Wait, Maybe The Realtors Aren't Wrong This Time http://www.businessinsider.com/wait-maybe-the-realtors-arent-wrong-this-time-2009-6/comments en-us Wed, 31 Dec 1969 19:00:00 -0500 Sat, 15 Mar 2014 12:50:06 -0400 Joe Weisenthal http://www.businessinsider.com/c/4cfdc0cfccd1d5ac7b140000 michelle staton Tue, 07 Dec 2010 00:06:23 -0500 http://www.businessinsider.com/c/4cfdc0cfccd1d5ac7b140000 looks like everybody is spamming these pages. at least, if you're not going to comment on the subject, put just one or two links, not the whole site of your sites. 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PLEASE! http://www.businessinsider.com/c/44b9b9143975444a6ce9fc00 Brian Fri, 26 Jun 2009 03:14:01 -0400 http://www.businessinsider.com/c/44b9b9143975444a6ce9fc00 Joe, I recently started reading this blogg and had been thus far very impressed until I read the post about something I know a bit about, the home valuation code of conduct. As a real estate agent I see the home valuation code of conduct as a joke. It does not do what it pretends to do, create better honest appraisals. Instead it creates huge profit centers for lenders and takes money away from good honest hard working appraisers. Not to worry, they've already worked out work arounds. The ironic part is that the home valuation code of conduct doesn't apply to government backed FHA loans, the only remaining lending source for sub-prime borrowers with as little as 3% down and sketchy credit. Its a desaster in the making. Joe, with today's post all is forgiven, I just wish you had learned more about the subject before writing about it. I'm sure you wish you had too. BTW there is a huge story about B of A, Countrywide and short sales that no one has covered. It's Countrywide's dirty little secret. Let me know if you want to know more. Keep up the great writing! http://www.businessinsider.com/c/d837544bea0d444a9cdff700 winstongator Thu, 25 Jun 2009 19:53:14 -0400 http://www.businessinsider.com/c/d837544bea0d444a9cdff700 How different were appraisals in bubble markets when looked at in terms of rental equivalents instead of comparable sales? Generally the larger was used which would bear out by the price/rent ratios increasing dramatically. If comp sales aren't useful, use rental equivalent. There's a reason they don't want to use that... Yun's argument hinges on the fact that he is upset that deals are not closing because of appraisals being too low. His concern is only one way and it is only about deals not getting closed. It is real easy to fix a low appraisal - put more money down! The 80% is a loan-to-value. If the 'value' set from appraisal is 100k, and you want to sell at 110k, the buyer can only get a 80k loan. The buyer should really re-examine their offer, and if they really want it, up the DP or have the seller meet halfway. Realtors were in denial about the bubble, denial about its popping, and still in denial that prices are so low. Appraisers, even the preferred ones, are conscious of the target on their backs. If an appraiser is going to err, it is better for them to err on the low side. http://www.businessinsider.com/c/62b9b9145b09444a2c649400 Brent Thu, 25 Jun 2009 19:33:45 -0400 http://www.businessinsider.com/c/62b9b9145b09444a2c649400 I have been an appraiser for 20 years. The appraisal is thought to be quasi insurance policy by the investors. However, it is not. The true solution to the appraisal problem is to make the appraisers get bonded and peer reviewed, which incentifies the appraiser to do their job correctly and ethically. If that means that appraisals are more conservative and costly, that is a better way forward in order to restore investor confidence. In order to lose your license, you need to commit crimes against humanity. Even then, there is a hearing. The compensation is too skewed towards the brokers, when they receive 3% and the appraiser gets $300. On a $250,000 house, the broker gets $7,500 and the appraiser gets 0.12%. http://www.businessinsider.com/c/62b9b91408f9434ac45d9400 Paulina Thu, 25 Jun 2009 18:24:08 -0400 http://www.businessinsider.com/c/62b9b91408f9434ac45d9400 @Doug Thanks. Yes, I think that is the heart of the matter. Do any banks hold their loans and operate with risk assessment and ethics in their communities? I'd like to learn of some. @Rich H. Agreed. I have friends who want to get into my area and are maybe thinking they can afford it, but worried prices are still too high. I'm like, "Don't get an agent involved. They only want to keep a deal together so they can get paid. It's ridiculous. Some deals should fall apart." I told them to pick some streets they like in neighborhoods they like, and knock on doors or send letters to selected houses. Then see what bubbles up. Four people in my immediate vicinity, including us, bought houses on VERY great streets with no agents. Easy, easy transactions, and paid an attorney $2500 for paperwork. It was so win-win. We literally saw the