Agents Talking to Appraisers and the Fogginess of the Dodd-Frank Act

Many people have a lot of different ideas.  Some appraisers are great and will talk to you, even ask for help with comps.  Others treat you like you have the plague.

Don - definitely a topic that caused lively discussion!  And it is clearly evident there are different practices and methods across the country based on many of the responses to your post.  And although someone wrote the appraisers "don't care about your comps anyway" (I'm paraphrasing here) I would disagree with that as I have been personally thanked for the research I've performed and provided to the appraiser.  Last, we have only had one "bad" appraisal in the last few years, so in our particular area the appriasers appear to do a good job.

I always try to meet the appraiser to let them in the property and briefly discuss the property. If there were multiple offers, I talk about desirable the property was at the price listed. It's always good to plant that seed, it can make the difference in them looking a little harder for another comp or giving a little higher adjustment for view, location or condition of a property. I am convinced that it works. Great post, thanks.

Rich Bosselmann R(S)

Koa Realty Inc.

(808) 345-5085

My comment.... I am shocked and amazed real estate agents meet the appraiser at the property. I don't think that ever happens in my market. Now that I said that, I have a first, a lake property sale where the agent is meeting the appraiser.  I appreciate her diligence after the sale is made, because it is not over until closing day.

Whenever a listing of ours goes pending, I make it every effort for the appraiser to have to contact our listing agent in order to access the interior of the property.  That at least allows us to speak with them and give them our data.

Our brokerage recommends doing exactly what you said, give comps to the appraiser, meet them there and ask questions respectfully.

Those were some great pieces of advice. Perhaps, a few more from the appraiser's point of view would also be helpful.

Distance to a property doesn't equal geographic competence. The arbitrary mileage cutoffs currently being imposed have caused me to lose a great deal of business. I grew in NYC and did most of my work in the boroughs until Dodd Frank, now, I am often deemed geographically incompetent because I choose to live on Long Island, even though, I probably know those markets as well as or better than my home county. 

For listing agents, please don't include foyers, mudrooms, laundries, baths and basement rooms in your totals. I know you are trying to present the property in the best light but you may well be causing the appraiser to overlook some properties when he/she is sorting out potential comps. I personally read through every potential listing to be diligent but don't expect every appraiser to be so conscientious. It is very time consuming and lenders are placing ridiculous pressure to shorten turn time and return reports much too quickly. Also, don't even bother bringing comps more than 6 months old and even more of a waste, don't bring sales 25-50% higher than your purchase price, they can't be used, unless you undervalued your listing. Trying to find the highest sales in a market is not a comp search. The appraiser is required to explain why all of those sales within a 1/2 mile of the subject were not used just to go 3/4 of a mile to find something that supports value. If there is a good reason, (condition, lot size, GLA) then by all means point it out but to repeat, there must be a good reason. You should also realize that just because a comp property sold for less than what you’re looking for, doesn’t mean it won’t support value. Sales are supposed to be bracketed around the appraised value. Some will adjust up and some adjust down. It would behoove you to read a few appraisals thoroughly to understand the process.

Since Dodd Frank, each report takes at least double the time to write at the same time banks are pushing to have them returned in 48 hrs or less from the time of inspection. What used to be a 12-15 page report is now 30. Sadly, appraisers are under governmental constraints as well as bank pressure. If you want the job done properly, don’t chat the appraiser up while he’s doing the inspection,  that is how things are missed. I will always spend as much time as necessary with the realtor, homeowner or whomever before I leave to ask questions, go over qualities of the property and comps. Getting in the way of the photos and pointing out “this is kitchen, the master bedroom etc” wastes time. We can generally recognize what a room is.  

The more we understand each other’s responsibilities, the better it is for all concerned.

This post got a great response and i am glad  I got to read it

Good Morning:  This is some great Info for all,  Keep up the good work and good luck with your sales,  E

What a range of responses you got to this post!  Excdellent choice of a topic.

I will always offer to communicate with the appraiser about the subject property. Most are interested but some are not, so I play it by ear.

