Wednesday, October 26, 2011

Blog 2 Real Estate Professional Interview Regarding Real Estate Appraisal and Land Valuation

David Mueller-Flores
FIN 181

For my interview I choose to interview a broker, so that I could gain insight as to how appraisal and land valuation would be a part of my future career. I was fortunate enough to discuss a few questions regarding appraisal and land valuation with Mr. Harlan Anderson. Mr. Anderson is a broker and owner of Realty World Sweeney Anderson located in Hanford, CA. He was very helpful and it was a great opportunity to hear his opinions regarding real estate appraisal. Following will be my questions and his responses.

Q: How often are you asked to give a broker’s opinion of value? And by what sort of client usually?

A: “I am personally asked to do broker opinions of value or broker price opinions probably two or three times a month. I do have agents that work under me, however, that specialize in these and probably do as many as twenty per month; which would be one per day. Who usually asks for these? It’s virtually always the bank that’s holding a first (first trustee) or on occasion somebody that’s holding a second or third trustee may ask for a broker’s price opinion.”

Q: As a broker, would it be beneficial to have an appraiser as a personal contact? Why or Why not?

A: “This question is a little tricky. The industry, or some drama queens out there, seems to think that there is already too tight of a relationship between brokers and appraisers. So that the appraiser feels obligated to bring in a value that really isn’t there. So with the current political correctness in play, it would be very NOT beneficial to have a tight personal relationship with an appraiser.”

Q: Can you think of an example where an appraisal had a significant impact during a property sale or purchase?

A: “Yes, there are lots of times where an appraisal is a very big thing in a contract and to make a contract go through. Many times they find things, conditions of the property that must be corrected as a condition in order to be approved for the loan. That and of course the other thing too, if a buyer and seller have a $140,000 purchase price that has been agreed on and then the appraisal comes in at $125,000. The deal can fall apart, hopefully it can be renegotiated. Many times the seller will be upset but still say, “Ok, well that’s what a professional says it’s worth. That is what I will sell it for.” Even when appraisals do come in lower than the sales price many times the transaction can still go through. But, that is a very big hurdle to jump over if that kind of scenario plays out.”

Q: What Benefits would a brokerage firm expect if they had an on-staff appraiser?

A: “This question scares the bejesus out of me. If we had an on-staff appraiser; right away people would be second guessing us and say, “You made your appraiser bring in that value under threat of cutting them off, firing them, dismissing them, chopping them off at the knees.” There is no way we could consider having an appraiser on staff.”

Q: In your opinion, what effect did appraisals have on the housing crisis?

A: “Appraiser got blamed for things when they brought values in or did not bring values in for a period of time when the housing market was falling off the cliff and really raw. I’ve heard such things as someone looks at a house today that’s worth $160,000 and blames the appraiser at bringing in the value in at $225,000 back six years ago. Yeah, you’d look real bad if your appraisal was that much higher than today’s actual value. But that’s what it was worth at that point. I do not think that the appraisal field and in my experience I saw no appraisers that were bringing in values higher than what they should have been; at any point. I think they are a very honorable profession, as a group.”

I would like to thank Mr. Anderson for his time and insight. He was extremely helpful and willing to share his opinions regarding real estate appraisal. I was honestly surprised at some of the answers he had given but his reasoning and logic makes sense to me and has given me new perspective regarding relationships between brokers and appraisers; as well as, brokerage firms are asked to give their own opinions of value. This was a great experience for me and it was very informative to discuss this topic with Mr. Anderson.


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