Friday, September 28, 2007

A Sign Of The Times

I was talking with a friend of mine this past week. We'll call him "Scott". He has been a real estate appraiser for about 9 years now. 99.9% of his business comes from a fairly large builder in town who has been building in the valley for quite a few years. He was telling me a story about a homeowner who had bought a home in early 2005, right about when the real estate boom was in full swing. This homeowner is now attempting to sell her home. Low and behold, she owes more on the home than it's currently worth...join the club! So being stuck between the preverbal rock and a hard spot, she had decided to file a complaint with the Arizona Board of Appraisers. She was claiming that the appraisal that he conducted was wrong and that he should be liable to some degree for the position in which she found herself. She claimed that he, as an appraiser, had fraudulently inflated the appraised value of the home so that the builder would be able to sell her the home at an artificially inflated price.

Any time somebody makes such a claim the Arizona Board of Appraisers takes it very seriously and conducts a full investigation. The board requested copies of all supporting documents from Scott and notified him of when the board would be reviewing the complaint. If he chose, he would be allowed to be present during the review and would be allowed to explain his appraisal if the board needed any explanations.

Now, I've known Scott for approximately 8 years and have never known him to do anything dishonest or backhanded. So when he was telling me about this story, I almost immediately dismissed it as a false claim.

The day came for the board to review the complaint, and Scott had scheduled his day so that he could be present. He showed up at the time he was told, and discovered that the board had already reviewed the complaint, reviewed his file, including all of his supporting documents, and had dismissed the claim almost as fast as I did.

It made me laugh a little bit, even though I felt bad for the homeowner who found herself in such a bad position. But the bottom line is, investing in real estate is not a guarantee. It might be one of the safest investments around, but it's not fool proof. You have to do your research and be comfortable with the decision that you are making. The value of real estate at any given point in time is what an individual is willing to pay for it at that given moment. Unfortunately, the Phoenix real estate market is knee deep in a correction and selling a home that was purchase towards the end of the boom might not be a possibility without realizing a loss in your investment.

-Steve Nicks

[tags] Appraisals, Desert Ridge real estate, Real Estate Market [/tags]