Cuyahoga County sheriff to bar appraisers from buying foreclosures
The Columbus Dispatch brings us a short but very interesting piece. The sheriff in Cleveland wants to ban any appraiser from buying houses that are sold at public foreclosure auctions. Sheriff Reid sees a potential conflict of interest. I would agree with his position but would suggest that he (and those throughout our country) take it a step further.
First, I agree with his position because there is a definite conflict of interest. My first assumption is that the appraiser is performing an appraisal for a bank on a pre foreclosure property. If an appraiser plans on purchasing a specific property that he or she is appraising for a bank his or her inclination will be to appraise it very high? Why you might ask? Because a bank uses this value to determine market value and to evaluate offers. If the value that they have been given by a rogue appraiser is too high, the banks inclination is to foreclose and auction it off.
I think they should take it a step further. I think they should ban real estate agents who perform brokers price opinions from re listing the same properties for the banks. These folks are commonly known as REO agents or Real Estate Owned Agents. There is the same conflict of interest. If an agent knows that they or their brokerage has the potential of securing a bank owned listing if the the property that they are evaluating goes into foreclosure, the real estate agents inclination will be to value the property above market. This action could produce the same outcome as a high appraisal.
SO if your involved in a short sale or preforeclosure and you find that the bank is sending out a REO agent, be ready to appeal the BPO if it doesn’t represent the just market value for the property.
Cuyahoga County sheriff to bar appraisers from buying foreclosures
CLEVELAND (AP) – The sheriff in Cleveland plans to bar the 36 appraisers working for his office from buying homes that have gone through public foreclosure.
The move by Cuyahoga County Sheriff Bob Reid is meant to avoid any conflict of interest in setting the value of foreclosed homes. The sheriff’s office has overseen nearly 33,000 auctions of foreclosed homes in the past five years.
Under Reid’s predecessor, appraisers were an important source of political fundraising for the sheriff’s office.