Monday, February 5, 2007

Appraisers forced to distort numbers

With the spring/summer home buying season on the verge of beginning, problems associated with Real Estate fraud and data falsification become more pressing.

A recent survey pointed out that 90% of appraisers have been pressured to raise property valuations. The survey was conducted by October Research and involved 1, 200 appraisers from all the 50 states, District of Columbia and Puerto Rico. An identical survey was carried out in 2003, when only 55% of appraisers admitted they’d been pressured to adjust the results of their valuation.

With home prices sliding, everyone in the industry is trying to work out a better deal, and an appraiser may lose the assignment if he/she refuses to cooperate. Mortgage brokers and agents are listed as the top sources of pressure, but sellers, lenders and even buyers have also been reported to attempt to influence the final results.

If an appraiser’s estimate is considered unsatisfactory, customers may refuse to work with him/her and some appraisers fear they might lose their positions. Loan brokers are constantly calling appraisers asking if a certain property’s worth can be evaluated at the sales contract price; and if a lower number is arrived at, the appraiser may not get paid for the work.

Most appraisers refuse to knowingly submit inflated valuations, but the real solution is probably a legislative measure that would make forcing appraisers to inflate or otherwise adjust estimations illegal.

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