Appraisal Weirdness, the hot new reality TV show!

Appraisal Weirdness, the hot new reality TV show!

Listen, I've got this great idea for a reality TV show! Here's an outline of the pilot we just shot.

We follow these homebuyers right after they get in contract on their dream house in a Northern California town called Los Altos. They don't have to compete against other buyers to get the house—it's been on the market for three months—so we miss that part of the "they paid too much" angle, but we can milk that plenty in future episodes.
Then we get this appraiser from a Southern California burg called Alhambra to bid low on doing the appraisal, so of course the appraisal management company gives him the job, even though he's used to appraising homes in neighborhoods a zillion miles from Los Altos. We mention that this violates Fannie Mae guidelines and the appraiser's code of ethics. We think about bussing him up there, like they do those people who go around from town to town selling magazine subscriptions door to door, but we don't have enough money in the budget, so we hand him a Rand McNally World Atlas and tell him to show up in two days, we don't care how. We end this segment with a long shot of him thumbing a ride north outside some small town in the Central Valley.
The Alhambra appraiser uses Los Altos comps that aren't bad and aren't good—two of the three are in a different school district, for example—yet he magically "makes the price", just like appraisers did in the bad old pre-Home Valuation Code of Conduct days when anyone could push them around and did.
Now here's where we throw the lucky contestants a curveball and get the viewers glued to their TVs. We make it part of the deal that the first appraisal has to be reviewed by another appraiser. We tell everyone it's so no rogue appraiser can slip the bank a fast one, like could happen in the bad old days. It's appraisal quality control, see? To protect lenders and society, get it? So we find this other appraiser who's what do they call it? pedantic, which I think means he only feels good when he's coloring inside the lines. Because I tell ya, this is a tough house to appraise, so you've got to throw away your Introduction to Appraising textbook and think outside the box. The Alhambra appraiser knew this, I will say that, so he went outside the usual Fannie Mae guidelines to find comps, which Fannie Mae says is okay if that's the only way he can find good ones. The review appraiser sees this and throws a fit. So he uses only comps within a one-mile radius of the buyers' dream home, that sold only within the past three months. Like he's appraising a house in some new cookie-cutter subdivision in Modesto, instead of in an established area where you find a different neighborhood every few blocks. So his comps aren't comps—they're either much smaller or much larger homes, and always on much smaller lots—and then he does all these fancy schmancy theoretical adjustments that prove a) the house is worth less than the land it sits on and b) he's Santa Claus.
Then we get this tight shot of the listing agent throwing a hissy fit. She's on the phone to the review appraiser, all set to shoot him down with her comps, but the appraiser shuts her down by telling her the HVCC says she can't talk to him and asking her if he can record their conversation.
The listing agent hangs up and calls the buyers' agent. Now here's the good part. We've got the buyers' agent in a quandary, see, because it isn't necessarily a bad thing for his clients for the review appraisal to come in $150k below the contract price. But in this case it is a bad thing, because the buyers can't come up with an extra $150k in cash, or even $100k, and the seller sure as heck isn't going to sell her home at the review appraiser's valuation—she's had two offers better than that from builders who'd knock her house down and build new. So unless the buyers' agent challenges the review appraisal, his clients don't get the house. Besides, there's one of those what do they call them? higher principles involved here, even though it's just real estate: his clients know Los Altos well enough to know that the review appraisal is bogus. And, come to think of it, they aren't wild about the first appraiser either, the one who had to use an atlas to find Los Altos. All they want is for some competent neutral party with local knowledge to tell their lender and, incidentally, them, what their dream house is worth.
The next shot is looking over the buyers' agent's shoulder as he Googles for something he's seen before, Fannie Mae's Home Valuation Code of Conduct FAQs. Sure enough, Q64 says "The Code does not prohibit the appraiser from talking with the Realtor; Realtors can often be a source of data in the market in which the subject property is located." He prints this out, decides he'll say "absolutely" when the review appraiser asks if he can turn on his pretend recorder, and gets on the phone ready with a few polite questions. We switch to split screen. Would the review appraiser be willing to consider the comps the buyers' agent used when he did a Comparative Market Analysis for the buyers? Would he value the home higher if he knew the detached in-law unit was built with permits? Would he change his mind if he saw the offers from the two builders, offering more than his appraised valuation for the land alone? And, by the way, how many appraisals has he done in Los Altos? The review appraiser starts sweating and forgets his recorder, but all the buyers' agent can get out of him is five minutes of "I don't have to talk to you", "no", and "I don't have to answer that". We end this scene with the buyers' agent heartily thanking the appraiser for his helpfulness and then hanging up looking embarrassed for taking such a cheap shot.
The buyers' agent emails his record of the conversation to the buyers' loan agent, who forwards it to her boss, who apparently forwards it to his boss etc. Meanwhile, we've got the loan agent working the phone hard to "escalate" the situation up the lender's food chain. A day later we get word that management has approved a review of the review. Two days later the review of the review comes in, at the contract price. Just like the bad old days, except that by this time everyone's thinking the good new days make the bad old days look positively golden.
We end this episode with a wide-angle shot of the closing table, everyone smiling and happy, the loan agent announcing that the review appraiser is off the appraisal management company's approved list, and that the president of the bank personally looked into why the AMC sent an Alhambra appraiser hundreds of miles to appraise a Los Altos property.

So this time it's a Hallmark ending, but I tell ya, as long as we've got appraisal management companies hiring low bidders, even if they've never done an appraisal in the area, and as long as we've got a few appraisers hiding behind what they think the HVCC says and snowing just about everyone, we'll never run out of these stories. And they won't always have happy endings.