Long Beach Real Estate-Long Beach Condos

Insights into the Appraisal Process

Realizing that the appraisal process is a complete enigma to most sellers and buyers of Long Beach Homes and Condos, we asked one of our top appraisers to write an article for the Long Beach Homeowners describing the appraisal process.  He has exceeded our expectations.  

To most people, real estate appraisal is a rather obscure field. Thats because appraisal is mostly a business-to-business profession where clients of appraisers are usually banks, attorneys or other professional organizations - rarely homeowners. I was invited by Laurie to connect with thousands of her loyal visitors to shed light into the world of appraisers, breakdown common misconceptions revolving this illusive industry and share my personal insights about the Long Beach real estate market. Through a series of exclusive articles here on LBREH, Ill attempt to do so in plain language.

To start, real estate appraisers occupy paradoxical strata in the real estate food chain. That is, were the least paid of all facilitators in a finance transaction, yet were the independent enablers that enrich the lives of the star players (agents, brokers, buyers, sellers). When framed this way, it appears that being the noble body of honesty and integrity totally blows. But it doesnt, its truly a great profession and highly lucrative once you understand it.

So lets take it one step at a time.

First, appraisers are required to adhere to very strict standards of ethics and professional practice. The reason appraisers work for flat, generally modest fees - especially in mortgage transactions - is so that there is no collusion or inducement to 'hit a number'.  Could holding the 'payment carrot' at the end of stick sway a persons better judgment?  Sure it can.  Thats why appraiser payment should always be upfront at a fixed rate, regardless of value or the outcome of the transaction.  A real life testament to this practice is in the case of mortgage fraud investigations.

As the Southern California market unravels, major lenders that issued home loans in the advent of the credit bubble are digging deep to find inappropriate activity. The first and most critical component of any mortgage fraud investigation is the appraisal. The slightest indication of collusion or inducement can trigger full blown audits (file investigation) since the size of the Long Beach home loans were predicated mostly by the appraised value of the Long Beach property. This is why when applying for your next home loan - make sure to get payment out of the way during the site inspection. This way, the appraiser remits a 'paid invoice' for your broker/lender. While Im a benefactor to this advice, this will help alleviate any appearance of