Appraisal mistakes contribute to Austin's soaring home prices

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by ANDY PIERROTTI / KVUE News and photojournalist DEREK RASOR

Bio | Email | Follow: @AndyP_KVUE

kvue.com

Posted on September 19, 2013 at 10:25 PM

Updated Friday, Sep 20 at 4:57 PM

AUSTIN -- A KVUE Defenders investigation uncovered mistakes made by property appraisals are contributing to Austin’s soaring home prices.

Austin homeowners Leah and Ronnie Lawson say it happened to them.

State records show a property appraiser hired by their mortgage company, and another one the Lawson's hired, incorrectly added a 390 square foot patio to their home’s value - inflating the price. A previous homeowner added the enclosed patio without permits.

They discovered this only after they purchased the home in 2009. "It's not taxable, not heated. It’s not designed to be year-round use, although advertised as," explained Mr. Lawson.

"We're not real estate professionals, but we started reading online and said ‘Hey, this isn't legal. They’re not supposed to count this,’” said Mrs. Lawson.
 
The Texas Appraiser Licensing and Certification Board found both appraisers violated state code. The Lawsons estimate they over-paid $40,000 on their home.
 
Apartment and home renters pay the price too. As home values increase, property taxes climb too, and landlords pass on the additional expense to their tenants.

According to figures provided by TALCB, the number of appraisers whose licenses were lost or suspended due to mistakes, nearly tripled from 18 in 2009 to 51 in 2012.
 
"These kind of things can cause real estate bubbles," said Jonathan Stilley, an Austin realtor.
 
In August, Stilley addressed the state licensing board about a complaint he submitted involving a possible appraiser mistake that could have over-valued a home in a north Austin neighborhood.


According to real estate records reviewed by the KVUE Defenders, the home sold in April for $325,000. That’s $50,000 more than the second highest priced home in the area.
 
Since the home sold, home prices in that neighborhood jumped. In 2012, the average home listed for about $204,000. Homes are now listing for nearly $60,000 more.
 
"That is bad for homeowners who are paying inflated prices that shouldn't be necessarily be inflated," said Stilley.

It's been six months since the realtor submitted his complaint and TALCB is still investigating. The state board admits, it usually takes up to a year to resolve complaints.
 
“Within that years' time, that one appraisal becomes the benchmark. At the rate that homes in Austin are selling, it wouldn't be unusual for 30 or 40 houses to sell. Then, every home in that neighborhood starts ratcheting it up, and the price keeps going up and up and up," Stilley explains.

Shannon McClendon is a member of the TALCB. She says at the peak of the housing collapse, it took state investigators up to two years to investigate complaints. “We're proud to be honest with you, with our investigators and attorneys, who work on these cases to have gotten them down to a year," McClendon said. 
 
The Austin board member also doesn't believe one mistake can impact housing prices.
 
Stilley disagrees. “This is exactly what happened in Phoenix and in Scottsdale and in Miami and in Los Vegas, and the people who get hurt, are the ones holding the bag at the end," said Stilley.
 
McClendon says the increase in revoked and suspended licenses show the state is heavy handed when it comes to penalties.
The Lawson’s filed suit against their home’s previous owner, but they lost in court. The Lawsons are appealing the decision.

If you suspect an appraiser made a mistake, you can report it to TALCB.



 

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