Top takeaways or tips from today's "Can We Talk: Appraisers and Agents Forum". My understanding is that this was the third of such gatherings in Louisiana encouraging Appraisers and Agents to talk out issues, concerns and get their questions answered.
A Special Thank You to Bridget Fredericks, Ross Shuffield MAI, Joe Mier SRA, Cheryl Bella SRA and Bruce Unangst, Executive Director of La Real Estate Appraisal Board, for their diligent effort to help the Louisiana Real Estate Profession. Thanks as well to Leslie Ortego, Executive Director of La Chapter of Appraisal Institute, for setting up and making this gathering a success.
For this gathering, the Moderator was Ross Shuffield, MAI and Presenters were Cheryl Bella, MAI, Joe Mier, SRA and Greater Baton Rouge Association of REALTORS® 2014 President Bridget Fredericks. Joe Mier is the current Vice President of the Louisiana Chapter of Appraisal Institute and incoming President for 2015. Photo source above is Louisiana Chapter of Appraisal Institute.
A LITTLE HISTORY ON WHAT CAUSED APPRAISERS AND AGENTS TO STOP TALKING
In 2009 and during the national U.S. housing and financial meltdown, the Federal Government enacted HVCC (Home Valuation Code of Conduct), which created extreme Appraiser Independence and ended pressure on Appraisers to hit target numbers in appraisal reports from both Lenders and from Agents. While Home Appraisers were relieved that the pressure was off of them, the result was Appraisers and Agents ceased to communicate, which was extremely damaging to national real estate market. This lack of communication lasted from 2009 to 2012 when Dodd-Frank Law was enacted to try to correct the wrongs created by HVCC. Thus the need for "Can We Talk" gatherings throughout the State of Louisiana. Photo source above is Louisiana Chapter of Appraisal Institute.
REGULATORY COVERAGE - EXPLAINING TO AGENTS WHAT'S REQUIRED OF APPRAISERS
Cheryl Bella, MAI is in mortgage banking with responsibilities of Fannie Mae appraisal and USPAP compliance. USPAP is the set of laws Appraisers are bound to uphold - Uniform Standards of Professional Appraisal Practice. Cheryl reminded Agents that Appraisers are bound to their client, to remain Objective, they are not advocates for an Agent's cause (their sale) and do not have the goal of hitting a target value in reports. Cheryl reminded Agents that appraisals are now generally ordered through AMCs (Appraisal Management Companies) through a rotation roster of Appraisers on their fee panel. AMC's separate Appraisers from Lenders so Appraiser Independence remains intact, which was the intent of HVCC and Dodd-Frank. An Appraiser's client is the AMC that orders the Appraisal and the Lender and is not the seller, home buyer nor the Agent(s) involved.
USPAP REGULATIONS APPRAISER MUST ABIDE BY
NUGGETS FOR GBRAR AGENTS:
Five (5) Good Ideas for Agents To Communicate With Appraiser About Their Deal:
1.) Fill out EVERY MLS sheet completely leaving extra comments and extra photos because each MLS sold is a potential comp for an Appraiser at some point
2.) Physically Measure the home being listed instead of copying previous MLS listings or relying on old homeowner plans. This is so vital that in 2015, the La Real Estate Commission is forcing the issue by making how to measure a home based on ANSI Standards a mandatory class. This means owning the tools and carrying those tools in your automobile to measure homes and/or hiring an Appraiser to measure your listings. Doing so will
3.) Is to email what they wish to be considered by the Appraiser (info on backup offers, potential comps, etc.)
4.) Or to leave what they wish to be considered on the Kitchen Counter for the Appraiser for the appraisal inspection
5.) Or to use the private area on MLS Sheet for showing instructions to say something like Appraiser please call Listing Agent directly at 225-...-.... for insight into how the market reacted to my listing or I have important feedback on this listing.
Can Appraisers and Agents Talk about a sales transaction that Agent has under contract?
How much can Appraiser and Agents talk about this transaction?
What can an Agent offer to an Appraiser about this transaction?
When can an Agent offer to an Appraiser about this transaction?
Answers: Agents can offer info on seller motivation, seller updates upgrades, marketing time, multiple backup offers, if sellers are making repairs based on a home inspection report and potential comps in Agent's workfile used to support the listing price. Agents can't pressure the Appraiser to hit a target value. Generally the best practice is to communicate with Appraiser when they initially call to setup the appriasal inspection. After the home appraisal inspection has taken place, an Appriaser generally doesn't communicate with Agent(s), which is why it's very important for the Agent to take the time to communicate with the Appraiser. This all depends on each individual Appraiser. In 2014, Appraisers still want to operate in an "Appraiser Independence" environment respected by the Agent (s) involved.
What's THE WORST thing you can say to an Appraiser when they call to setup the Appraisal inspection - when the Appraiser is trying to communicate with you when they call about your deal?
Answer: "Call CSS"...my opinion (Bill Cobb Appraiser's Opinion)
Telling an Appraiser to "Call CSS" is giving up your opportunity to talk to the Appraiser about this transaction, to offer info on backup offers, detailed list of renovations / updates, potential comps, etc. Be proactive upfront instead of appealing the appraisal after it's been done and turned in.
HOME APPRAISER TALK - Joe Mier, SRA
Joe Mier, SRA, Joesph Mier & Associates Real Esate Appraisers & Consultants in Hammond La, talked about how Appraisers do their job and took questions from Agents on what is living area, what is not living area, accessory units, ANSI standards, what is a bedroom, Q's and C's (Quality and Condition ratings), how Appraisers handle moving market trends, how Appraisers apply adjustments to comps, excessive seller paid concessions, avoiding pricing by the MLS CMA method of sold price per sq. ft., etc.
BRACKETING LIVING AREA.
Joe also covered "Bracketing", how Appraisers are required to bracket or sandwich the subject's living area in a report. If subject is 2,000sf living area, Appraisers are required to use comps between say 1750sf to 2250sf, within a 10% to 15% variance.
PROBLEM WITH SELLER PAID CONCESSIONS.
The problem with excessive seller paid concessions is OVERPRICING. The damage occurs when seller paid concessions are say $6,000 to $15,000, that after these sales are reported closed in MLS, the next Agent pulls their MLS CMA without deducting the excess. Thus this Agent overprices their listing and may experience a problem with their appraisal at contract time.
BE CAUTIOUS IN CLASSIFYING ADDITIONS OR ENCLOSURES AS LIVING AREA
Make sure proper building permits were obtained and that these areas match original quality of main home. To be classified as "Living Area", addition or enclosure must be able to be accessed from interior of main home.
AGENTS REPRESENATION - Bridget Fredericks
Bridget Fredericks, GBRAR's President, covered best practices of filling out MLS sheets to help both Agents and Appraisers. Then Bridget took multiple questions from Agents on best practices and how to contest an appraisal when Agents want an Appraiser to consider additional comps.
Again, I thank ALL involved and attended this successful gathering. Bill Cobb, Appraiser
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