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Revenge of the Appraisers

By
Real Estate Agent with RE/MAX United Real Estate

I'm not an appraiser and I don't play on on TV but I feel fairly confident of my ability to value property pretty fairly.  Granted, sometimes the Seller wants a little more and over prices the listing.  If they don't I usually feel we'll make it past any appraisal.

It seems, though, that appraisers are really reveling in their new found independence.  I also hear that a lot of appraisers are getting the short shrift, money wise, from all these third party clearing houses that lenders have to go through to order an appraisal.  So, I can see where appraisers may feel a tad resentful and also feeling their wild oats a bit.

Recently, I was listing a home in a neighborhood that could reasonably be called "moderately priced". There was a mixture of short sales, foreclosures and "plain vanilla" sales in the area so I had to really think about it but I came up with what I thought was a reasonable value.  The Seller want $10K more. So be it.

Amazingly (to me), the house had 27 showings and 4 offers in 2 days.  The Seller was sure we she had under priced her house and was having all kinds of second thoughts. However, she moved forward with one of the offers which was both reasonable and realistic. 

Fast forward to the appraisal.

The appraiser calls and says she wants to come by that day.  OK, I'm thinking to myself.  I have the key and it was the same key 27 Realtors used to show the house.  I set the appointment to meet the appraiser.  Lo and behold, the Seller had locked a top lock to which I had no key.  I couldn't get in.  The appraiser couldn't get in.  She was a little miffed.  She said she would call "when she was coming back to the area." OK.  Works for me.

Now, it turns out the appraiser isn't coming back (VA, by the way) and she isn't stepping foot inside the house. She's sending her appraisal to the lender and the buyer's agent called me to tell me it might come in low. The buyer's agent doesn't know how much lower than the contract price, what comps were used or anything.

So, I wait. An irritated appraiser who could care less if the seller, buyer or lender are affected one way or the other.  An appraiser that won't put the fact of multiple offers into the equation.  A VA appraisal that, for all the appraiser knows, may or may not have conditions that need to be addressed. An appraiser who comes from God knows where into a neighborhood she may or may not know anything about.

I sent comps to the buyer's agent but I suspect the buyer's agent probably doesn't care how low the appraisal comes in.

Hey, if it was easy, anyone could do it, huh?

Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale

Ken,

I don't know the rules or requirements but I wonder how someone can call it an appraisal when they do not see the interior? It can be an opinion without seeing it but that seems to not follow the typical protocol for an appraisal. Any way to appeal this?

Aug 31, 2009 03:19 PM
Tim and Pam Cash
Crye-Leike (Sango) - Clarksville, TN
Real Estate Professionals - Clarksville TN

VA Appraisals can be tough to challenge and once in force they stick for six months in this area (as I am sure it is in yours).  There should be a requirement that they thorougly evaluate the property though which would entail them entering the residence.  I hope it works out for you.

Aug 31, 2009 03:23 PM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

When the market was at it's highest ebb of stupidity a couple of years back, appraisers would literally put on their forms that they did a drive-by, which meant they didn't go into the houses. I don't know that many banks sent them back to do the job right. Now they are probably the banks that have either gone out of business, or at least have the highest foreclosure rates.

Aug 31, 2009 03:38 PM
Ken Montville
RE/MAX United Real Estate - College Park, MD
The MD Suburbs of DC

Wayne -- I'm not sure of the "rules" either but I think this particular appraiser just didn't want to make a 2nd trip to the house.

Tim and Pam -- I haven't been officially notified of the appraisal results, yet.  It was just an informal conversation with the Buyer's agent passing information from the lender.  Very little information. I'm not sure how it will come out.  I do know this particular appraiser just doesn't want to do the j-o-b.

Ed - I don't think "drive-bys" are acceptable nowadays.  I may be worng.  I'm hoping the underwriter will see that this was not a complete appraisal and order a second one.  It may slow things down a bit but that's better than an artificially low value.

Rick -- There are, indeed, new disclosure laws re: mortgage and good faith estimates and APRs.  I'm not sure what they are related to appraisals.

Aug 31, 2009 11:13 PM
Alan Gross
PrimeLending, A PlainsCapital Company, Equal Housing Lender - Bethesda, MD
Loan Consultant

It surprising to me that a VA appraisal can be completed without an inspection of the properties interior. All appraisals I see now have interior pictures. The last VA appraisal I received (August 2009) contained the clause "Based on a complete visual inspection of the interior and exterior areas of the subject property." This part is hard coded into the report.

