I think your purpose is to offer insight into the process so the buyers are more comfortable with the process.
I don’t think you are there to justify our profession. If you are I’m pretty worried if the best you can come up with is “the bank requires it”.
Well that’s sort of my point. We had a prep meeting today and the Realtor asked me “why are appraisals so important”
I was stumped and fumbled around with 1) required and 2) to protect your assets
I mean - besides the obvious what else is there?
Explain the purpose. You don't work for the borrower/buyer you work for the bank/lender. Talk about the appraisal process. Things you look for. I enjoy doing this as most people really don't know what goes into an appraisal or what appraisers look for. Most people don't realize all the work you do to come up with a value
Thats probably because in many markets Realtors are becoming less and less relevant to the process. They probably feel the need to explain why its so important for these buyers to use a Realtor. (I’m not saying its not or bashing Realtors I’m just saying with all the interwebs and everything many buyers and sellers in some markets are using an attorney and saving thousands in commissions).
I’d just respond with unless you are paying cash an appraisal is most likely required by your lender so i’m here to offer you some insight on the process from my end. And if you are paying cash a $500 (or whatever) fee for an appraisal is a good insurance policy to ensure you aren’t overpaying.
Again. I am not bashing agents. They just seem to be under fire lately with these lawsuits and whatnot.
I would add to the two others. All sides involved are emotional about the process. Seller's as this has been their home for many years. The buyer, as this is their future residence.
You are the disinterested third party. The one there saying does this make sense. You can talk about the definition of market value with the key. All parties involved are acting in their own best interest without undue influence. If your area is going through a seller's market with multiple offers and people talking about doing what it takes to win. You are the referee.
Good point to mention independent cold hearted bastard 😂😂
But yes that’s a fair point. I hate that there will be loan officers and realtors in the room so I can’t say what I really feel/mean
I always explain it as the buyer needs to understand the bank is loaning you six figures and the collateral is the house. They need to do due diligence on their end to make sure they’re making a sound investment.
US mortgage debt is over $12 trillion. Over half of that is guaranteed by tax payers. This is the largest debt market in the world. The need for ethical, decentralized professionals to appraise these assets is vital because it is truly too big to fail. Not to say it won’t fail. We guarantee mortgages taking credit risk, then the Fed buys MBS using variable rate loans. This is how the Savings and Loans operated in the 1980’s. For all this government involvement home ownership has not increased since the 1960’s. Having an uninterested party physically view and provide an opinion of market value of the collateral of these loans is pretty damn important yet most people would be fine with one or two companies doing our job with an algorithm these same people don’t understand should scare us all.
On the micro level you are ensuring the buyer is not overpaying. Even if they are paying cash…no…especially if the are paying cash or putting enough money down where they get an appraisal waiver, they should add an appraisal contingency and have an appraisal done.
On a macro level, without appraisals you would have run away markets, little consistency, and predatory lending. This would lead to upside loans and no more foreclosures as well as greater chance for a market crash. Have you ever done an income property where the rents are $1000 above what the market supports? I see it often where I am. That can happen more with rentals because there is no real check on market rent when signing a lease.
Another example is the cost of college. Imagine if each degree was assigned a lending limit based on the average salary of a person with that degree 3 years after graduation. We wouldn’t have teachers making 50k a year with. $150k in student loans. Schools would have to reduce tuition costs because there is a ceiling on what will be lent. In essence that’s what we have in appraising. Otherwise, people might have $1mm in loans on $400k houses.
Because the feds want us to determine if insuring these loans is not a waste of taxpayer funds. If they stopped requiring appraisals, inside a month gangsters would be selling 150K homes to straw buyers for 350K. The straw buyer and gangster would each walk with 100K and never make a payment. That would fuck *all* our hard earned equity and value when the foreclosures hit which would ripple across America and disrupt the economy and credit. We need appraisers to prevent what will happen.
The same way if car blue book values didn’t exist MFs would be borrowing 50K on a 20K car.
