I recently wrote on my appraisal blog the 21 things that appraisers look for when doing an appraisal. My goal was trying to help the public understand the appraisal process, more importantly what it is that we do. One of the hardest things for me is when I’m given specific instructions by the lender not to discuss anything with the borrower about the appraisal being done on their home, and the homeowner is sitting there asking me one question after another. I feel like the biggest jerk when I have to tell them, “I’m sorry the lender won’t let me talk to you, yes I know you’re paying for appraisal, yes I know I’m wondering through your house poking my nose in every nook and cranny.”
What's even more frustrating is when I’m having trouble with value on a sale, and the lender tells me that I’m not supposed to talk to any of the Realtors involved in the transaction. Really!! Who knows more about what’s happening in the market then the agents involved in the sale. Things are getting better regarding being allowed to communicate with agents, but I have to make sure I follow each lender’s guidelines or I’m toast.
Being that the lender is the client, they do have that right to demand that nothing be discussed about the appraisal process. But, there is no better person then me when I’m nose to nose with the borrower, or the real estate agents for that matter, to discuss any problems that I might be having. The frustration I feel at times I’m sure stems from my personal nature of just dealing with the situation right then and there.
I feel that if there was a better understanding of the actual appraisal process, then the rhetoric wouldn’t be so vitriolic when things don’t turn out the way those involved hoped for. Having sold real estate for 12 years I thought I understood the appraisal process fairly well, boy was I in for a rude awakening when I started appraising homes 14 years ago. My mentor pulled me aside one day and told me I have to take my Realtor hat off, appraisals are not the same as doing a market analysis. From that day on, even as hard as it was at times, things started to gel for me.
The best analogy I’ve used to describe the appraisal process is to try and imagine a large puzzle you’ve just opened, and before you start putting the pieces of the puzzle together you lay them all out all to see what you have to work with. Doing an appraisal is very similar; appraisers have to gather a lot of information about the house before we can even think about the methods of valuation. When putting the pieces of the puzzle together they have to make sure they meet the lender’s guidelines, Fannie MAE or Freddie Mac’s guidelines, HUD (FHA), follow USPAP standards, and meet any specific investor guidelines. And it’s only after all of that is sorted out, can we start the valuation process, which is another blog post.
If you have any questions, or real estate appraisal needs (divorce, bankruptcy, tax appeal, or estate planning) please contact Michael at 612.599-2581, or use the form on the contact page.
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