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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Valuepro who wrote (265553)8/1/2010 3:02:43 PM
From: neolibRead Replies (1) of 306849
 

This was very unlike the old days when S&Ls did their own appraisals, but they also tended to hold onto those loans for investment purposes, so the appraisal function, then, was self policing. If an in-house or outside appraiser could not "hit the number" that was respected, because it was viewed as saving the institution a potential problem. Not these days.


I had an uncle who worked for a S&L as an appraiser during the S&L debacle. The same dynamics were are play then, but the chain was two steps long. The S&L was competing for business. If their internal appraisals didn't hit the number, the business went to the S&L next door. So pressure was applied to in house appraisers to hit the numbers. After all, the magical market, which should not be 2'nd guessed by "elites" was setting prices. If houses were selling for upwardly spiraling values, who was the appraiser to say those prices where not valid? Certainly sellers didn't want to be cheated out of top dollar when selling because of a conservative appraiser. No S&L wanted to see their business grind to a halt while their next door competitor raked it in. The buyer wanted the loan so he could move in to his dream, which was a safe investment at any price! And or course, this time it was different! There were subtle reasons why perpetual prosperity was at hand.

History repeats, more or less...
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