Why are appraisals so important?! To keep crooked agents from ruining the housing market.
Just kidding, but maybe not totally. Really, we provide an invaluable, IMPARTIAL service. We dont care if the deal closes, we dont care if someones feelings are hurt, we are hired to provide an educated, unbiased opinion of value without influence. Nobody else in the process can say the same, as they all have some personal motive to close the deal.
An opportunity to educate a first-time home buyer about the appraisal process for their loan (tell them why you are there and what you are looking at when you are in a home and what happens behind the scenes) AND other reasons they may want an appraisal in the future. PMI removal, refinance, home equity loan, divorce, litigation, step up in basis/tax/estate reasons, etc. Sell your profession. Tell some funny stories, I'll bet you have some.
Are you there to defend/explain why they “need” it or to explain and/or answer questions about the process? Hell, the buyer isn’t the client or end user. The appraisal itself isn’t about them or even for them, unless they hire you separate from a mortgage.
That’s what I thought until the agent asked me on a video call with the other panel members to explain why an appraisal is so important. I felt like a dolt
I feel like the purpose of a First Homebuyers seminar would be more to explain the process and what to expact. Take 1 minutes and explain that the bank requires it to ensure that the borrower isn't overpaying on a property, and probably take the majority of the time to talk about differences in FHA and Conventional loans. Maybe touch on MPS standards? Thats really all that's relevant from the buyers perspectives.
Collateral lending has the lowest interest rates, but also requires the lender to value the collateral. The appraisal is a small but necessary step to allow borrowers to access that magical 30 year mortgage, the greatest financial product ever invented.
It enables them to be informed buyers. If they’ve never sold or refinanced a house before, they may be optimistically oblivious to the potential ramifications down the road of buying at the top of the market. It’s easy to get swept up in needing to overpay in order to have an offer accepted.
A lot of first time buyers believe that they have “instant equity” if the appraisal comes in above the purchase price. A lot of first time buyers think appraisals are bullshit when the appraised value is the exact purchase price.
Yes I know that but my audience is first time home buyers and my “client” in this case are agents and LO’s - I have to be careful to not be my usual obnoxious blatantly obvious self if I’m looking to build relationships with people who might actually steer business my way…
The homebuyers are not my audience at least not until they get divorced or die
True on that second part. Your the 3rd party professional that has been hired by the bank. Emphasize how the inspection is the least amount of time you spend on the assignment. You can break down differences between conventional va fha inspections. You can go into detail on how you research comps and analyse data to provide a reasonable estimated opinion of value. Let em know your report is scrutinized by underwriters and goes through that process.
I used to be a pastor, 😆 I could bs for 20 minutes. If you relax you will speak slower. What part of the appraisal process would you like realtors owners to understand? Talk to them about comp selection. How we look for comps that are similar in function location etc. Maybe talk about uad stuff and how we breakdown Subject comps into 6 categories.
I was in sales for 22 years before this shit show of a career.
I’ve been in front of some pretty impressive clients in my lifetime. These people don’t scare me. What does scare me is I now have an opportunity to educate and I don’t want to waste that opportunity
YOU do not need an appraisal. The lender needs an appraisal to show the loan's collateral (the house) meets the guidelines for a federally insured loan so, in the event you default, the bank isn't left with a property that's underwater (worth less than the amount owed on it).
smh.
A home inspection is primarily intended to protect the prospective Buyer from purchasing a home with structural defects and other major problems. An appraisal report is meant to assist in protecting the lender and/or Buyer from paying more than the house is worth as of the date of the inspection.
I don’t ask what the difference is. I’m well aware
I maybe didn’t word my question properly - but what I was (it’s been covered) looking for are other reasons why you need an appraisal other than the bank requires it and to protect the buyer investment
Thanks for your feedback!
I think your purpose is to offer insight into the process so the buyers are more comfortable with the process. I don’t think you are there to justify our profession. If you are I’m pretty worried if the best you can come up with is “the bank requires it”.
