Matt Birkbeck, a columnist for the Pocono Record, recently targeted "bloated real estate appraisals" as a major cause for concern in the Pennsylvania Pocono mountains area as news broke about a local appraiser who is facing a 136-count complaint filed last summer by the state of Pennsylvania Bureau of Professional and Occupational Affairs. A loss of license and fines as high as $1,000.00 per faulty appraisal face Dominick Stranieri, a Stroudsburg resident with offices in Scranton, charged with inflating appraisals.
The whole case started when Francisca Moya, a homeowner in Pocono Farms East decided to sell her home a year after she bought it. She purchased the three-bedroom Cape Cod style home for $159,000 from Raintree Homes and was stunned to learn it would bring no more than $85,000 a year later. She obtained a copy of the appraisal from the bank and learned that the appraiser did not use "comps" (comparable sales) from the open market but rather used sales data from three other new homes built by Raintree - homes that were apparently sold at artificially inflated values.
Joe Fisher of Fisher & Fisher Appraisals in Cresco told the newspaper, "Any appraiser that does this is setting people up for foreclosure." Fisher, who teaches appraisal re-certification courses and reviews appraisers suspected of fraud for the state Board of Certified Real Estate Appraisers and various lenders also stated, "People doing this stuff are thinking only about lining their pocketbooks, which worries me most."
The president of Raintree Homes, Gene Percudani, declined to speak with the Pocono Record, but denied using inflated appraisals and defended the appraiser through his attorney, Randall Porte.
Birkbeck also reported that a local appraiser, whose identity was not revealed, was offered $500 cash to perform an inflated appraisal and the promise of steady work leading to $5,000 income per week. The refusal to do so was met with threats from a local mortgage broker who stated the appraiser would not get any work. Appraisers generally earn $250 - $300 for legitimate residential appraisal work and annual income in the range of $50,000 to $70,000, according to Birkbeck.
Demands to "push the number" are so common today that an online petition was created at the Appraisers Forum. (related story) to fight back and let the public know what is going on in the industry. They want "action be taken to hold the lenders responsible for this type of violation and provide for a penalty on any person or business who engages in the practice of pressuring appraisers to do dishonest appraisals that do not provide for independent judgment." The petition has been signed by almost 6,000 appraisers to date.
Julio E. Sune, Jr., a state certified residential real estate appraiser from Miami with 22 years of experience offers this advice, "At the present time, there is a shortage of available residential properties for sale in certain areas. Therefore, properties could be sold for more than they are worth. In an "over-heated" market, the prudent consumer/purchaser should take reasonable steps to determine the Fair Market Value of a real estate property. Use an experienced, reputable appraiser, whose primary duty is to estimate market value, and not price, to protect your interests. Find one who knows the particular market area very well."
Pat Rioux
