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The Appraiser Came from Where?

Education & Training with The Melanie Group

An issue that just hasn’t gone away in real estate is that of the travelling appraiser—the one who does not live or work in the area, but nonetheless has travelled there to do an appraisal. Some Appraisal Management Companies (AMCs) have faced this problem by requiring that their appraisers only accept assignments within a particular geographic area, usually a circle around their office, but some AMCs continue to search for the quickest, cheapest appraisal—which may involve an appraiser without geographic competency.

                Time after time, real estate agents in my classes are reporting that appraisers are coming from several counties away; they are indicating by their questions (“Where exactly is your town?”) that they don’t know the area, and they are also revealing their lack of competency by statements like: “I don’t belong to your MLS, so I don’t have a lock box key—please meet me at the property. By the way, bring some comps.”  To say that this is just wrong is a massive understatement! First of all, the last person who should be the sole source of comparable data for the appraiser is the listing or selling agent—he or she has a vested interest in making certain that the property appraises for contract price, so of course the comps provided will support that number.  But on a larger level, the appraiser is violating the Uniform Standards of Appraisal Practice (USPAP), and therefore, violating state law (USPAP is incorporated into all state appraisal license laws, under FIRREA) and actually exposing him/herself to criminal penalties.

                Here’s why: if the appraiser is doing an appraisal for a loan, he/she is using a Fannie Mae form.  USPAP is clear that if an appraiser accepts an assignment with “assignment conditions” from the client, he or she must abide by these, or be in violatin of USPAP. These appraisal reports have certifications which are pre-printed, cannot be changed, and the appraiser is certifying are “true and correct”. Here are the two that matter, with respect to this problem:

Certification #11 states: “I have knowledge and experience in appraising this type of property in this market area.” 

                Fannie Mae does not allow “on the job training”—the appraiser either knows the market, or he/she does not. There is no “sorta, kinda, maybe”.

Certification #12 states: “I am aware of, and have access to, the necessary and appropriate public and private data sources, such as multiple listing services, tax assessment records, public land records and other such data sources for the area in which the property is located.”

                Again, it’s like being a little bit pregnant—you either are or you are not. You either belong to the MLS, or you don’t. You either subscribe (if a subscription is needed) to online records, or you don’t.

                Many MLS services now include regional data. However, just having access to the data is not the same as “knowledge and experience….in this market area”.  My MLS system includes data from 5 counties; I personally will only work in half of two counties—both within not many miles of where my office is located.  If you, as an agent, or a homeowner, suspect that the appraiser lacks expertise in the market, contact the lender and make a major fuss.  The lender should not be hiring an appraiser who does not know the area.  If you are an agent, head this kind of behavior off before it happens. When you discuss lenders with your buyers, contact the lender the buyer plans to use. Ask the lender point blank: “How do you (or your AMC) ensure that the appraiser hired has geographical competency in this area?” If the lender can’t give you an answer which makes sense, e.g. “We assign appraisals by zip code, and our appraisers are limited to X number (a low number) of zip codes”, or “We will not assign appraisals that are more than X number of miles from the appraiser’s office” then push back by saying you will need to investigate other lenders and confer with your client.

                At the end of the day, buyers want (and deserve) an honest and fair appraisal performed by an appraiser who is competent in all respects—including geography. 

Jean Hanley
Coldwell Banker Kivett Teeters - Hemet, CA
Specializing in Folks Who Want To Buy/Sell Homes

Great blog Melanie.  I have not really run into any out of area appraisers, however, I have heard other agents complaining about them

Apr 29, 2013 06:59 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

We have it quite often and it is something I dread. You try to educate but most of the time they bring the influence from their market with them.

Apr 29, 2013 01:39 PM
Alec Hagerty

Thanks Mel,  this is easily one of the top three complaints I hear about in my classes...   but, what can an agent do?  Timely becomes an issue too ... 

Apr 29, 2013 10:54 PM
Doug Huhn
Bridgepoint Mortgage - Clinton, CT
Mortgage Professional

As a mortgage professional, I need to address (no pun intended) some of the information in your blog. The AMC may have a limited number of appraisers who will accept orders. Unfortunately, many appraisers will only "partner" with AMCs that will pay them the highest amount for reports and have less restrictive turn-times. The issue is not with lenders; HVCC needs to be amended. This is one of the greatest examples of why using a broker in todays lending environment has become more advantageous than a direct lender or bank. Mortgage brokers have the ability to choose an investor that utilizes an AMC that has a strong pool of local appraisers in any geographic area. The appraisal fee is less and the turn-times are faster. 

Apr 30, 2013 11:24 AM