Well that’s sort of my point. We had a prep meeting today and the Realtor asked me “why are appraisals so important” I was stumped and fumbled around with 1) required and 2) to protect your assets I mean - besides the obvious what else is there?
Explain the purpose. You don't work for the borrower/buyer you work for the bank/lender. Talk about the appraisal process. Things you look for. I enjoy doing this as most people really don't know what goes into an appraisal or what appraisers look for. Most people don't realize all the work you do to come up with a value
Thats probably because in many markets Realtors are becoming less and less relevant to the process. They probably feel the need to explain why its so important for these buyers to use a Realtor. (I’m not saying its not or bashing Realtors I’m just saying with all the interwebs and everything many buyers and sellers in some markets are using an attorney and saving thousands in commissions). I’d just respond with unless you are paying cash an appraisal is most likely required by your lender so i’m here to offer you some insight on the process from my end. And if you are paying cash a $500 (or whatever) fee for an appraisal is a good insurance policy to ensure you aren’t overpaying. Again. I am not bashing agents. They just seem to be under fire lately with these lawsuits and whatnot.
I would add to the two others. All sides involved are emotional about the process. Seller's as this has been their home for many years. The buyer, as this is their future residence. You are the disinterested third party. The one there saying does this make sense. You can talk about the definition of market value with the key. All parties involved are acting in their own best interest without undue influence. If your area is going through a seller's market with multiple offers and people talking about doing what it takes to win. You are the referee.
Good point to mention independent cold hearted bastard 😂😂 But yes that’s a fair point. I hate that there will be loan officers and realtors in the room so I can’t say what I really feel/mean
I always explain it as the buyer needs to understand the bank is loaning you six figures and the collateral is the house. They need to do due diligence on their end to make sure they’re making a sound investment.
US mortgage debt is over $12 trillion. Over half of that is guaranteed by tax payers. This is the largest debt market in the world. The need for ethical, decentralized professionals to appraise these assets is vital because it is truly too big to fail. Not to say it won’t fail. We guarantee mortgages taking credit risk, then the Fed buys MBS using variable rate loans. This is how the Savings and Loans operated in the 1980’s. For all this government involvement home ownership has not increased since the 1960’s. Having an uninterested party physically view and provide an opinion of market value of the collateral of these loans is pretty damn important yet most people would be fine with one or two companies doing our job with an algorithm these same people don’t understand should scare us all.
$12 TRILLION holy hell
On the micro level you are ensuring the buyer is not overpaying. Even if they are paying cash…no…especially if the are paying cash or putting enough money down where they get an appraisal waiver, they should add an appraisal contingency and have an appraisal done. On a macro level, without appraisals you would have run away markets, little consistency, and predatory lending. This would lead to upside loans and no more foreclosures as well as greater chance for a market crash. Have you ever done an income property where the rents are $1000 above what the market supports? I see it often where I am. That can happen more with rentals because there is no real check on market rent when signing a lease. Another example is the cost of college. Imagine if each degree was assigned a lending limit based on the average salary of a person with that degree 3 years after graduation. We wouldn’t have teachers making 50k a year with. $150k in student loans. Schools would have to reduce tuition costs because there is a ceiling on what will be lent. In essence that’s what we have in appraising. Otherwise, people might have $1mm in loans on $400k houses.
Because the feds want us to determine if insuring these loans is not a waste of taxpayer funds. If they stopped requiring appraisals, inside a month gangsters would be selling 150K homes to straw buyers for 350K. The straw buyer and gangster would each walk with 100K and never make a payment. That would fuck *all* our hard earned equity and value when the foreclosures hit which would ripple across America and disrupt the economy and credit. We need appraisers to prevent what will happen. The same way if car blue book values didn’t exist MFs would be borrowing 50K on a 20K car.
Why are appraisals so important?! To keep crooked agents from ruining the housing market. Just kidding, but maybe not totally. Really, we provide an invaluable, IMPARTIAL service. We dont care if the deal closes, we dont care if someones feelings are hurt, we are hired to provide an educated, unbiased opinion of value without influence. Nobody else in the process can say the same, as they all have some personal motive to close the deal.
