The economy works on a supply and demand system that drives industries forward compared to their standing in the economy. The trend in the last few years in the real estate appraisal market steered towards low appraisal prices. Efficiency was accepted whereas accuracy was ignored. The discouraging trend of cheap appraisals in a mass-market 'just get it done' system ended up with a lot of inferior and poor real estate appraisals. The housing crisis indirectly led to this demand to get the cheapest and simplest valuation possible.
Real Estate Kicking Into Gear
Fortunately, the trend is diminishing. The real estate market is kicking back into gear and home buyers are realizing that a quality appraisal has an immediate connection to the property sale. It is possibly the one area of real estate where shortcutting can have a serious detriment to the final sale.
The Appraisal Hub is a residential appraisal company that emphasizes the mortgage lending market. Lenders can obtain accurate reports from well-compensated and insured appraisal agents on a national scale. A traditional Appraisal Management Company targets the general consumer market. Mortgage lenders have finances at stack on a larger level, and a series of poor appraisals from the AMC can dramatically disturb their funding.
Insurance and Appraisals
The resurgence in extremely accurate appraisals and general real estate buying has seen many homebuyers and sellers filing on properties that have sat during the crisis. The conditions of these properties are questionable. It ends up being in the hands of the appraiser to calculate the value in grave detail to see if the property even qualifies for a mortgage. Properties that are in especially poor condition do not and often should not qualify for a mortgage. The risk is entirely too high. The age of the home is only a slight indication of quality. Homes that seem bad on the outside could have wiring issues, foundation concerns, and water damage throughout the walls. If a mortgage was issued on a property that was too liberally qualified it could open up a battle between the mortgage entity and the insurance company.
A mortgage company is not required to commit to a full inspection. The Appraisal Management Company often clarifies enough in the appraisal report to decipher if there are underlying problems with the home that could be a liability. The appraisal is the most important report for mortgage lenders because it manages to look at a fuller financial picture.