10 Rules of Engagement with Appraisers that can impact Values

Real Estate Appraiser with Lanier Appraisal Service CR004373
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Realtors have more control over how the Appraisal goes than they may think. If you follow these Top 10 "Rules of Engagement" with Appraisers you will be doing your Sellers a huge favor. Time upfront can reduce the time you may spend on the back end trying to deal with an appraisal that comes in under the sales contract. Remember you are trying to get the HIGHEST possible price for your listing so this takes some work. Your sellers will love you for it!

* Pretend you are selling this home to the Appraiser  AND pretend it is YOUR home. Some of the best Listings I have seen are Owner/Agent Listings.

1. PHOTOS....Good Quality and many of them please! Include the views from the rear of the home especially when dealing with 
Lake, Golf Course or Acreage homes, etc. The photos do not have to be professionally taken, but they need to be of high quality so when you click on them you can see all the details. I see way too many small resolution photos that do not open up to larger, clear ones when you click on them. 

** Use all the space you can under EACH photo as descriptors. Appraisers read these every day. The more you add the better, ie;  Comments under the Kitchen photo could read: " Renovated kitchen in 2012, new granite counters, new GE Profile Stainless Appliances, New Tumble stone backsplash, New upgraded lighting. Owner put over $30,000 into new kitchen upgrades" The more details the better as they will provide valid support for a higher value in the appraisal. Cost of all upgrades is not required but DOES help!

2. Provide packet of information in the home with "Appraiser Information" written on the outside of the envelope. Many times Appraisers will not call ahead, so have this packet readily available in the home. If they do call, tell them the packet is there which includes information on how you determined an appropriate Listing Price and if a pre-listing appraisal was done, tell them you have included a copy in the packet.

** Make sure to add comments on each FMLS/MLS sheet stating how they DIFFER from the Subject. Very helpful especially if you have been inside those other homes since Appraisers do not see the inside of the Comparable sales, only the Subject.

3. DO provide appraiser with insider information you may have about the home or the neighborhood that they may not have: Include
 a cover letter to the Appraiser which would include things like why the current owner purchased this home and why the current BUYER is purchasing this home. What are the perceived value added amenities of this home for a buyer. If you know of positive things that are happening in the area or neighborhood, include these. This can be very helpful and so worth your time to provide to the Appraiser.

4. Do include a BRAG Sheet with costs of renovations, additions, updates and the year/s completed. This is Very important for getting the most out of an Appraisal. 

5. Call Appraisers Back right away! You do NOT want them guessing on something important and you do not want the Appraisal delayed waiting for your call back. Appraisers typically call the day or day before the report is due as that is when they are working on it, so please call them back as soon as possible, whether it is your listing or not. Remember one day they will be calling a Fellow Realtor on one that impacts your deal. 
6. Do NOT price your listings over anything else that has sold in that neighborhood unless you can provide details and reasons why! Lenders have real issues with appraised values over anything else that has sold in that neighborhood, so be prepared to support your actions on your listing price along with other sales that will prove this home is worth being priced over all the others.  
7. When you select Comparable Properties make sure you Bracket your Comps...Provide sales and listings that have sold BELOW and ABOVE your sale. This is how Appraisers must chose comps, so please follow the same process and again note on each listing sheet why they are inferior or superior to your Listing.
** Remember one CRUCIAL thing when it comes to Comp Selection:  Choose only those sales that a Buyerwould consider as a good replacement for the subject at the same or similar price if the Subject was no longer available. Don't rely solely on SALES PRICE or Price per Square foot for your Comp selection. Appraisers do not do this so you should not do this. Do not go into a superior development with superior homes to justify your listing price or it could backfire on you....Adjustments for location, square footage, quality and condition will be made and this sale could actually reduce the value for your Subject property. **Update per Bill Cobb's comment: Do not forget SELLER Paid Closing Costs/Concessions. If a seller pays well more than the typical closing costs, you MUST adjust downward against that sale as Appraisers will do this. This is Required by Fannie Mae to adjust that sale in the amount that it has effectively increased the Cost of that Home over what the typical market price should have been. 
8. Consider using 2nd Gen Square Footage Datasource which comes from actual Appraiser measurements of the homes. This data will help you to accurately determine how much larger or smaller the homes are...the same way an Appraiser would. GLA (that area above ground or grade is what appraisers count) Basement level finished space is considered separately and shown on this website along with other physical data about each home which has been measured. 

