Refis bearing the brunt of 'appraisal alert'

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With the maximum loan to value for refis reduced to 80 per cent,  banks may be adding insult to injury with more conservative appraisals for refis, argue brokers.

According to Andre Semeniuk, a mortgage planner with Mortgage Architects, appraisers are now more conservative when it comes to refinancing than purchasing.  

“The major issues with appraisals are with clients that are refinancing and repositioning debt to consolidate,” he said. “Appraisers understand that because there’s no one waiting to sell the house there won’t be the same aggravation of coming in low on an appraisal on a refinance that there is on a purchase.”

Semeniuk said banks on appraisal alert in anticipation of a slowdown are creating the slowdown themselves. He has noticed appraisals differ by as much as 25 per cent.  

“Those homeowners who have high unsecured credit card debt that are trying to reposition themselves for the long term are finding they’re not able to do that,” he said. “Not being able to use or select experienced appraisers may also have an effect on the economy  because those people who have high interest, monthly compounded high-interestdebt really do not have the ability to reposition that debt to a more affordable standpoint .”

Brokers are reporting that companies are on appraisal alert since last month’s mortgage rule announcement and more conservative appraisals may be driving the very slowdown appraisers are anticipating.

“We understand appraisers are there to do their job and we don’t want to prevent them from doing that but unfortunately appraisals are fairly subjective and that has created concern. There’s an extreme amount of inconsistency in the market,” Semeniuk said.


  • Stephane Prevost-DLC Alliance on 2012-07-05 4:27:26 AM

    I had 5 appraisals in a 1 week period come in low. One was 23k lower and Realtor still pushed my client into the purchase of an undervalued home.

  • Kevin St. Amand on 2012-07-05 4:56:33 AM

    How true! I have had an appraisal done in the Leduc, Alberta area, when it can in $20,000.00 less than an GE appraisal two weeks prior as I had switched lender to avoid insurance premiums for client.
    I contacted the appraiser to discuss to no avail, he was not interested in taking another look to see if anything could be done. When I contacted Brokerworx to escalated the file, they told me to get another appraisal and maybe I would get a better value! Yes this industry is very subjective and the lenders buffer themselves with companies like Solitifi, Brokerworx, etc. I think these appraisal brokerages companies need better screening processes of these appraiser as they have no consistency and don't care about the outcome as long as they get paid.
    The last appraiser came in 15% higher than the first appraisal done using the same comparables! I ended up losing the deal back to original lender as client got tired of waiting for escalation process and new appraisal, etc. Should be a wake up call to the lenders!


    Appraisals are not giving the true Value of the Property. They should be using the same methods of appraisals what they learn in the course to get the true value but I have noticed in GTA the appraisals are only focused to be in the good books of the lenders so that they get more recommended by the lenders and get more business. I have appraisal reports where the value is more than $100K on same property in less than 4 weeks, both done by the Certified Appraisal but for different lenders. If it is a MLS Sale does not matter if the property is sold for fair market value or not the appraisals will give the exact same value figure. If it is a Brand New built House they will go exactly same as what the client paid for 2 years ago.
    It shows more that the appraisals are not fair to the clients but yes they are very particular to make the Lenders happy who gives recommends them.

  • Paul Therien, CENTUM on 2012-07-05 6:24:50 AM

    It is interesting that the value of a property can be different based on what the requester has asked for when ordering the appraisal. It defeats the purpose of having a value assessment if the person doing the assessment cannot, or does not, remain objective. This applies to any appraisal completed, and regardless of who orders the appraisal. The value of the home should be the value, period. That being said – appraisals have ALWAYS been subjective and can have large fluctuations in a relatively short period of time – it is the nature of the beast.

    Perhaps it is time that the broker community through CAAMP or the regional’s (MBABC, IMBA, AMBA, etc) engage in discussions with the National Appraisers Association?

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