Appraisal Problems? Blame the Appraiser - Maybe Not

Real Estate Agent with Keller Williams Realty


Surrey House in McKinney Texas

Appraisal Challenges.. one of the most discussed issues around the water cooler of a real estate office.  Often the conversation immediately points to the incompetent appraiser who was assigned and all sympathetic Realtors give a nod of agreement. 

Let's lynch the sorry appraiser, lets turn in him to the state for poor work, lets complain to the lender and get him/her out of the business .. all Realtors are now fired up to take action.  Step back my friends and reflect on the issue at hand, is it the appraiser (now known as SOB) or could there be other factors contributing to the appraisal challenge?

There are many Red Flags that may wave on an appraisal report that may be the source of the problem.

  • Comparable Sales - is your home so unique that there are no truly comparable sales to utilize in the report?  This may cause the appraiser to go a distance, incorporate dated sales, make large line adjustments for varied points.  All these may result to an underwriter's rejection to make the loan.
  • Condition - the home may need some work and will not qualify for the loan type sought.
  • Previous foundation work- loan my be denied if the process to correct the foundation did not meet the guidelines.
  • Project not FHA Approved- big obstacle .. Realtors this is your job to check this out so awareness of the ability to obtain a loan or not is determined.
  • Recent Sales- appraisers now have some strict guidelines that must be followed in the preparation of the report - time frame of comparables, distance, etc. 
  • Line Adjustments- where the appraiser recognizes value for varied amenites on the home.  If your home has a great view and yet no sales have a view then a large adjustment will be made across the board on the report.  Underwriters do not like this at all!

The best defense is to be prepared before the appraiser comes to look at the home.  

  • Be aware of any potential problems such as condition, lack of sales, etc.
  • Have a packet of information to provide the apprasier regarding best sales, information about specifics on the properties that might give good insight to the appraiser.
  • Provide a list of upgrades and time frames completed to the appraiser.
  • Do your homework and warn the sellers upfront of potential issues that might arise.
  • Be aware of the type of loan for the buyer, limitations of that type of financing, institution going through may also be a factor (we all know there are good ones and ones to avoid).  Let the seller know of your upfront concerns about a buyer's lender choice as part of your discussion about the offer.
  • Buyer has minimal down and a lot of seller costs .. underwriters get really picky with more at risk buyers.

As you have that cooler chat about the SOB just know that sometimes this situation could have been avoided.  The best professional understands the importance of preparation and the value it gives our clients. 

Comments (8)

Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

I think the best defense is to price the property correctly.  If you don't have comps before you list it then you probably won't when it goes on deposit.

Feb 02, 2011 07:26 AM
Bob Jakowinicz
National Realty Centers Livonia--Bob Jakowinicz - Livonia, MI
Michigan Real Estate Agent-- MI Real Adventures

I think most real estate agents are looking at the comps and how well it was done before they blame the appraiser.  When the report comes in missing bathrooms, bedrooms and many important features then the complaining starts.  We have had sales for the most part appraisals done o.k. but every once in awhile they just are done poorly from the start 

Feb 02, 2011 07:28 AM
Stephanie Stringer
First Choice Loan Services NMLS#210764 - San Antonio, TX
Mortgage Loan Originator

Connie-   Great article.  Being a loan officer I appreicate you bring up the point about if the property is able to go FHA or not.   This is key with so many more loans going FHA instead of conventional these days.  Great Job!

Feb 02, 2011 09:01 AM
Connie Goodrich
Keller Williams Realty - McKinney, TX
CRS ABR (McKinney Realtor)Texas

Webster - It still amazes me that some agents list the home for what the seller has said they wished & did not pull or prepare information.  It would be much easier if all did their jobs.

Bob - I have seen those poor done reports and it really is very unfortunate.  I do acknowledge that there is a lot of appraisers who just don't do their job with care.  I also know that sometimes issues develop that has nothing to do with the appraiser or value but goes to the stict guidelines of the lender or failure of the home to meet standards.

Stephanie - I know you as a loan officer get to hear it from both sides of the fence.  All just need to realize that there is far more on an appraisal than a value. 

Thanks to all for visiting my post and taking time to comment! 

Feb 02, 2011 09:38 AM
Sharon Kolb
Atlanta Decatur Homes - Atlanta, GA
Broker - Atlanta Decatur Homes

Connie -  A well-prepared agent is the best defense, however, there are Appraisers, and there are Appraisers.  My experience in the past year has been all over the place.  Same house, first Appraiser under-appraised by $10,000; second Appraiser - $10,000 over-value.  It's just crazy these days.

Feb 02, 2011 12:29 PM
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Connie, I think MOST appraisers do a fairly good job unless they have a BENT to undervalue the property. Some REALTORS price listings over priced to satisfy the Seller and disregard their own CMA comps. If you want REALLY wild numbers look at Zillow. Completely all over the map.

Feb 02, 2011 12:40 PM
Toula Rosebrock
Diane Turton, Realtors, Forked River, NJ - Lacey Township, NJ
Broker/Sales Associate, Realtor, Lacey Township,

Hi Connie:

Appraisers have been getting a bad rap lately.

I find that most appraisers do a great job for the most part.

Feb 02, 2011 01:45 PM
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

One consideration that may help if you have a very unique property that you feel will have some valuation challenges is to request that the lender assign the appraisal to a "certified" appraiser, not just a licenced one.  The licenced appraiser is the entry level & not lic. to appraise "complex properties, meaning in my mind unique properties with valuation challenges that a greenie with only a short time appraising may not be familiar with.  The problem is that most lenders use only 1 criteria to decide if they have to use a certified appraiser & that is if the property (home) is over 1 million dollars.  Now, we know that there are plenty of challenging valuation issues out there on properties well under 1 million dollars. And since the "certified" appraiser has extra training & experience in the complex assignments, it just makes sence to ask for the certified appraiser.  It should increase your chances of getting a reliable appraisal.

Feb 04, 2011 08:40 AM