Appraiser CooperativeAlternative To Appraisal Management Companies

Over the years, we have been repeatedly asked to support an idiotic practice, by mortgage originators and borrowers alike that has been candidly termed as "Value Roulette." Simply put, beginning the loan application process without any idea of the actual value range of a property is something similar to launching a space exploration without knowing where you are going and now that the markets have been declining, not knowing market trends and conditions has never been more expensive.

Value Roulette typically begins in the loan application process when both the borrower and/or mortgage originator have no real concept of a property's true market value, and it is further perpetuated by two issues, 1) a homeowner's, borrower's or lender's need and 2) ignorance (lack of information), although in some cases it is simply motivated by greed and/or stupidity.

There are many mortgage originators who recognize the importance of knowing the value of a property before they begin, and probably explains why most of them like dealing with real estate purchases. You see, everything is neatly spelled out in the purchase and sale agreement, which includes a fixed value and down payment. No guessing where to begin.

The number one job of a mortgage originator, as we see it, is managing the borrower's expectations throughout the loan process. This is relatively simple in real estate purchases because the value is anchored and there generally are no surprises. Unfortunately, the process is much more difficult in cases of refinancing, as the value expectations are not based upon a fixed value, but rather the borrower's needs. However, it even gets more complicated when the borrower has recent reference points upon which they have based their expectations. They could be based upon one of their own a previous appraisals, other sales they know about in their neighborhood, active real estate listings or even rumors of market values from homeowners in the area who have recently financed or had an appraisal completed.

The typical loan submission process takes about eight hours of client interface, data and documentation collection and paperwork preparation for the average mortgage originator and of course, mortgage originators are not paid for loans that do not close.

Since the entire loan process is dependent upon a property's value, one of the first things a mortgage originator will ask the borrower for is a list of assets, particularly the real estate that is going to be used as collateral, along with its Current Market Value. Unfortunately, the best estimate that most owners usually have is the Assessed Value from the County Assessor, which accompanies each year's tax bill. Since these values, for a variety of reasons, are different than Current Market Value, the entire loan process if orchestrated on a wild guess or "Guestimated Value".

Sad to say, it is often through this interaction and long before the appraisal assignment is even ordered, that the "magic number" and the borrower's expectation is established. Everyone should be able to recognize the problems associated with this approach. Unrealistic and false expectations perpetuate a situation where everyone's time and anticipations are based upon a gamble. (Just like a roulette wheel, round and round and round it goes - where it will land, nobody knows.)

Knowing and understanding market values and trends is crucial for mortgage originators and having access to reliable market condition information, in an easy to understand format, can help to control a borrower's expectations.

ValyooTrends Market Condition Summary Reports are far more extensive and specific in reporting historic activity and the probability of future market trends than can be obtained from other data suppliers. Because we employ methods that analyze both historic AND current real estate and local economic information, we are able to report market trends and forecast with great accuracy what market activity is likely to occur in the near future.

ValyooTrends Market Condition Summary Reports provide an extended 24-27 month view of the marketplace and the data is cross referenced and verified with other real estate and economic information as a means of providing a realistic view of market conditions.

So, if you're a mortgage originator assisting a borrower with a loan submission, ValyooTrends Market Condition Summary Reports is an affordable tool to help mange expectations by providing a realistic picture of market conditions and probable property values.

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