Appraisers generally welcome any information that helps them do their work. As professionals they know what is appropriate and what is not.

Thanks for reminding us that the appraisal can be such a huge factor in a sale. Except for cash purchases, some appraisal make the sale, others break it! In the interest of all parties involved, the listing agent should be ready to provide comps and addtional information to an appraiser.

Donald 

It seems there are a lot of new regulations put in place for both buyers and sellers. Times are changing almost daily.

Thanks for your thoughts. 

I think appraisers have a tough job so I try to make sure they don’t stress over appraisals of my listings. I always bring comps and whatever additional information that I think will make their job easier. They often have the information anyway but they appreciate that I am being helpful and not making their life more difficult.

Valid Points, Donald!

As a Home Appraiser, I sent this to my State's Appraiser Board this morning asking for guidance be issued to ALL Louisiana State Certified Residential Appraisers: 

"LA Appraisers Need Guidance On Agent Appraiser Communication

There’s tremendous “fogginess” about Agent Appraiser communication during and after an appraisal.  We need Appraiser’s Board to issue detailed guidance, based on Dodd-Frank, on how we are to communicate with Agents before and after report submission, seriously!  

Honestly, I hate revisiting a report for comps I may have overlooked based on an Agent’s opinion. So, when I’m setting up appraisal inspections, I tell the Agent as a common professional courtesy that this is their opportunity to provide any comps used to establish listing price.  Some Agents “Farm” neighborhoods and sometimes know more than Appraisers about neighborhoods and more about individual sales that may have shown.

I was brought up in this business to understand theirs 3 professionals involved in a home sales in terms of value: Listing Agent, Selling Agent and Appraiser.  And, I do this to avoid an appeal after report submission.  Some Appraisers have a different opinion and think any Agent communication is an attempt at influencing their value decision.  This is crazy to me in that we as professionals must be able to communicate more and I thought that’s why Dodd-Frank was written, to correct the wrongs HVCC had on our industry.

Two Local Agents Stated This To Me: 

Bill, I will ALWAYS speak with the appraiser when I get the call. I like to meet the appraiser at the listing to go over the property details too. But a lender told me recently that I wasn't supposed to do that anymore. What exactly is permissible these days as far as communication?

Bill, I welcome the opportunity to speak with and on occasion meet with the appraiser either over the phone and when possible, at the appointment time. This does give me the opportunity to point out the highlights of the property as well as pass a copy if the original CMA that was done just prior to the listing. It is our job To make sure that any and all information is passed whenever possible. I would like to see open communication after the appraisal is done as well. The shoe is now on the other foot as some agents will defer you to a showing service because of time issues (not always because of fear to communicate with) and so will the appraiser is off to his next appointment. No exact right answer here, but effort by both can go along way." 

Bill 

A lot of good information here.  Thanks for putting this together

Donald,

Your post should be required reading for realtors, lenders and appraisers.....Thanks.

In my opinion whether an agent "should" talk to an appraiser or not doesn't have anything to do with any law. It comes down to the individuals involved. If the communication is delivered with respect for the other person and what they do and has a "here's some data that "may" be helpful" feel to it & the receiver is willing to accept that kind of communication then it can be a great thing and benefit all parties. If either side is off (ie the agent deliveres their communication wtih a "must use this data" type of feel or if the appraiser is the kind of person that resents anyone suggesting anything), then the clients are probably better off if the no communication between agent and appraiser takes place.

As I've often never met a specific appraiser before and don't know them,  I have found that a simple request works well before delivering my communication. I ask something along the  lines of, "I have some data about this home, comps and trends in the neighborhood - do you want it? 99% of the time they say "sure". The other 1% I bet it's good that I asked before just giving it to them.

In my market the appraiser contacts the agent (sometimes the listing agent and sometimes the selling agent) for entry into the property.  Often the agent will provide them with comps.  I understand the desire of either agent to get the highest legitimate appraisal price, however it seems to me that a buyers agent, functioning as a buyers agent could run into some ethical issues if they influence the appraisal.