Why Appraisers Hate Agents

The reasons why appraisers hate real estate agents (many of them anyway) are both varied and lengthy; almost all have to do with agent ineptitude and ignorance of how appraisals are completed and how data – specifically comps – are selected and utilized. I’m an active certified appraiser since ’89 as well as an active broker; I see this issue from both sides. HVCC has driven most experienced appraisers out, moving in have been fee chasing  appraisers concerned more with speed than quality; some blame belongs on this side of the fence. However, in 23+ years of dealing with agents, the consistent ignorance that most show makes me wonder if they are dumb or willfully ignorant. These are my opinions so if you have issues with any of this, I speak for myself and no one else. I'm not taking about overall issues - I'm specific to the issues surrounding appraised values and comparable selection. 

I’ll Tell You Whatever You Want to Hear

There’s a reason the real estate sales industry has the pathetic public perception it does, just look in the mirror. Of course there are solid agents, but the vast majority of agents I run into:

• lack the fortitude to deal honestly with sellers and buyers.
• tell sellers what they want to hear just to get listings.
• tell buyers “it’s a great time to buy” even when it might not be for them or for that certain area.
• repeat the industry talking points without formulating their own opinions.
• vomit back “scripts” instead of relying on research to answer questions candidly and accurately.
• point fingers at everyone and assign blame – appraisers, inspectors, lenders…it's always some else’s fault.
• think this is a part time business – the DNA agents that prey on friends and family…they lack the experience required to properly represent clients but guilt people into using them…often with substandard results.

The public is obviously to blame as well, if they are content shopping fees and not properly verifying agent experience and production, then they get what they ask for. It’s pretty easy to convince a seller that their home isn’t like the rest, that they will buck the trend – and some agents know that and exploit that just to get a listing. Setting unrealistic expectations right out of the gate – for both sellers and buyers – sets the table for failure.

The Appraiser Killed the Deal

If there’s a more stupid comment than that, please give it to me. Everything in life happens for a reason – something motivates someone to do something. What motivation is there for an appraiser to “kill your deal”?

Appraisers are becoming simply form fillers, the reviews completed are becoming more and more reliant on automated reviews; programs look for variables outside of given parameters. Do you like Zestimates? (of course you do when they work in your favor). Appraisals have been and continue to be reviewed by programs like that – with the new UAD requirements that will be enhanced and that was one of the major reasons for changing the form. If you think Eddie the Appraiser is your enemy, think again.

When Eddie does his job correctly and you scream “the appraiser killed the deal”, a few things happen:

• you start with the histrionics and vilifying the appraiser for being inept.
• you immediately have “great comps that the appraiser didn’t use” and tell everyone (including your client) that you’re right and Eddie is crazy.
• the mortgage broker/lender contacts the appraisal management company, who then contacts the appraiser.
• the appraiser then has to pull that file and wait for the “great comps that the appraiser didn’t use” to be sent over.
• once those come over, Eddie now has to spend time and review them – often having to provide written explanation as to why they’re not truly comparable.

This takes time – and since HVCC started time is money for appraisers. Given that Eddie isn’t paid to handle appeals, this costs him money.

Given this process, what is Eddie’s motivation to “kill your deal”? I can tell you from personal experience, if I saw a purchase appraisal is coming in low I’d call the agents and give them a heads up. I’d give them a day to support the contract, if they sent nonsense I’d move ahead with an appraisal that accurately reflected the current market value based upon the closed comps.

What is a Comparable Sale?

Do you know? Do you know what current appraisal guidelines require for comparables? If anything, the idea of proper comparable selection epitomizes the dumb or willfully ignorant agent. Simply put, a comparable is a reasonable alternative purchase to the subject. If the subject isn’t available, the comparables should fill as many of the requirements of the subject as possible. This means location, room count, design, living area, age……it means understanding that different homes will appeal to different buyers. Comparable = Comparable.

It DOES NOT MEAN simply grabbing the sales that fit your argument because they are close in sale price. It DOES NOT MEAN pushing forward comps that are over a year old or not comparable by expected standards. It DOES NOT MEAN simply throwing as much nonsense against the wall and hoping that something sticks.

Reliable comparables are:

• CLOSED SALES that are preferably within 6 months but not more than 12 months.
• the same style/utility - a 4BR/3.5B traditional home on a finished basement IS NOT comparable to a 3BR/1B ranch home on a slab. Overall condition should be similar.
• are actually closed; listings hold little credibility, pending sales a bit more. However, closed sales are what are required.
• Comparable sales ARE NOT just sales that support your idea of value.
• DISTRESSED/REO homes CAN and SHOULD be used IF COMPARABLE.

You’ll see that this isn’t a long list – and that’s because this isn’t rocket science. It is opinion however and we know what that's like. However, the comps will tend to cluster and once that general value range is found, the comps tend to rise to the top.

At every step of the way, appraisers, reviewers and the automated review programs will be looking for the demonstrated value support. Demonstrated value support is based upon RECENT CLOSED COMPARABLE SALES.

Get Educated About Appraisals

Any true professional knows their business inside and out, how much do you know about appraisals? The axiom of “a little knowledge is a dangerous thing” applies here, now more than ever a competent agent needs to understand the URAR and how it’s prepared. I won’t argue that the appraisal industry has issues; however everything is based upon the data. If you understand and abide by the comparable requirements then you’ll be well versed in the most important part of the report.

Will there be things missed? Yup. Will you call it good condition and the appraiser average? Yup. Will you expect a new coat of paint to add 10%? Uh Huh. Obviously three appraisers looking at the same home will have three slightly different opinions - but as long as everyone understands the parameters the opinions shouldn't be that varied.

Do your job properly researching and evaluating your market, be honest with your clients and understand the appraisal process and what appraisers deal with…you’ll save yourself headaches and won’t need to assign blame. No appraiser really cares about "killing deals", all they care about is trying to make a living. And no, I'm not a bitter appraiser - I'm appraising primarily lender owned foreclosure properties and enjoy having the ability to pick the real estate clients that I work with. I've found that what Sy Syms used to say..."An educated consumer is my best customer" rings true; the folks I deal with appreciate my candor.