Lenders and appraisers are in the news a lot, and some are being sued for not providing honest real estate valuations. There are allegations of fraud, collusion, and unethical dealings between and among lenders and appraisers. What is happening here?

Appraisals are needed to provide a unbiased, third party opinion of value for collateral reasons. It protects the lender from loaning more than the property is worth, and the buyer from getting "upside down" in their mortgage. Lenders, sellers, and buyers are all vested in the sales contract price, or for the deal to go through, requiring the appraiser to be "independent" in the estimate of market value.

Phony or inflated valuations destabilize the entire mortgage market and, possibly, the economy. An economic downturn generally results in defaults, foreclosures, and "short" real estate sales. The resulting credit crunch spills over into all areas of the economy.

In the past, the other parties to the real estate transaction pressured appraisers to "hit" the contract price with their estimate of market value. Ethical appraisers, those who refused to "hit numbers," lost business to the unethical appraisers. 

Harborside refused to bend to that pressure and expanded into the government arena, providing appraisal services to cities and counties, as well as state and federal agencies. We only perform to the highest ethical standards possible.  We do not do assignments based on contingency fees.  That is, we do not agree to do an appraisal report and get paid only if the loan closes.  We do not do assignments based on percentage fees.  That is probably the appraisal profession’s biggest no-no, because it would tend to make appraisers inflate the value of homes or properties to increase their paycheck.  Other unethical practices may be defined by state law or professional societies to which an appraiser belongs.

The Uniform Standards of Professional Appraisal Practice (USPAP) also defines as unethical the acceptance of an assignment that is contingent on "the reporting of a pre-determined result (e.g., opinion of value)," "a direction in assignment results that favors the cause of the client or the amount of a value opinion," as examples.  This means you can be assured we are working to objectively determine the home or property value. You can rely on 100 percent ethical, professional service.

We pledge to communicate, in a timely fashion, each assignment without bias or partiality; to abstain from behavior deleterious to our clients, the appraisal profession, and the public; to hold paramount the confidential nature of the appraiser/consultant - client relationship, and to comply with the requirements of the Uniform Standards of Professional Practice (USPAP).