Brokers call for appraisal changes

Brokers call for appraisal changes

Brokers call for appraisal changes Brokers who are frustrated by outdated and inaccurate appraisals are calling for a reform that will take into account other valuations when deciding the value of a home.

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

According to Ambrosio, homes he is having appraised now are being valued at winter prices, when the market was slower and prices were lower.

“Look at prices in February compared to now; we’re getting valued at February and March prices even though the market has gone up,” He said. “When August rolls around they will be looking at Spring prices.”

It’s a problem a number of brokers across Canada have had to deal with and one particular player is noticing certain appraisals are especially under-valued.

“The appraisers don’t care, they often undervalue by 20-30 thousand dollars; they are quoting down from the market, especially when it’s an insured-referred appraiser,” Avijit Ghatak of Centum Home Loan Inc. told MortgageBrokerNews.ca. “I have chatted with the insurers and they don’t discuss it with us. They say they only go by the appraisers and not the market or the Realtors (but they should) go by the market and listing as well as what the appraiser says and do an average.”

Ghatak believes benchmarking against similar homes – currently listed – as well as recently sold homes is a good way to get a better glimpse of a home’s true worth.
 
 
52 Comments
  • Anonymous 2014-06-18 11:38:45 AM
    Listing data is not an indicator of market; there is no evidence of sale activity attached to pricing set (i.e. it can anything the seller wants). A good appraiser will not only consider recent / relevant sale activity, but also review any current listings that may have received offers or may be under contract. As well, a survey of active market participants (i.e. brokers / buyers) should also supplement the appraiser's decision.

    Please review the Canadian Uniform Standards of Professional Appraisal Practice ("CUSPAP") for the steps and analysis required for an appropriate appraisal - ensure that your client's appraisal is compliant. The standards are continually being updated, and the brokerage community themselves should be familiar with them in order to fully service their clientele.



    Active AACI Appraiser
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  • Barbara Buote 2014-06-18 11:39:50 AM
    Anthony has brought to light what I have been saying over the past months. Certain lenders and insurers specifically use an extremely narrow list of appraisers that time after time appraise a property WELL below current market value. I have proof of this with my appraisal of the same property using an appraiser from their "lists" that has an evaluation way higher (but in line with comparables). However, these certain appraisers that are ordered for a second appraisal I believe are getting the business due
    to their nature of "conservatism" and knowing that they may become the sole supplier for that lender or insurer.

    I am not looking for a highballed nor lowballed
    appraisal - just an honest one, which I believe
    97% of appraisers do. It is that very small
    percentage that may want business so badly that they will go down that road of I'll give 'em
    what they want.

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  • Anon 2014-06-18 11:46:08 AM
    Most appraisers don't do a thorough job ad they decide what is comparable, often stating that a comparable had superior finishes than the subject property even though they never saw that property and have no reasonable evidence other than comments on a listing to establish that. Most appraiser spend very little time in the property and do very little research. Too often they will exclude supporting comparable becuase its one or two streets further than where they decided to include despite the comparable property being closer in specs to the subject.
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