Appraiser Pressure

Appraiser Pressure: Real or Perceived

Appraisal pressure has become a hot topic, but what really is it that participants in a real estate appraisal assignment are not allowed to do.   Appraisers understand that our lender and real estate clients are in the business of making loans and selling homes, and they understandably do not want the appraiser to kill their deals.   However, the "appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests" and not advocate the cause or interest of any party or issue".  So there is sometimes a conflict between the needs of our clients and the legal requirements of the appraiser under the "Uniform Standards of Professional Appraisal Practice."  

I find the most blatant pressure is after the appraisal has been delivered, when the client tries to get the appraiser to up the value estimate or remove (truthful) but negative descriptions or determinations in the appraisal report.  Often these requests start out politely, but can become very nasty when the appraiser refuses to comply.   Now in the eyes of the client, the appraiser has become unacceptable and a new, more understanding appraiser will be found for future work.  Appraisers who have killed deals learn that they might also be stiffed on their fees.  The combination of nasty phone calls, loss of clients and revenue follow that appraiser around, causing some to become accommodating appraisers - willing to hit the needed values and ignore things about a property, a neighborhood or the local real estate market to keep future clients. 

Because of the baggage appraisers will see "pressure" when it is not intended.  For example an owner's estimate of their homes value on an appraisal order is viewed as a "target" value.  Other times there is real pressure when the appraisal request asks the appraiser not to proceed unless he or she can provide the needed value (with the implication that no compensation will be provided unless the appraisal is acceptable).   "An appraiser must not accept an assignment that includes the reporting of predetermined opinions and conclusions."  And "an appraiser must not communicate assignment results in a misleading or fraudulent manner."     

In a legal setting when the appraiser concludes at or near a suggested value on the appraisal request and that value is questionable, it looks very bad for the appraiser.  Violations of the Uniform Standards are not only used to revoke an appraiser's license, but are also used against the appraiser in criminal cases.  Yet, many appraisers gamble daily between mortgage fraud and keeping their clients happy.  

A related issue to appraiser pressure is "comp checks".  Again appraisers understand loan makers do not want to waste time and money on a loan that will not fund, because the property has valuation or condition issues.  So they request the appraiser to give them a heads up if the value needed in unlikely.   So as a service (and the potential of an appraisal assignment) appraisers might do some primarily research (using data sources they pay for and their time and expertise) to give a possible range of value.  Once an appraiser provides a range of value, a pinpoint guess at potential value or even a benchmark of value ("it looks like the value you need is possible") he has performed a "legal" appraisal under the Uniform Standards of Professional Appraisal Practice.  It would be a very limited scope appraisal, but an appraisal never the less, subject to all the requirements of the "Standards".  Most appraisers do not go through all the required steps of an appraisal when providing a comp check - and the end results could be misleading (a violation).  Every now and then the appraiser does their primarily data search and once at the property realizes that home sales he hoped to use in the appraisal are not reasonable and new ones should be found and the possible value is now different.  All this appraiser time and expertise often goes uncompensated.  That is not right!  In order for the appraisal process to best serve the "public trust" the appraiser needs to be compensated for their time, expertise and professional opinions, not just paid when the client gets the results they want