potato starch. It seems that all cheap cheeses us it as a filler. Take a look next time you buy some cheese, at the ingredients. Real cheese takes longer to make, has better ingredients and flavor. Before I order at a restaurant, or eatery, I always like to ask if they use real cheese. Try it, and it might be surprising the range of responses you get. Most employees have no idea and have to go check. Most chain pizza companies do not use real cheese. Round Table did, but after 30+years, they closed the store in my town, too many Domino's, Little Ceasar's, Pappa John's to compete with. This may be the year where lots of seasoned appraisers hang up their cheese, real or fake, as at the current feel level, it does not pay to be in the business and maintain all the resources.
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In 2003 I wrote a journal article entitled "Predatory Lending, Client Pressures and Appraisal Frauds in which I tried to help explain some of the many reasons in loan origination appraisal assignments, there is pressure for the appraiser to Anchor on Price, not Market Value as defined in USPSP. Whether it is fraud for housing or fraud for profit or just predatory loan packing; Sales Prices are often inflated in new home subdivisions, and the appraisers are expected to call it Market Value. In 2003, there might be an $8,000 pack put into a deal to help the borrower into the house they could not afford; with the builder in a cozy relationship with the lender or with them owning the lender. Some builders helped things along by including the garage size in the brochure square footage for the appraisers to use. A couple public builders were targets of Class Actions suits on this issue. Appraisers who helped make deals work by inflating values 5% to 10% per deal, helped ramp up prices 25% to 50% in a five year period. Now, in my markets, I am seeing things like a $225,000 Sales Price that include $30,000 in concessions by the builder, and Cash Equivalent sales at the $189,000 level. This in tracts that had been selling for over $400,000 in 2006 at the peak. The appraisals all stay in the file for later examination, scrutiny, forensic review, etc. Now in 2009, we are seeing buyers alledging that they were duped, and that the appraiser had a hand in it. This, even though the appraiser did not make a piece of the profits, just their flat fee. We have had an increase in criminal and civil cases this year on this problem. When it all comes out in the wash, licensed appraisers will be painted with a broad brush as being little more than Sharp Shooters hitting artificially created Sales Prices. By that I mean, we all will have the taint of being Licensed. Too bad we have not made a practice of turning in fradulent {inflated and misleading appraisals} reports when we saw them. I guess we were waiting for someone else to do it for us.
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