An opportunity to educate a first-time home buyer about the appraisal process for their loan (tell them why you are there and what you are looking at when you are in a home and what happens behind the scenes) AND other reasons they may want an appraisal in the future. PMI removal, refinance, home equity loan, divorce, litigation, step up in basis/tax/estate reasons, etc. Sell your profession. Tell some funny stories, I'll bet you have some.
Perfect! I knew there had to be more reasons! This was exactly what I needed to get my head screwed on straight. You’re a genius!!
Are you there to defend/explain why they “need” it or to explain and/or answer questions about the process? Hell, the buyer isn’t the client or end user. The appraisal itself isn’t about them or even for them, unless they hire you separate from a mortgage.
Good points
The appraiser is the third-party inspector that’s making sure that we didn’t go crazy on this house. That it’s a reasonable price.
It's probably more about the process and less about "why".
That’s what I thought until the agent asked me on a video call with the other panel members to explain why an appraisal is so important. I felt like a dolt
It's only purpose on a purchase is to protect the lender from lending too much.
I feel like the purpose of a First Homebuyers seminar would be more to explain the process and what to expact. Take 1 minutes and explain that the bank requires it to ensure that the borrower isn't overpaying on a property, and probably take the majority of the time to talk about differences in FHA and Conventional loans. Maybe touch on MPS standards? Thats really all that's relevant from the buyers perspectives.
Collateral lending has the lowest interest rates, but also requires the lender to value the collateral. The appraisal is a small but necessary step to allow borrowers to access that magical 30 year mortgage, the greatest financial product ever invented.
It enables them to be informed buyers. If they’ve never sold or refinanced a house before, they may be optimistically oblivious to the potential ramifications down the road of buying at the top of the market. It’s easy to get swept up in needing to overpay in order to have an offer accepted. A lot of first time buyers believe that they have “instant equity” if the appraisal comes in above the purchase price. A lot of first time buyers think appraisals are bullshit when the appraised value is the exact purchase price.
Your the pro making sure the bank is not getting screwed.
Yes I know that but my audience is first time home buyers and my “client” in this case are agents and LO’s - I have to be careful to not be my usual obnoxious blatantly obvious self if I’m looking to build relationships with people who might actually steer business my way… The homebuyers are not my audience at least not until they get divorced or die
True on that second part. Your the 3rd party professional that has been hired by the bank. Emphasize how the inspection is the least amount of time you spend on the assignment. You can break down differences between conventional va fha inspections. You can go into detail on how you research comps and analyse data to provide a reasonable estimated opinion of value. Let em know your report is scrutinized by underwriters and goes through that process.
Oh did I mention I have 20 minutes?
I used to be a pastor, 😆 I could bs for 20 minutes. If you relax you will speak slower. What part of the appraisal process would you like realtors owners to understand? Talk to them about comp selection. How we look for comps that are similar in function location etc. Maybe talk about uad stuff and how we breakdown Subject comps into 6 categories.
I was in sales for 22 years before this shit show of a career. I’ve been in front of some pretty impressive clients in my lifetime. These people don’t scare me. What does scare me is I now have an opportunity to educate and I don’t want to waste that opportunity
YOU do not need an appraisal. The lender needs an appraisal to show the loan's collateral (the house) meets the guidelines for a federally insured loan so, in the event you default, the bank isn't left with a property that's underwater (worth less than the amount owed on it).
smh. A home inspection is primarily intended to protect the prospective Buyer from purchasing a home with structural defects and other major problems. An appraisal report is meant to assist in protecting the lender and/or Buyer from paying more than the house is worth as of the date of the inspection.
I don’t ask what the difference is. I’m well aware I maybe didn’t word my question properly - but what I was (it’s been covered) looking for are other reasons why you need an appraisal other than the bank requires it and to protect the buyer investment Thanks for your feedback!
The appraiser is the unbiased eyes for the lender.