“20% of Home Sales Fail due to Appraisers” “ Home Builders blame appraisers for sabotaging home sales”
What is going on here? Why are so many appraisers turning in low appraisals, and throwing sales “under the bus”? Why can’t the appraiser see the market the way the agents and the sellers see it? Can we do anything to fix it?
THE GOOD NEWS: The top appraisers do see the market as you see it. They work extra hard to research the market forces, form their opinion of market value and quite often, support the purchase price of the home. They are the ones working on the other 80% of the home sales out there.
THE BAD NEWS: The random system that major national banks use to assign appraisers is based mostly the lowest fees, not on local expertise. Low-fee appraisers are driving for hours to assignment scattered across the county. Also, due to their low fees, they will not spend enough time to prepare the professional report that you & your clients deserve.
THE GOOD NEWS: You can help eliminate these carpetbaggers, and instead of being a victim, you can take a few minutes to read this and come away with the tools to improve your successful closing rate.
- Real estate listing agents have a legal responsibility to seek out the very best options for their client. That means, if the sky is cloudy, it is the agent’s required duty to convince others that the sky is blue and the sun is really shining (you just cannot see it). Those others may include potential buyers and the random appraiser sent by the lender from Cincinnati.
- Real Estate Appraisers have the legal responsibility to do their own research on the market and the subject property, and report back directly to the lender. The best ones, the professionals you have trusted for the past 10 years, always take extra time to research deeply, going further out than 3 blocks, look at older sales, check historical data, and take careful notes and photos of the subject. Their dedication to the craft, the art, and the science of valuation, produces a trustworthy and complete report that usually supports the pending sale price.
- The bad appraisers, like bad apples, create lots of problems, and with their lack of professionalism, they cause a lot of needless injury and pain. They are like a drunk driver, weaving down the street, boucing off of parked cars and eventually crashing into other cars, home or people. Until they are stopped, they continue to destroy the world around them. But these bad appraisers can be stopped, once you know how to identify them. It is up to you, the agent, to invoke your legal requirement of protecting your client. The real estate cops are not around to protect you today, maybe they are off across town, directing traffic to the new shopping center opening.
- In today’s market, we cannot allow any single deal fall apart. Each one is precious and very important. The way to protect you and your client, and the potential sale, is to add two extra steps to your professional home selling or buying process: 1) Understand the tell-tale signs of the bad appraiser, and 2) Feed the good appraiser with nourishing, healthy, local market sales and data.
- The Tell-tale signs are there, but it is up to you to find them. When the appraiser first calls for the inspection, ask the following questions and act as the protective gate keeper to the home. If the appraiser does not pass the test, tell them they are not qualified to work on your project, and you will have the lender send out a qualified local specialist.
- Hello, Mr./Ms. Appraiser, can I get your phone number, in case we get disconnected? ( Good appraisers understand and will be gracious and forthcoming, bad appraisers may be cautious and inhospitable)
- I would like to give you the best directions to the property, where are you coming from? (Good appraisers will be from local or nearby communities, that you recognize, bad appraisers may be driving for an hour or more, and will not be qualified to work in your neighborhood. If they withhold that information, they most likely are from too far away.)
- Are you a member of our local MLS? Do you need me to provide you with local MLS material and data? (If they are from farther away, they may have reciprocal access, but it may not be complete, and may not have the sales that you find are important. Again, a warning sign for you to note.)
- Have you found any material about our subject? (Most appraisers will have done a preliminary review of the subject and nearby comparables, before they even call you. If not, it may be an indication that they are rushing through a stack of orders, and not spending enough time to do an accurate analysis.)
- Can I get your email address, so I can send you some material about the house and the local market? (The appraisers you want to be working on your project will welcome any material about the subject and local comparables. If not, they may not be trustworthy)
- (If the appraiser does not appear to be qualified, or is from out of the area, and would not provide an accurate report) “Thank you for the call. Unfortunately, my professional responsibility to my client will not allow me to give you access to the property, as you are not “geographically competent”. We will be contacting the lender and having them send out a local expert instead.”
- (If they pass your test) “I look forward to meeting you. I will send you my material later today, to help you start your research. Call me on my cell phone if you need anything, or are experiencing any delays on the inspection day.”
- Immediately after the purchase contract is signed, run the local market data, and print out, as a .pdf, full page listings of the 3-5 most similar comps that you feel reflect the market of the subject. Then also, type up as a “word.doc:”, the subject and neighborhood features, so they can draft it directly into the report. Send these two documents to them that same day.
We are all part of this big real estate market, and those of us still standing, have the strength and creative drive to make it through the next several years, working together and sharing our love of our families and local communities. But we all know, it takes more time and creative thinking to make each sale in this market, and with these tools, you can more likely close that last 25% of escrows as well.