Posted on Monday, July 07, 2008

Area expert says real estate appraisers' ranks slashed in half nationwide

Twin sisters and real estate appraisers Linda Jannette and Debbie Dietz at Alliance Appraisal Associates in Sarasota. GRANT JEFFERIES/
Twin sisters and real estate appraisers Linda Jannette and Debbie Dietz at Alliance Appraisal Associates in Sarasota. GRANT JEFFERIES/

Open up the phone book and look under real estate appraisers and odds are if you select a few numbers at random, nearly half of them have been disconnected.

"There's not too many of us anymore," said Gerry Russell, owner of Bradenton-based Realty Appraisal Services of Southwest Florida.

According to appraisers, the real fallout has hit the residential appraising industry.

"The volume of available work has decreased by about 40 percent," said Debbie Dietz, owner of Alliance Appraisal Associates in Sarasota.

As a result, the last cycle of license renewal for appraisers in 2006 found the numbers of appraisers across the nation cut nearly in half, Dietz said.

"On one hand, I think it's good. The industry shakes out," Dietz added.

During the housing boom, there were many ways less-than-reputable appraisers took advantage of the system, local appraisers say.

Some used trainees to do the work and didn't check figures while others allowed unscrupulous mortgage brokers to influence their appraisals.

"They (the mortgage brokers) didn't really care what the house was worth, they just wanted the loan to close," Dietz said.

The practice, known as target shooting, falsely bolsters the value of a home just so a loan will close. Many appraisers got requests to do appraisals that were questionable and in some cases unethical, local appraisers said.

"I turned down five or 10 appraisals a week at times," said Jeff Deuitch, owner of Manatee Appraisal Service in Palmetto. "Generally the requests came from small mortgage companies from out of state."

Some of these requests would have attached notes that told an appraiser if the home's appraisal exceeded a certain price, they should proceed with the order. Orders like that inferred that if the price didn't equal or exceed what the broker wanted, the appraiser wouldn't get paid, Deuitch said.

"The pressure was out there all the time," he said. "It's a violation to accept an assignment contingent to a certain value."

Overinflated appraisals have led to an influx of reviews requested by lenders. Dietz and Deuitch have both been hired to review other appraisers' work. A review determines if the appraisal was handled properly and most importantly, accurate.

"I'd say 99 percent of the reviews I am looking at, I disagree with the value," Dietz said.

Some values are over inflated, she said. But in others, Dietz disagrees with the legwork they used to reach the appraised value but finds the value close to where she would place it.

Not all appraisal errors were intentional, Dietz stressed. Inexperienced appraisers inadvertently made errors in some cases.

"So many people got their license as second jobs and were looking to make a quick buck," Dietz said.

She heard some newcomers during the boom who expected to make $200,000 or more, which she said was unrealistic even during the busiest of times.

As many Realtors found out, in a slower market the key is adapt or die. Now, many appraisers are finding the same thing is true in their profession.

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