Cost is very reasonable at .10 cents per address and can be printed off for your files.
Do  not say things to Appraisers like: "You should have no problem appraising this home at the Sales price"... or... "We need a GOOD appraisal on this one". Remember one thing...Appraiser's objective is to protect the bank and not to make the deal work. 
All you will do it place doubt in the Appraiser's mind if you make comments like this and trust me I have heard them many times! Just give them the packet of information already discussed and this will go a LONG way to getting the best possible value that the market will support for your Listing.
10. Do tell Appraisers if you had multiple offers and the details of those as this will provide them with good information about the value and demand for this property.
Thanks for reading my newsletter. If you know of anyone who would be interested in having this sent to them on a monthly basis there is a link below to forward this to them. 
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Lanier Appraisal Service
Flowery Branch, Georgia 30542
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Re-Blogged 11 times:

Re-Blogged By Re-Blogged At
  1. Patricia Kennedy 10/29/2015 08:00 PM
  2. Michael McGuffie 10/26/2015 02:06 AM
  3. Bill Cobb Appraiser 10/26/2015 04:02 AM
  4. Shannon Slater 10/26/2015 05:02 AM
  5. Frank Rubi 10/26/2015 05:34 AM
  6. TENNESSEE HOME TEAM 10/26/2015 07:48 AM
  7. Brigita McKelvie, Associate Broker 10/26/2015 10:42 PM
  8. Melissa Brown 10/27/2015 04:12 AM
  9. Gerald Morgan 10/29/2015 07:28 AM
  10. Will Nesbitt 10/30/2015 05:23 AM
  11. Winston Heverly 01/04/2016 12:27 PM
Real Estate Best Practices
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how to increase appraised values
realtors have control over appraised values
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Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Mary Thompson great discussion - and love the difference of opinion.

I may differ in my own way - admitting the fact that we should work with appraisers to show the value in the house - based on the incidence.

An appraiser valued a home at $60K below what the buyer was paying! We had to take it to the next level and surprise surprise - the new appraisal was about 10K above the offer price - after I showed the comps and requested the review of the appraisal.

And one more - the appraiser refused to even talk to me saying, he knows what his job is! (And yes, I do agree with that statement.)

Oct 27, 2015 02:54 PM #77
Dee Neal
Palmer House Properties - Alpharetta, GA
Atlanta Area Real Estate

you know, when i joined activerain many years ago, i was a new agent and i learned so many things here which helped me in my business. this post is added to those things. a lot of things on your list, ive never thought of. thanks a lot...this post is being bookmarked by me. 

Oct 27, 2015 03:49 PM #78
Barbara Michaluk
Weichert Realtors | Silver Spring, MD Phone Direct 240-506-2434 - Silver Spring, MD
Leisure World Specialist / Full Service REALTOR

Mary, These are good tips for realtors to communicate to an appraiser. It's always good to help the appriaser by furnishing appropriate info about the property and how the homes was priced.

Oct 27, 2015 08:48 PM #79
Certified Mobile Notary Signing Agent - Smith Mountain Lake, VA
Highest Ranked Certified Mobile Notary in Virginia

In ANY  business, whether it be lending, like me, or appraising, like you; information is ALWAYS  valuable !   It doesn't matter whether it is GOOD information or BAD information; it is all part of how we form an opinion as to value.

Oct 28, 2015 03:07 AM #80
Kate McQueen
Realty Associates Texas - Cypress, TX
Tailored service for your real estate needs!

I recently had buyer clients that wanted to offer on a home that was substantially overpriced.  I spent several hours working on the comps trying to find the rationale the listing agent/seller had for pricing this home and there simply was no evidence to support the price.

To make matters worse, it was an investor flip and of course he wanted make money.  But the reality was that there was no way out for him at the price he expected, and in fact, he would most likely need to bring money to the table.

They rejected my buyer client's offer since the seller believed he could get at least close to the asking price.  It won't happen.

Agents do a real disservice to sellers by overpricing a home, or allowing a seller to demand that it be overpriced and then taking the listing.  In the case I'm describing here, going back as far as two years there was no listing that sold above a certain amount.  Item 6 in your post applies here, along with a few others.  

The only clear pattern that emerged for me while searching for comps, is that the listing agent had comped the home to new construction homes in an adjacent community without adjusting for age and other amenities.  Even the newer homes were't selling as high as this listing once they became resale.

Bad news for all involved on this one.  My clients liked the home but there was no way to get the seller to see how his best alternative was to absorb the losses now rather than wait and lose even more when the home doesn't sell.


Oct 28, 2015 03:49 AM #81
Mary Thompson
Lanier Appraisal Service - Flowery Branch, GA
Lake Lanier Appraiser in North Georgia

Kate McQueen #81. KUDOS to you! As a buyers agent you did your job and did it well! I could not agree more with what you did for your buyer. Listing Agents want to get the highest price for their sellers, but buyers agents should be protecting them from paying too much for a home. I totally agree that Listing Agents who take an over priced listing (and most of them know going into the listing that it is overpriced) are doing a disservice to all parties involved.

