Okay, I promised you this entry so here it is! Let's hear your stories of appraisal nightmares. You all have them, you know you do. LOL! This is your opportunity to vent, gripe, complain, throw an appraiser under the bus (no names please) or even just ask a question as to why an appraiser may have done a particular thing that has left you puzzled. I'll do what I can to help.
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Baird & Warner Downers Grove - Downers Grove, IL
Realtor - Downers Grove
Good Morning, Alison-
Last year I had sold a home to my buyer clients. The lender they chose had used an appraiser that was not local. When he was using comparables, he used them from different communities, so needless to say he was having problems with the sales price. The lender would not take them because he was pulling them from another town, in a gated community, and on a golf course....where mine was new construction, different town, smaller lot, no golf course, etc.. After arguing with him and explaining why the properties he used were not comparables, I decided to do the work myself.
When I pulled-up recent solds from the community my clients purchased in, I had found many comparables and sent them to him. Low and behold, he used my comps. Not sure why he felt the need to go out of the community (different towns) instead of using the ones that were right there? He had no explanation for me of why he didn't use the "right" comps.
Jun 12, 2008 12:36 AM
3rd Generation Appraisal Services - Orlando, FL
Laura:
Thank you for your story. One of the responsibilities that appraisers are charged with is certifying that we are competent to perform the assignment at hand. One aspect (and one of the most important) is geographic competence. In other words, we should know the area in which our subject is located. Sounds to me like this appraiser was not geographically competent.
You obviously did well in providing the appropriate comparables as it sounds as if the second submission was accepted by the underwriter. I wish I could give you reliable advice as to how to avoid these situations in the future. Thousands of dollars are at stake for you and tens or hundreds of thousands are at stake for your sellers/buyers. It is vital that the appraiser get it "right."
These days, lenders are feeling the pressure from regulatory agencies to increase the buffer zone between loan officers, real estate agents and appraisers. The problem with this is that real estate truly is an industry that thrives upon information. If there is no easy flow of information among agents, loan officers, appraisers and lenders, we're at a severe disadvantage.
For your own sake, research and print out what you feel legitimately are the most comparable, recent and proximate sales to your subject (also, include several of the most similar listings which are currently competing with your listing, if you are representing the seller). Be very deferential when presenting your information to the appraiser (you know how crotchety some of us can be!). Keep in mind that appraisers are typically hyper-sensitive to undue influence. It happens everyday that less ethical "professionals" attempt to have us risk our licenses (and livlihoods) for that 3-digit fee. Just let the appraiser know that you realize he's already done his own research and that you're just trying to fill in any blanks. Personally, I welcome this information --- my attitude is that agents farm specific areas and know where the newly, as-yet-unrecorded FSBO sales are. When feasible, I'll drive on over to the former FSBO, knock on the door and verify the sale with the new owner.
Laura, another possibility, in your particular case, is that the lender used an Appraisal Management Company (AMC). These companies typically pay their appraisers only 50% - 60% of a typical appraisal fee (don't be surprised though if on the HUD you see an appraisal fee that seems well above the norm - the AMC skims from the bottom and the top). Hence, only the least experienced appraisers end up doing their work. Fight back. Complain to that loan officer. You have the power --- remember, they value your referrals.
Jun 12, 2008 08:28 AM
Anonymous
Alison...I just had to comment on one thing posted in your response.
There are always appraisers - just as in every profession - that arent very experienced or competent. The fact that this particular appraiser was on the roster of an AMC has nothing at all to do with that fact.
Making a blanket statement that an appraiser who works for an AMC means that they are "the least experienced appraiser" is false and ignorant. There are many seasoned, professional, ethical appraisers on the roster of AMCs. Especially in todays market, where most of the larger banks like Citigroup, Bank of America, Wells Fargo, just to name a few...have moved to only use AMCs for their appraisal assignments. This happened a while ago, not just with the new changes coming about. Many of the appraisers that were doing work for these large clients joined AMCs to retain these clients.
I am not saying AMCs are the best solution in our industry. But I do take offense to state that those that perform appraisals for them are "the least experienced" or somehow not performing above and beyond industry standards.
Jun 12, 2008 08:54 AM
#3
3rd Generation Appraisal Services - Orlando, FL
Anonymous:
Thank you for your brave response.
You are correct --- not all appraisers who work for AMCs are inexperienced. Lest a false and ignorant account of what I stated remains, here it is again: These companies typically pay their appraisers only 50% - 60% of a typical appraisal fee ............Hence, only the least experienced appraisers end up doing their work. You are quite right --- I should have replaced the word "only" with "often."
In fact, not all AMCs pay only 50% of the typical fee. Some pay quite fairly --- those are the ones I do assignments for (wink). The better quality AMCs also don't put "target values" on the requests or ask for "reconsiderations of value."
I did not intend to suggest that AMCs are some recent innovation, new to the scene as a result of the mortgage meltdown. In fact, I said no such thing. They've been around for many years and some have consistently whittled away at appraisal fees. Many appraisers, without the marketing accumen to find new clients, have acquiesed and the result has been an overall discounting of value and respect for the independent fee appraiser.
An interesting aspect of the proposed HVCC - the NY Attorney General's solution to appraisal inflations pushed by collusion between a large bank and its AMC - is to strong-arm a policy that appears to be pushing all lending appraisal work to AMCs. That's a little like having the DEA put crack dealers in charge of drug rehab facilities.
Jun 12, 2008 10:00 AM
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