elderly lady gardening, told her we liked her house. She invited us in. We spent nine months wooing them with offers on contracts and upping the price, and finally, they said they were ready to sell. (He was for years, but wife wasn't. They'd been in since 1951, moved in 2004.) What did it for them? Not the offers. They didn't need the money. No, we had the same wedding anniversary. There was a Michigan and Cal Berkeley connection. They liked us, and we appreciated things about the house that they did. Said we wouldn't tear it down. Later, we had them to our parties, they had us to their assisted living facility. They came to my husband's funeral. We talk on the phone regularly. They still come to the block parties. All good feelings all this time. Agents can make a real estate transaction unnecessarily adversarial. Plus so much gets lost in communication, "My client said, my client wants, the other agent said, blah, blah, blah." Most are dingbat hags, anyway. Around here, that is. That said, there are good agents out there, I'm sure. I just don't know any. http://www.businessinsider.com/c/467a6c79c4f4434ad9d08f00 L'Emmerdeur Thu, 25 Jun 2009 18:05:55 -0400 http://www.businessinsider.com/c/467a6c79c4f4434ad9d08f00 "For one thing, this is what lobbying organizations do. They lobby." Hey, another thing, that's what murderers do. They murder. Doesn't make it right. http://www.businessinsider.com/c/d837544b64f0434a60d5f700 Rich H Thu, 25 Jun 2009 17:47:15 -0400 http://www.businessinsider.com/c/d837544b64f0434a60d5f700 I think residential realtors are scum sucking vermin. Almost all of them suck. They only want to suck your money and dont have the buyers or sellers interest at heart. http://www.businessinsider.com/c/d837544b39d9434a46d0f700 Doug Thu, 25 Jun 2009 16:08:25 -0400 http://www.businessinsider.com/c/d837544b39d9434a46d0f700 Paulina, you bring up an very interesting point: >Maybe if banks had to hold their own loans and couldn't sell them, they would actually care about about accurate valuations.< That, in my mind, is the real crux of the whole issue, and has been since day 1. The whole subprime mess came about in part because no one cared about accurate valuations until it was too late. Why? Because the system was set up where there was NO ACCOUNTABILITY. Who's going to care when thousands of loans are being packaged together and sold to investors around the world? Fannie Mae? WaMu? Moody's? NAR? Joey the mortgage broker? (LOL) Give me a break! As we now know, the only ones accoutable are the taxpayers of the USA. FWIW, appraisers are easy to blame or push around because they're the low man on the totem pole in all RE transactions. If you're trying to find where the real problems lie, stop looking under pebbles and try the huge boulders over there. http://www.businessinsider.com/c/d837544ba2d1434ac4c8f700 RJM Thu, 25 Jun 2009 15:36:02 -0400 http://www.businessinsider.com/c/d837544ba2d1434ac4c8f700 I think Barry Ritholtz should head up the New York Fed! http://www.businessinsider.com/c/62b9b914f6cd434a442d9400 Erik Thu, 25 Jun 2009 15:20:22 -0400 http://www.businessinsider.com/c/62b9b914f6cd434a442d9400 Joe, I have been enjoying the postings of late that analyze the actual functional impact of reforms (CRA, AMC's). You have been brining up some interesting points. In this case, clearly the way that appraisals are conducted was extraordinarily screwed up, and now it is still (perhaps slightly less) screwed up but in a different way. You are right that the identify of the messenger cannot be conflated with the merits of the arguments, whether it's the NAR in this case or the GOP in the case of the CRA. However, I can't help but feel that you are baiting your readers with headlines that intentionally conflate the messenger and the analysis and exonerate these organization. "Wait, Maybe The Realtors Aren't Wrong This Time" and "Sorry, Folks, The CRA Really Did Require Crap Lending Standards" are headlines that date people to come out of the woodwork to disagree with you. The truth is that your analyses are interesting and seem sound, but these organizations are also untrustworthy and agenda-seeking. They are blindly lashing out, and they occassionally hit something that we should consider. Kudos to you for identifying those things, but why invite the flame wars? http://www.businessinsider.com/c/62b9b91495cd434ac62a9400 Paulina Thu, 25 Jun 2009 15:18:46 -0400 http://www.businessinsider.com/c/62b9b91495cd434ac62a9400 @Jonathan Miller. I know, but it seems wrong to make the appraisal just work for the lender by playing ball. When I was an agent, representing buyers in a hot market, it seemed all these houses were so overvalued. The bank would pay for an appraisal, but I encouraged my buyers to pay on their own for an appraisal during the inspections as part of that. Then we would compare and sometimes negotiate. Something is just wrong about the way it was done before. Maybe if banks had