Quick, the Appraiser Is at the Door!

Take the listing? Check! Sell the home? Check! Inspection completed? Check!

Appraisal okay? Things could have gone better! What happened?

Everyone benefits when appraisers and listing agents work together. Often a low appraisal value could have been avoided if all parties knew their roles at the beginning of the assignment instead of at the end.

It’s okay for a listing agent to communicate with an appraiser, but it’s inappropriate to demand a particular value. Per the Uniform Standards of Professional Appraisal Practice (USPAP), appraisers must arrive at their own supported conclusion. Look at the appraiser as an important part of the team but one who must remain independent, impartial, and objective. The appraiser is not, and cannot be, an advocate in a mortgage assignment.

That said, don’t wait until the appraiser is at the door to begin thinking about the appraisal. It’s a reality that the appraiser has already completed most of the work on the assignment before arriving at the house and would prefer information sooner rather than later.

Appraisers can do their best job when fully and properly informed. Brokerage professionals work with buyers and sellers every day and are experts when it comes to current market conditions. It’s appropriate to discuss your market knowledge with appraisers. A good appraiser doesn’t take any offense when it comes to reliable data and great information.

How else can you help an appraiser? Meet the appraiser during the appraisal inspection and provide the appraiser with a package, which at a minimum includes the following:

1. MLS printout for the subject home
2. Copy of the contract
3. Spreadsheet of other offers received
4. Property data sheet or brochure used during the marketing period
5. List of improvements that includes year completed and cost
6. Description of special features that make the subject property stand out from other homes in the area
7. MLS printouts of sales you want the appraiser to consider
8. MLS printouts of pending sales with actual contract prices
9. MLS printouts of current listings
10. Realtors Property Resource® (RPR) report using the Refine Value tool to offer your own opinion of value
11. Survey of the property, if available
12. Floor plan and measurement of the home, if available

Be reasonable with the selection of comparable sales. Take the time to learn the guidelines that an appraiser is required to follow instead of providing randomly selected sales, which may not even be allowed for consideration. Generally speaking, the best comparable sales to provide have the best combination of being located in the same marketing area, closed within the past three to six months, are in the same or similar condition, have a similar gross living area (- +/-5% ), and have the same number of bedrooms and bathrooms. Fannie Mae and Freddie Mac, FHA, and VA appraisal requirements vary. Not all appraisals are based on the same beginning instructions. Find a copy of each agency’s standards to be aware of the assignment conditions.

Regarding comparable sales, consider approaching the appraiser like this: “Here are comparables I used in pricing the home.” This type of a statement is very non-demanding and could go a long way toward establishing a good relationship with the appraiser.

Prior to an appraisal inspection, educate your clients on how to best prepare for the appraisal, which is really the same instructions you’d provide for showings:  beds made, house clean, lights on, yard looking its best, clutter gone, owners and pets gone, no smells, and so on. Sellers shouldn’t relax just because a house is under contract. It’s just as important to keep things looking their best straight through the closing.

What if the appraisal comes in below the sales price? Don’t call the appraiser directly to discuss it. Instead, ask the lender if you have the right to submit additional information for the appraiser’s reconsideration of value. Ask yourself for next time, could this information have been provided in “The Package”?

What if you feel the appraiser doesn’t have the proper experience to work in the subject area? Or, perhaps the appraiser isn’t familiar with the particulars of the property being appraised? It’s best to articulate your concerns to the lender early and in writing; when doing so, always being respectful of the appraiser and the lender.

The bottom line is that real estate agents and brokers can be advocates for their clients whereas an appraiser’s assignment is unrelated to a predetermined value or the attainment of a stipulated result. However, by having great documentation, keeping interactions professional, and keeping the home in order,  listing agents and homeowners can open the door to a smooth appraisal process.