 Some Realtors M/O is to take over priced listings in the hopes that they can get it reduced later on and get the home sold. This is NOT the case! In our market 35% of overpriced listings CHANGED Hands so the Realtor who took that listing lost out. 

It has been proven time and again that an over priced listing winds up selling for less than it would have if it was priced right to begin with. 

I wish all Buyer's Realtors were like you! I surely hope your Buyer realizes what you did for them.

Thank you!

Oct 28, 2015 04:09 AM #82
Sylvia Jonathan
Coldwell Banker Platinum Properties - Irvine, CA
Broker Associate, SFR

I do exactly that (except # 8) and have for years, including during the "down market". Works like a charm.

Oct 28, 2015 06:12 AM #83
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Those are some great tips.  It is always akward working with appraisers.  Some like what we can tell them and others want nothing to do with us.

Oct 29, 2015 04:04 AM #84
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

This is so deserving of all the attention you recieved! I have book marked it to use in my own business - thanks for the great ideas

Oct 29, 2015 08:56 PM #85
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

All great points that very few agents actually know ! I'm BOOKMARKing this post to share in Agent Training !!!

Oct 29, 2015 09:33 PM #86
Doris Freeman
Reliant Realty - Hendersonville, TN
Broker/Agent, Realtor

Thanks for the great tips and information, very informative

Oct 29, 2015 11:00 PM #87
Will Nesbitt
Nesbitt Realty at Condo Alexandria - Alexandria, VA
Nesbitt Realty is a family-run brokerage.

Stop, call (770) 967-0753 and speak to Mary Thompson about Real Estate appraisals in Flowery Branch, GA.

Oct 30, 2015 05:30 AM #88
Scott Kimball

Fantastic post with great information!

Scott Kimball- Home Inspection All Star Atlanta

Oct 30, 2015 06:47 AM #89
Mary Thompson
Lanier Appraisal Service - Flowery Branch, GA
Lake Lanier Appraiser in North Georgia

Thank you all. So glad to help out and that you plan to use this data in the future. You are doing your sellers a great service!

Oct 30, 2015 07:14 AM #90
Gary Coles (International Referrals)
Venture Realty International - Las Vegas, NV
Latin America Real Estate

Hi Mary Thompson I think your post is great.  Appraisers and agents should work together and everything you have suggested appears to me to be ethical and helpful.

Oct 31, 2015 12:28 PM #92
Valerie Crowell
Keller Williams - Walnut Creek, CA
Broker Associate

Houses don't appraise all of the time in our market.  It's a market full of raging appreciation.  If I can't justify the comps, I'm going to be in an appraisal fight.  I'd rather take conventional with the ability to make up some of the difference than FHA and be saddled with that appraisal for six months.  That being said, if the buyer's agent can tell the story, I'll bite.

Nov 01, 2015 11:49 PM #93
Beth Brittenbach
Century 21 Schutjer Realty - Vallejo, CA

Thanks for a great post Mary! I'm so glad to know someone really does read those descriptions with the photos! The Public and Confidential Remarks fields on our MLS are pretty restrictive but we can go on all day with photo remarks (and I do!). Most appraisers would concur with your recommendations, but unhappily there are those who not only work in areas they don't know well but refuse to accept a package from the Realtor. Since the inception of the AMCs we have had too many instances of appraisers being assigned to our area who have no idea how to establish value here; and they are almost always the ones who refuse to accept an appraisal package. Oh, the stories we could tell!!:):) 

But generally, the appraisers are dedicated professionals who know their jobs and appreciate agents who show them respect, courtesy and an equal level of professionalism. 

Nov 06, 2015 04:15 AM #94
Mary Thompson
Lanier Appraisal Service - Flowery Branch, GA
Lake Lanier Appraiser in North Georgia

Amen Beth, when treated with respect and courtesy Realtors and Appraisers can indeed work in harmony. Keep up the good work for your Sellers!

Nov 13, 2015 02:59 AM #95
Sussie Sutton
David Tracy Real Estate - Houston, TX
David Tracy Real Estate for Buyers & Sellers

Great re-post. I am bookmarking this one. I normally don't do this but will from now on.

Jan 04, 2016 01:52 PM #96
Bob Crane
Woodland Management Service / Woodland Real Estate, Keller Williams Fox Cities - Stevens Point, WI
Forestland Experts! 715-204-9671

Great advice, Selling the property does not end when the purchase offer is signed!

Jan 04, 2016 03:26 PM #97
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Mary Thompson

Lake Lanier Appraiser in North Georgia
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