The following article is by Steven R. Smith, MSREA, MAI, SRA, Smith Realty Advisors, The opinions expressed are the author's and do not necessarily represent those of the Appraisal Scoop blog.
While cleaning out the garage on Sunday, and moving some books, one fell out and opened to a page that had this as the opening:
Truth Of Intercourse
Among sayings that have a currency in spite of being wholly false upon the face of them for the sake of a half-truth upon another subject which is accidentally combined with error, one of the grossest and broadest conveys the monstrous proposition that it is easy to tell the truth and hard to tell a lie. I wish heartily it were.But the truth is one; it has first to be discovered, then justly and exactly uttered.
Even with instruments specially contrived for such a purpose - with a foot rule, a level, or a theodolite - it is not easy to be exact; it is easier, alas! to be inexact.
[The first to name the Author, wins an Appraiser Hat ! All I have left are Black Hats with Silver lettering. UPDATE: The winner is Bob Lancaster, RDL Appraisal & Realty, Pasadena, MD - *Truth of Intercourse]
What does the quote have to do with appraising in a declining market?
Yes, it is harder to tell the truth even when the world knows the housing market is declining.
Myself, I like the intercourse of ideas and enjoy markets that are dynamic. It is hard to tell the truth when the market is going up 50% per year, but not as hard as when it is going down. Well, it is not that hard, just hard to get loan production clients to believe.
So, as an industry what do we do? Do we lie? Yes we do, there are millions of appraisals that have lies in them, that will come back and haunt us over the next five years.
Take a look at this article, The Fed Stops Spoonfeeding Us: A Great Depression for Housing? Put into context . . . It behooves each of us to search for the truth in the real estate market and NOT depend on the Feds, NAR, state Realtor organizations,or DataQuick to tell us what is happening.
We, as licensed professionals, need to do the hard work to know the truth and report it objectively, to give it context so our clients can receive it, not reject it.
Or how about this, are sales volumes down in your area, but prices are rising? Why? How can that be?
Could it be because cash back rebates and concessions are not being considered by the data reporting organizations and companies? With this concept in mind, read the Inman News article: Sales down but prices, inventory rise in California.
Truth, not from an advocate for commissioned Realtors, not from the most powerful real estate lobbies. No! It is up to the individual appraiser to put their arms around their own markets. To do the real analysis and report the truth, net of concessions, cash back deals, and fraudulent sales reporting that have become part of the statistics and databases we rely upon.
Related Article: Fannie Mae Announcement 07-11: Overstating Property Values In Declining Markets
"Appraisal is only hard if you try to do it right, or if the market is going down, or both."
AUTHOR: Steven R. Smith, MSREA, MAI, SRA, Smith Realty Advisors, 936 San Jacinto St., Redlands, CA 92373, Real Estate Appraisals, Consulting, Expert Testimony, Forensic Reviews, Fraud Research and Analysis, Litigation Support, Fraud Training 909-798-8855, fax: 909-798-0139
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