In his reference to “faulty valuations that keep some buyers from getting a loan,” Mr. Yun has identified one of the primary causes of the current economic crisis.

Several years ago I was doing lots of appraisals for a major national Appraisal Management Company.  They never had any problems with my work.  I had the highest rating they offer to appraisers.  One day the work stopped coming to me.  I called and asked why.  It took about six months and a number of calls before an employee told me the answer.  This company represents a company that has a real estate sales presence and a residential mortgage loan presence.  A vertical marketing situation.  As it turns out, I submitted an appraisal report that had a value conclusion that was less than the contract sales price.  The Realtor was very upset.  He filed a complaint.  The staff member of the Appraisal Management company told me, and I quote, “You have to take care of those Realtor’s.”

I was fired for not committing fraud on the Realtor’s behalf.

Mr. Yun, in his statement, was referring to what are referred to as the “good old days” when appraisers would do whatever the lender or Realtor said, or get no more work from that lender.

Mr. Yun and his cronies did not complain when they had the appraisers under their thumb.  Now that the appraisers are left free to estimate market value (rather than present a pre-selected value conclusion provided by the Realtor or lender) it seems to them that the appraisers are a problem.  However, this view of appraisers as a problem comes from people who are putting deals together, but are not lending their own money.  I’d bet that Mr. Yun would sing a different song if it was his money that was being lent.

We appraisers are here to provide a degree of assurance to the lenders that the loan to value ratio that the lender wishes to attain on a loan is real.  The Realtors and mortgage brokers have been the primary advocates of “over valuation” of properties by appraisers for decades.  Not all Realtors and not all mortgage brokers cause these problems, but I say most do.

Recently I have been into neighborhoods where the only sales during the last six months have been foreclosed properties.  Mr. Yun calls himself an economist, yet refers to appraisers using “distressed and discounted sales” to compare to traditional homes as a mistake.  Buddie, if all there is that sells in a neighborhood for a significant time is foreclosed sales, then that is where the market is at in that neighborhood.  Once the foreclosed properties flush out of the system, then it can return to normal.  But, it is what it is and we appraisers were trained, licensed and charged with the responsibility to report just that.

I have no sympathy for the likes of Mr. Yun and his whining about appraisers finally having the freedom to do their job without the manipulation of Realtors and mortgage brokers.  The system if finally working, to a much larger degree, the way it was designed to work.

I recommend you look more closely at the residential lending institutions that did not get themselves into a deep hole during the last five years.  They managed their systems with much higher integrity than many of the others.

I wish Mr. Yun well, and suggest he study residential real estate economics.  It is a fascinating subject.  And, in his position he will find the study very enlightening.

Ralph K. Olsen, MAI, SRA, IFA

Pacific West Appraisal Services, Inc.

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