Sep 01, 2009 12:48 AM
Robin Rogers
Robin Rogers, Silverbridge Realty, San Antonio, Texas - San Antonio, TX
CRS, TRC, MRP - Real Estate Investment Adviser

Ken, that is sickening! After all that work and stress. I hope the appraiser at least uses decent comps. If not, I would contact the lender and let them know she didn't do her job by returning to inspect the property.

Good luck!

Robin

Sep 01, 2009 01:37 AM
Douglas Fischer
East Oahu Realty - Selling Honolulu, Hawaii Condos - Honolulu, HI

We just had an interesting seminar with an appraiser on Oahu, Hawaii.  He's been in the business over 25 years and seen many markets.  It was very interesting hearing about the appraisal process from his perspective.  That's no excuse for the situation you describe, but it's always good to hve knowledge of something as critical as appraisals from all view points and perspectives.

Sep 01, 2009 11:04 AM
Patricia Kennedy
RLAH@properties - Washington, DC
Home in the Capital

Ken, hope you have a ratified back up offer!

Sep 01, 2009 11:31 AM
Dr. Stacey-Ann Baugh
Century 21 New Millennium - Upper Marlboro, MD
A doctor who makes house calls.

This seems a bit crazy.  How can she do an appraisal on a house she's never seen.  Good luck.

Sep 01, 2009 12:19 PM
James Downing - Metro DC Houses Team REALTORS®, CRS, GRI, ABR,MRP, MilRes
Real Living | At Home - Washington, DC
When Looking to Buy or Sell - Make the Right Move

I'm with Pat - look for a back-up.  The Appraisers are out there and many just don't want to do their homework.

Sep 01, 2009 02:03 PM
Ken Montville
RE/MAX United Real Estate - College Park, MD
The MD Suburbs of DC

Alan - I think the appraiser may actually be coming to the house based on very recent e-mails.  I haven't heard from her,though.

Robin - Good idea. 

Douglas -  appraisals are just one more thing Realtors need to know in order to best serve their clients.

Pat - No back ups but we had multiple offers within 2 days so I'm sure we can repeat (assuming the Seller doesn't raise the price too much)

Stacey-Ann -- She's seen the house from the outside.  What is interesting to me is that this is a VA appraisal and I wonder how she might know if there are any VA conditions to be met.  There shouldn't be but how would she know?

James -- If this falls through we'll get another offer. This place was priced right and hot, hot, hot.  My challenge will be keeping the Seller in reality and keeping the Seller from re-pricing way too high.

Sep 02, 2009 12:13 AM
Diane Donnelly
Keller Williams Flagship - Annapolis, MD
Anne Arundel County, MD Real Estate

The challenge with some of these appraisals is that the appraiser could be from out of town and because of the new rules and clearinghouses, could be coming up with erroneous values.  Further, the FHA appraisals are going to be good for 6 months even it's low.  You could be stuck with a low appraisal for six months.  I've not been fortunate to win any appeals so it's one more hurdle to jump.  Good luck!

Sep 16, 2009 12:51 PM
Anonymous
Gary

I just found this site during a quick google and noticed all the Realtors talking about appraisers like we are just running in the wild. As appraisers we are highly regulated, more then realtors.  To make it simple take a USPAP class and educate yourself so you know what an appraiser can and cannot do.

1) The lender/Client chooses the type of inspection for federally related transactions i.e. interior or exterior inspection, the appraiser "cannot" choose the type of inspection on their own.

2) Short sales and REO properties. If the market has a high percentage of short sale/listings and solds and they are common then that is part of the market and thus they are fair game. There is no rule either federally or via USPAP that forbids the use of these types of sales "in the current climate". The principle of substitution states that an "informed" buyer will not pay more for a property, or a feature in a property, than a comparable substitute.

In short if you are listing an 1100 sf ranch for $170K in a market that has a good amount of short sales as well that are ranches selling from $95-130K and they are in similar condition (or can be adjusted for condition) you may want to think about re-thinking your listing price instead of just blaming the appraiser for killing your deal on a property that was listed too high in the first place.

To conclude just do a quick MLS search before you list a property and check what the similar properties are selling for and include the distressed sales in your search as well and then you will be able to list the property accordingly even though your seller may not be happy with the price.

Regards,

 

Gary

 

 

 

 

 

 

 

Sep 18, 2009 07:14 AM
#14