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Mortgage Broker News | 23 Jun 2014, 10:17 AM Agree 0
Real estate appraisers took to the comments section of MortgageBrokerNews.ca to explain -- and defend – the appraisal process following critical comments from mortgage brokers.
  • Angela Wong-Liao - Invis Inc | 23 Jun 2014, 11:08 AM Agree 0
    I fully agree that the appraisal value must be unbiased and fully utilized all the comparable data to provide a fair market value. It is especially important at this time as the market is moving fast. Lenders are relying on the appraisal value to lend, especially in a refinancing situation. In view of the hot market in Toronto now, some properties are sold over the asking price and the purchaser should be fully aware of the potential risk if the property does not appraised at sold price.
  • Brad Currie | 23 Jun 2014, 11:16 AM Agree 0
    A big reason why we have 3rd party appraisal services is lender's concerns over brokers having appraisers in their "back pockets". Let's be careful what we wish for. An appraisal is an opinion of value. Second opinions are available.
  • Vince Gaetano | 23 Jun 2014, 11:25 AM Agree 0
    Consider the comment by the broker,

    "...Appraisals aren’t coming in at the proper value; they’re not coming in at purchase price,” Xxxxxxx of XXX Mortgages told MortgageBrokerNews.ca at the time. “The appraisers look at market data that is old – they’re always looking backward and not forward...”

    I don't believe there is a complete understanding of what role the appraiser has in the process by the mortgage agent who made the comment. Appraisers do not forecast where values are going....

  • A Broker | 23 Jun 2014, 11:35 AM Agree 0
    I think the brokers who believe the appraisers should fulfil whatever value the broker or realtor place on a property "maybe" should find a different line of work. If you are not versed in real estate values and how the actual value is determined you definitely need education. As mentioned above appraisers are the only non biased party in the transaction. We all know the realtor isn't going to come straight with the purchaser. They base everything on the commission they can receive as do mortgage brokers. Leave the values to the professionals (appraisers) and be more professional yourself and deal with any problems that may arise.
  • DB | 23 Jun 2014, 11:44 AM Agree 0
    Recall a number of national lenders doing their own in house appraising using software and technical data supplied from the real estate industry. They are cutting out "independent appraisal companies" in order to cut costs and for "greater bank profits". Similar to in-house brokers (unlicensed mortgage brokers). So, how is this arms length? Consider the "risk management" situation that is created.
  • Dave | 23 Jun 2014, 11:51 AM Agree 0
    The next topic should be how certain 'B' lender appraisals come in 10% below everything else in the neighborhood... o:)
  • Ron Butler | 23 Jun 2014, 01:29 PM Agree 0
    Wow, "Brokers Unhappy with Appraiser Valuations" that's shocking news.

    I wonder what the next shocking, unexpected news headline will be? Perhaps "Dancing Kitten Video Tops YouTube Hits"

    Really, this is Mortgage Brokerage 101.

    What else can we expect when prices relentlessly climb and buyers engage in bidding wars on houses? What else can we expect when condo developers are pre-selling Phase 8 of a multi tower development and Phase 4 prices are suffering?

    All of this stuff is to be expected in a red hot market where appraisers need to protect their credibility.

    As Vince said quite correctly how can we expect appraisers to forecast future values?
  • JSydneyH | 23 Jun 2014, 02:09 PM Agree 0
    To answer Dave's question above, they ask for a much shorter sales cycle (30 days vs 90 days for a typical appraisal) which will reduce the price significantly. They use this information as a guideline to determine how much they are willing to risk.

    Brokers have to know their lenders and their risk tolerance to find a good match; the appraiser is their risk mitigation tool.
  • Daniel McKay | 23 Jun 2014, 04:41 PM Agree 0
    In the rare instances when I believe an appraisal has come in unjustly low, I will first discuss the appraisal with the appraiser in a calm professional manner. If I am still convinced the appraisal is low, I will have a realtor dig up some Actual Sales Prices on appropriate comparables. If those comparables seem to justify a higher value, in my unprofessional opinion, I will discuss with lender/insurer and ask for a second appraisal. But without proof that similar properties have sold for more, no broker has a leg to stand on arguing that an appraisal is low. If you want to be brokering 95% ltv deals on properties being sold above list, give your head a shake, that is how real estate bubbles are created. If your clients want to pay above list or actual similar sales prices, they better have cash for the down payment required to do so, or the deal won't and should not fund.
  • John Van Driel | 24 Jun 2014, 10:28 AM Agree 0
    Agree with MOST of the rational comments on the side of the appraisers; however, in view of the volume of business being thrown at a stagnant growth group of appraisers, do you not think that corners are being cut?? A $350 appraisal, many times, is being done in half the time that it used to take. This is the result of NO NEW appraisers coming into a recently closed shop in Ontario.
  • M. Robertson | 24 Jun 2014, 11:20 AM Agree 0
    Some brokers always seem to have something to complain about don't they? Lately the banks, the government, and insurers have all taken hits, so what the heck - let's turn our sights on appraisers now. After that... well then we can hit lawyers and notaries. I guess once that is done it will either be customers or back to the banks.

    It never ceases to amaze me at how some brokers trash their partners on here. Brokers NEED these partners to SURVIVE, they are the bread and butter of our industry. Remember, like the consumer, they have choice about who they can deal with. Just like you as a broker has choice.

    At the end of the day, these people are simply doing their job. They are not there just to make brokers happy. They are there to help make sure that our very strong Canadian housing market remains just that... very strong.
  • Paul Therien - CENTUM | 24 Jun 2014, 11:26 AM Agree 0
    In the last 24 years I have run across a lot of different situations, as both a lender and a broker, where I have not always agreed on the value given a property by an appraiser. In those situations I have always asked for a second opinion.

    The fact is that there has always been two "values" that can be reflected - Market and Lending. With advances in valuation technology the gap between these two values often is much smaller or simply does not exist.

    Just because a realtor has listed a home at a certain value does not mean that they are right. Many will list a property for what they "think" they can get for it. We also have to be cautious of properties that have sold for higher than value (bidding wars), or unique features of the home, etc etc.

    I agree with M. Robertson - let's be a little cautious with our mud slinging (for those that have done so). Appraisers have no easier a job than we do, different yes, easier no.
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