Home Brokers Think They Have Been Too Sloppy

Nikki Griffith, a home broker for almost 35 years had a talk entitled “The Commercial Appraisal Engagement and Review Seminar for Brokers and Bankers”. There she talked mainly about doing accurate appraisals to minimize risks in the real estate business. In this time when not all information is available in a poor market, proper appraisal will do a lot.

Griffith thinks that we are just passing a part of the current market cycle. The underwriting process is now tighter and things may be a little bit different.

Preventing risks will put pressure mostly on appraisers, not home brokers. With an inactive market, a frozen credit market and limited available data, appraisers must find other ways on how to properly valuate a property.

Banks have not done their best in appraising in the past that is why we are in this current crisis. If estimates on how much a property is worth have been done correctly, risks have been minimized.

In this current market trend, it is not more than sealing a deal for home brokers. It is more of preventing or lessening the risks.

It is about time for standards to tighten because the financial regulatory environment has not changed for more than two decades. The regulations implemented have been used since the savings and loan problems in the late ‘80s and early ‘90s when banking deregulation was still used.

Home brokers have been too focused on competing with rival real estate home brokers that they tend do become loose in underwriting. But now, home brokers must reinforce underwriting and give out loans properly. This is not the time to be sloppy.

Wichita appraisers and bankers, who listened to Griffith’s talk, was thankful that local lenders are still conservative, that real estate activity in their area is still alive. Their local lenders still have good appraisals that the activity level of their market is still better than other segments. Also, unlike other suffering markets, Wichita is more stable and did not experienced a great run up in property values.

Enough with the competition! Home brokers must pressure their appraisers to do their job well. Proper appraisal means proper valuation of properties for sale. Proper values will prevent the risk of losses and will eventually help the market do better.

This entry was posted on Tuesday, June 9th, 2009 at 9:58 am and is filed under Real Estate Brokers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.