to hold their own loans and couldn't sell them, they would actually care about about accurate valuations. I wasn't in the field very long, but there were a lot of things I saw and didn't like. Squirrely unethical things. http://www.businessinsider.com/c/d837544b85cd434a68c7f700 TheHonorableEnemy Thu, 25 Jun 2009 15:18:28 -0400 http://www.businessinsider.com/c/d837544b85cd434a68c7f700 I just heard it on the grapevine that Al-Qaeda has advocated for the COMPLETE extermination of all American citizens (AKA, "Sepps"). That doesn't mean Al-Qaeda is somehow "appalling" - or morally wrong in their intentions - after all, that's what they are SUPPOSED to be doing. Al-Qaeda is fulfilling their mission as "catalysts for change" and I perforce accept their sincere devotion to that endeavor. Anyway, good points JW!! Keep up the good fight against those dumbass Sepps! http://www.businessinsider.com/c/d837544be7ca434aa1c6f700 the skyline is falling Thu, 25 Jun 2009 15:07:19 -0400 http://www.businessinsider.com/c/d837544be7ca434aa1c6f700 Please. If you read into the "appraisals are too low" arguments that the NAR is proffering, they run the gamut. If you throw several different (mostly spurious) arguments up, one of them--after tortuous twisting and rationalizing--might have some merit. At the end of the day, the used house salespeople want house prices to go up because they believe that it will make them richer. That's the end of the story; you should be able to see through this. These people have little shame and even less intelligence. http://www.businessinsider.com/c/4f7a6c7976ca434a14e54600 Hondo Thu, 25 Jun 2009 15:05:25 -0400 http://www.businessinsider.com/c/4f7a6c7976ca434a14e54600 Joe, It goes to credibility! I wouldn't trust what the NAR says (they have a vested interest to see a deal any deal get done). I would hope the lender audits the apprasials but they are as much corrupted as the NAR. The probability of the NAR criticism being incorrect is high......let's put it that way. http://www.businessinsider.com/c/d837544bf1c8434a36c6f700 Joe Weisenthal Thu, 25 Jun 2009 14:58:57 -0400 http://www.businessinsider.com/c/d837544bf1c8434a36c6f700 @hondo. Sorry, but that's a total strawman. Just cause the NAR had a role in inflating the bubble, doesn't mean current criticism is incorrect. http://www.businessinsider.com/c/d837544b9cc8434a24c6f700 Jonathan Miller Thu, 25 Jun 2009 14:57:32 -0400 http://www.businessinsider.com/c/d837544b9cc8434a24c6f700 Hondo -exactly! Nothing has changed - the appraiser connection to the mortgage process is still completely screwed up. Palina - in all due respect, having homeowners order their own appraisal is just like having a mortgage broker own an appraisal - its done for their own self interest. An appraisal in these circumstance is for the lender to determine whether the collateral (house) is adequate enough to cover the loan. The appraiser is working for the lender, not the borrower. The problem here is that appraisers are only getting work if they "play ball" which places the lenders (banking system) at a higher level of risk than the public understands. http://www.businessinsider.com/c/62b9b914c9c7434ae4249400 James Huron Thu, 25 Jun 2009 14:54:01 -0400 http://www.businessinsider.com/c/62b9b914c9c7434ae4249400 You weren't too quick. NAR exists for its Realtors (TM) and their commissions; they're not here to protect the plummeting home values of the rest of us. NAR is complaining about "distressed" v. "traditional" home sales. In May, "distressed" home sales were 33% of transactions; 45% the previous few months. To try to separate the two and say "distressed" is <b>wrongfully</b> pulling down the value of "traditional" is idiotic, and takes away any credibility that complaining about real concerns with the HVCC and AMC's might have fostered. http://www.businessinsider.com/c/62b9b91465c7434acd249400 Paulina Thu, 25 Jun 2009 14:52:21 -0400 http://www.businessinsider.com/c/62b9b91465c7434acd249400 The problem would be solved if lenders are not at all involved in appraisals and the buyer pays for the appraisal directly, or the buyer and seller pay for several appraisals directly. Just like the buyer gets his own inspector and pays, same should be for the appraisal. Personally, I think a minimum of three $300 appraisals would be good. From independent appraisers who live nearby and aren't beholden to anyone. http://www.businessinsider.com/c/4f7a6c7904c6434a5be44600 Hondo Thu, 25 Jun 2009 14:46:28 -0400 http://www.businessinsider.com/c/4f7a6c7904c6434a5be44600 Nonsense Joe, where was the NAR when the appraisals and underwriting were atrociously poor……………….did they step forward and say anything……..of course not as they are only interested in their own interest both then and now. They are not looking out for anyone but them. Third party appriasers may not all be helpful to the housing market but neither were the appraisers prior to these. Again where was the NAR then??