Appraisers are next up on the Colorado foreclosure agenda according to the Rocky Mountain News article:

Erin Toll’s top priority as the new director of the Division of Real Estate for Colorado is to shut down appraisers who are artificially inflating home values, contributing to the state’s escalating foreclosure crisis.

The article also articulates the ABC’s of appraisals:

  • An appraiser’s job is to inspect the size, condition and quality of a home and review, verify and analyze market data for the home to determine its value.
  • Loan amounts rely on the value calculated by the appraisals.
  • Lenders typically require real estate appraisals for both purchases and refinances.
  • The appraisal protects lenders so they don’t lend more than a property is worth as well as buyers so they don’t pay too much.
  • Appraisers must be independent and should never assign a value just because a lender or real estate agent wants a specific price.
  • An appraiser will inspect a home inside and out, as well as use county and other real estate data to compare the house to similar ones that have sold in the neighborhood to determine its value. A good appraiser looks at the comparable homes to make sure they really are similar.
  • In addition to obvious things such as the size and condition of the home, the number of bathrooms and bedrooms, an appraiser will add value for things such as a well-done renovation, but will subtract value if the home needs work, such as a new furnace or a paint job.
  • A detailed professional appraisal can run 30 to 35 pages.
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