It is well known that Broward County Florida is in the top 10 counties in the country for high rates of foreclosure. What you may not know is that Broward County is also home to one of the largest real estate schools - responsible for the graduation of hundreds of residential real estate appraisers.

I was reading recently that Florida is second only to California in the number of residential appraisers. California has a ratio of approximately 1 residential appraiser per 6,000 residents. Florida has approximately 1 appraiser per 3,500 residents.

While this does not confirm the theory that an over-supply of appraisers affects foreclosure rates, it is a curious concept.

In my previous blog, I discussed the rising costs of government and its affect on property values. Just two days after I submitted my previous article to FNC for publication, Florida Governor Charlie Crist announced that the Federal Government was going to give the state $10,000,000 to offset the hospital costs for Haitian relief.

This grant from the government further confirms the increasing social costs which this state incurs. These social costs are passed along to the residents in the form of higher taxation rates which decreases the monies towards mortgage payments. This, in turn, has a profound effect on the ability of buyers to purchase real estate and a negative effect on property values.

Wow what a concept! Let’s take this theory a little further. Let’s say that the lending industry could make no documentation loans to virtually anyone who comes in the door. Now let’s say that a loan officer or broker has a wide choice of residential appraisers to select from.

Next we have a home available for sale. We have three prospective buyers. Each has their own mortgage professional who has their own appraiser. We are in a time of rapidly rising property values. The home is offered for sale at $300,000. The top price paid for a comparable home in the neighborhood is $300,000. All buyers are eager to spend mortgage money without regard to quality of investment. If values go up, they win; if values fall, they walk.

The high bidder gets the home for $350,000. They are provided with a 100% mortgage and are very happy to have their new home.

The next home in the neighborhood comes up for sale. The new price is $350,000 based on this previous sale. Again we have three buyers, three mortgage companies and three appraisers. You can easily see where this is headed.

After the Savings and Loan Crash, the Appraisal Institute and the Society of Real Estate Appraisers were the “Value Police.” After state certification, there were virtually no “Value Police.”

Will the AMC’s now become the new “Value Police”? Can we learn from our mistakes of the past? Only time will tell.