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One of the factors that led to the collapse of the real estate store in 2007 and 2008 was the rampant use of home estimation fraud during the bubble. Mortgage lenders use the appraised value of the home as one of the key determining factors for deciding how much to lend to a borrower. Therefore, if the home is appraised at an incorrect amount, a mess can result.
During the bubble, the appraisers were oftentimes hired by the lenders themselves, and although they were ostensibly independent, in reality, those appraisers that in case,granted values more suitable to the lenders were literally the ones that received the most work from the lenders. This situation resulted in constant pressure on the appraisers to contribute their employers - the lenders - with the numbers they wanted, to the detriment of the borrower. This was ultimately self-defeating once the bubble burst, as the over appraised properties were not only losing actual value, they also lost their fraudulent added value practically overnight. The lenders that had to foreclose found themselves in operate of property that could not be sold at anywhere near enough money to offset the traditional loan.
To avoid this, there are steps that a borrower can take to get an honest and legitimate estimation of their home. Although the lenders normally have their own appraisers that they deal with frequently, the cost of the estimation itself is normally charged to the borrower. As the borrower is paying for the estimation anyway, there is nothing to preclude the borrower from hiring their own appraiser, as opposed to the one recommended by the lender. In fact, this is a very good move to make and if your lender refuses to accept this - assuming your beloved appraiser is legitimate and in good standing - then it should be taken as a red flag that the lender may have an ulterior motive.
Finding and hiring your own appraiser adds an added element to the home buying process and is extra work, which is literally why many borrowers are willing to accept the lender's recommendations. However, if the entire mortgage is based upon an inaccurate appraisal, this can follow in gigantic losses for the borrower in the future. For this theorize it is worth the effort to take the time to find and hire your own appraiser.
Finding local appraisers is as easy as finding in the yellow pages, but it is foremost to ensure that the appraiser is legitimate and in good standing. Be sure that the appraiser is properly licensed, check with the better enterprise Bureau and the state attorney general's website to see if the enterprise has received a lot of complaints or been the branch of criminal investigations or lawsuits. You can also ask the enterprise to contribute references, but this has to be viewed considered as the enterprise is likely to only contribute the most satisfied of their customers for this purpose.
Hiring your own appraiser and taking the time to make sure they are a legitimate firm and in good standing can save you thousands of dollars and years of trouble. It is well worth the effort even though it does mean a bit more work on your part.
Home Buying - Getting an Honest evaluation
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