Admittedly the following is to a large measure self serving. Nonetheless, it also serves to epitomize what has been transpiring in our country for too long: cherry picking anecdotal and/or out-of-context evidence by those without the requisite qualifications to comment on a topic for the purpose of advancing an agenda. That I have now encountered it twice in recent days concerning a vocation in which I have had considerable professional experience prompts this rebuttal.
While I will summarize the remarks I will rebut, I invite any who are curious as to the exact remarks to visit http://radicaltitletalk.blogspot.com/2008/01/lessons-of-s-l-crisis-were-forgotten.html. (The author of the transgressing comments is Diane Cipa and her email address is: docs@tcsclosing.com; renee@nsakovacs.com)
Ms. Cipa notes her curriculum vitae as “General Manager of The Closing Specialists®. She has over 30 years of experience in the real estate industry including real estate sales, mortgage lending, and title insurance.”
The offending remarks made by Ms. Cipa on Wednesday, January 2, 2008 are, “’The lesson of the S & L crisis were forgotten….’ will [sic] future generations remember the lessons of the mortgage crisis of 2007? You’ve got to wonder.” “Current regulation of appraisers resulted from the mass failure of S&Ls in the 1980s. A congressional panel concluded that flawed and fraudulent appraisals were major contributors to the losses.”
In the other (I cannot recall the publication, though it was within the past week.) instance, the author, also referring to the present mortgage meltdown, was chastising appraisers for failing to adequately consider value via the “Replacement Cost Approach.” I’ll deal with that admonishment also.
It is true that congressional hearings alleged appraisers played a contributing part in a multi-billion dollar taxpayer bailout of an industry that was the direct consequence of Reagan’s push to deregulate everything. But allegations are not requisite of factual representations.
From 1978 through 1994 I was the owner of a real estate appraisal business in the San Francisco Bay area. For the sole objective of being able to obtain unrestricted sales and listing data, in 1979 I became a licensed California real estate broker; not merely a licensed salesperson, a broker. In 1981, having taken the several professional courses necessary, and having successfully passed the exams, I was awarded two professional designations; ASA and RM — the first from the American Society of Appraisers, the second from the American Institute of Real Estate Appraisers.
Overwhelmingly, real estate appraisers fall into a limited number of employment categories; sole proprietors working on their own, owners of a small business (legally, less than 100 employees — by far, including the owner-appraiser, most have fewer than 10 employees!), and as employees of lending institutions. Moreover, appraisers are financially unaffiliated with each other and are scattered throughout the country. The typical fee for an appraisal of an average single family home in the mid-80s was $100.00 to $200.00. Multi-unit housing and atypical custom homes could cost more to appraise. These facts are absolutely essential to the discussion.
The art of appraising for current market value is based on uncomplicated principles I’ll illustrate via a simple storage facility example. Storage facilities are found everywhere, meaning in a variety of locations across the country and within the same economic region. Location is primary. It’s easy to understand how proximity to different geographic circumstances in the storage complex and the region can demonstrably affect the price/rental value. The appraiser’s task is to estimate the current worth of a single unit based on comparable other units; units that have sold or rented recently. If Units A, B, and C have rented/sold recently, say for $200.00, $250.00 and $300.00 respectively, and the unit being appraised is larger than A, smaller than C and is the same or most similar to B, the appraised value will approximate $250.00 PERIOD!
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