To: Holden Lewis
c/o Bankrate.com
Dear Mr. Lewis:
Your nationally-syndicated column first appearing on your website Bankrate.com, and since appearing in major newspapers all over the country, "Appraisal glitches can stall, derail home sales," is very frustrating.
First, congratulations to your nephew for becoming the proud owner of a new home for almost $10,000 less than he was willing to pay because the previous owners were cash-strapped. Perhaps in a future column, you can keep us up to date on how those folks are doing. And it's true that a "glitch" such as you describe - an appraiser never actually looking at the subject property and appraising it based on the inaccurate public assessment records - can throw a monkey wrench into buying or selling a home.
But to portray it as a "glitch" - gosh, these things happen sometimes, here's how you can take advantage - was dishonest at best. And to say that "[m]ore likely, the problem stems from [the appraiser] not finding the right 'comps,' or 'comparables' - prices of similar, nearby houses that were sold within the last six months" is alarming in its unsophistication.
The "problem" with appraisals that come in under the sales price is, as you must know, usually that the buyer is overleveraging him- or herself by trying to finance the entire or almost all of the purchase price instead of making a healthy down payment and acquiring some equity for their investment, rather than waiting years of almost interest-only monthly payments to achieve equity. The "problem," more often than anything else - by far - is that the house isn't worth what the buyer wants to finance, which is what underwriters purportedly want to know before they risk capital on a buyer. You know, that quaint if outdated idea that an objective appraisal is required as part of a mortgage loan.
Obviously, the appraiser who worked your nephew's loan acted extremely irresponsibly, if indeed he simply ignored the addition that had been built on the home and would not visit the subject to see for himself. As an illustration of the "problems" with "low" appraisals, it probably succeeded in catching your readers' attention. But it misrepresented the issue. If true, your nephew had an irresponsible appraiser, not an appraisal "glitch." And as you conspicuously fail to state, appraisals that come in under the contract price are not usually "glitches."
We hope you'll take care to note in a future column that, indeed, sometimes the appraiser - the one trained and tasked with forming a professional opinion of the value of a property based in part on a sales comparison approach - far more often than not is more reliable than the buyer, seller, real estate agent, broker, or other party with a stake in the transaction being completed.
