The Right Place

Please don't hit appraiser; Does the collateral support the debt? By Sally Duros

Home sellers, please know: The appraiser is not working for
you.

That's a good thing.

So when your home is appraised at a few thousand dollars less than you'd like, please, don't slug the appraiser.

"Our primary job is to determine whether the collateral can support the debt," said Tim McCarthy, a Tinley Park-based appraiser and chair of the Illinois Appraisal Licensing Board. "We are supposed to be the value cop, but somewhere along the line corruption has crept in."

And the honest appraisers want that to end.

The problem is that for some time now some appraisers have been gaining new business by providing values above and beyond the true market worth of the property.

"There's no doubt that a few bad apples are giving our profession a black eye," McCarthy said.

Appraisers say these bad apples are stepping up home values because of the steady and intense pressure that is being applied by the lenders.

"As long as the lending industry is driven by commissions paid to loan officers, this will be a problem," McCarthy said. "As chair of our licensing board, I see it over and over again: an appraiser advocating for the client."

That's wrong. "We are supposed to be impartial," he said.

This is much more heavily abused on the mortgage broker side of the deal than on the bank side, McCarthy said.

Most of the parties involved in a real estate transaction have a financial interest. The appraiser and the home inspector are an exception because they are paid a flat fee. But they are both subject to the "you are killing my deal" pressure from others, which is either subtle or blatant that says "Go along with my program or you won't get work from me."

So what's a consumer to do to make sure that the property they're selling or the property their buying is priced in alignment with the market?

"Look for Senior Residential Appraiser (SRA) credentials or Member Appraisal Institute (MAI), credentials" said Don Kelly, Chief External Relations Officer for The Appraisal Institute, a Chicago-based global membership association of 22,000 real estate appraisers with 700 appraisers in Illinois, and more than 400 in Cook and DuPage counties alone.

Be a knowledgeable consumer, Kelly says. "Go into a real estate purchase saying 'I'd like two things: I'd like a copy of the appraisal, and I want to make sure that you are getting a qualified appraiser, and I know that there are SRAs out there, and that's what I want'," he said.

"Know your lender," adds McCarthy, who has an extensive list of links related to real estate on his Web site, www.TJMcCarthy.com. "If you say, 'I like their ad on the radio,' then you are losing the focus on protecting your greatest asset."

DETACH YOUR EGO FOR APPRAISAL:

Dr. Gary Walls, a psychotherapist and faculty member at the Chicago School of Professional Psychology, offered these insights and suggestions for home-sellers biting their nails over an appraisal.

"I think about this as a psychologist, but I have also bought and sold my house," he said.

"Houses are not just buildings. When people own homes they have deep feelings about them," he said. "They have a lot of narcissistic investment in it - a lot of self esteem tied up."

"Having your home appraised affects your pride, your self esteem," he said. "Getting a lower appraisal can awaken feelings of shame, feelings of failure. there could also be feelings of 'I've done something wrong,' because you might also feel the home purchase was a bad investment decision."

"When we get a narcissistic injury, one way we compensate for these feelings is to experience rage," and then objectify the rage.

"It's not me that's bad, it's the bad appraiser," he said. "That's really an unfortunate way to deal with some unfortunate feelings that are too painful to bear."

So what's a helpful attitude? "When you're getting ready for an appraisal, be prepared," Walls said. "Acknowledge that it's natural for the feeling to be personal. At the same time, reframe it to the reality that this is not personal."

"What the appraiser says does not reflect on your self worth," he said. "There are market forces at work here and a cycle that goes back and forth."

Walls also suggests that to head off the rage at the pass, sellers should try and identify with potential buyers who shouldn't get stuck paying a bloated mortgage.

Source: Sally Duros

e-mail: sduros@ suntimes.com

Previous Next Return to Hitlist Return to Search Screen Change Document Display