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Improving Communication Between Appraisers and Real Estate Agents Vital

Written by Realty Times Staff on Tuesday, 03 December 2013 1:11 pm
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Issues with appraisals continue to impact real estate transactions, but better communications between real estate agents and appraisers could help to minimize problems, according to panelists at a property valuation forum at the 2013 Realtors Conference and Expo. Most of the attendees were both sales agents and appraisers.

Lenders implemented tighter lending standards in recent years, and appraisers must be able to conduct independent and impartial valuations due to increased government regulations. These requirements have left real estate agents and appraisers confused about what can or cannot be discussed during the appraisal process, and with whom agents can talk to if they have a complaint about the results of an appraisal.

John Anderson with Twin Oaks Realty Inc., in Crystal, Minn., said he recently asked a group of real estate agents to identify their primary concerns for the year ahead. "Eighty to 90 percent of those agents said appraisals were the top issue facing them in 2014," he said. "I've personally had more appraisal problems in the past year than I've had in the past three decades."

Anderson insists on being at a property when the appraiser arrives. "I present documents and information about the property, which might include comparable properties that were 'pocket listings,' those sold outside of a multiple listing service," he said. "There is a misconception among some appraisers about the ability to communicate, but I present them with a folder of materials for them to consider."

In today's market, home appraisals that fail to provide credible valuation can postpone or cancel sales. Valuations that are not credible can be the result of lenders or Appraisal Management Companies (AMC) assigning appraisers that do not have the necessary competency, such as geographic expertise, to complete an appraisal report. 

Vic Knight, an appraiser with Chapel Hill Appraisals in Raleigh, N.C., said timing is important in communicating with appraisers. "The window of opportunity to communicate with an appraiser is before the valuation is made. Once that window closes, you can ask for a correction of errors, or seek clarification," he said.

Buyers, sellers and Realtors® are free to ask appraisers or lenders to consider additional property information, documentation and comparisons. They may discuss the unique conditions of a home and its neighborhood with appraisers.

Once an appraisal has been completed, any communications about errors or offers of additional information must be with the client who ordered the appraisal, generally the lender.

Anna Ruotolo, vice president of business development at Opes Advisors, San Francisco, with over 30 years of experience in the mortgage industry, said upfront communication is vital. "I wouldn't let an appraiser enter a home without being present, so I have an opportunity to provide them with information about the property," she said. "You can conversationally determine their geographic competency by asking how often they're in the area, or if they're aware of a particular development."

Marty Wagar, an appraiser with Midwest Appraisal Management Group in Portage, Mich., said the intent of an AMC is to provide a firewall between lenders and appraisers. "AMCs should be charged with having local competency rather than focusing on speed and cost," he said. "The primary consideration for an appraiser is geographic competency, regardless of where the appraiser lives, or his or her access to local MLS data."

Wagner said some lenders create problems by prohibiting any communications, even if it doesn't involve valuation. Another issue is regulating a healthy real estate market with standards that were drawn up during a downturn. "As for geographic competency, it's perfectly fine to ask a lender how their appraisals are distributed."

John Ebner, managing director and mortgage advisor at Opes Advisors, described the recourse that might be available after an appraisal is complete. "Possibilities regarding an error include a comparable property that should have been used or excluded or adjustments for comparable properties, which can be presented for consideration. It's not easy to get a change, but it can be done."

Appraisal standards are improved continuously as qualifications and standards of the Uniform Standards of Professional Appraisal Practice are strengthened. The continued evolution of the USPAP helps ensure that appraisers are competent with independence and integrity.

In February 2012, NAR adopted the Responsible Valuation Policy. It serves as a guide for members and staff in advocacy efforts for federal legislation and regulatory policy. This statement of policy, aside from the National Association of Realtors® Code of Ethics, offers guidelines for Realtor® members and is not intended to impose new or additional standards of practice.

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4 comments

  • Comment Link Terry Caldwell Wednesday, 04 December 2013 11:15 am posted by Terry Caldwell

    There is no prohibition against the appraiser requesting information about the property, we just cannot discuss value. Homeowners and Realtors are often the best source of information about the subject property.

    In the event there is an error in the appraisal report, or the borrower has a question, simply have the borrower submit a request to their lender. An opinion of value lower than the contract price is not necessarily an error. Provide sale or listing data to support your request.

    The more information the appraiser has, the more accurate the appraisal. Providing information about renovations, repairs needed, any legal or zoning issues etc. will help the process in the long run.

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  • Comment Link HMT Wednesday, 04 December 2013 10:10 am posted by HMT

    This is a topic that we've addressed locally in Atlanta for years. The basic problem is that most agents have lack of understanding about the appraisal process. If agents would understand what appraisers are epxected to do, how they are REQUIRED to do it and what underwriters demand, they would be better able to grasp the entire process.

    The single best thing a listing agent can do is to leave a packet of APPROPRIATE information at the house. Sales that meet the requirements and that are truly comparable. The idea of tossing everything and the kitchen sink is counterproductive and just shows that the agent is clueless.

    Have an opinion and support it. If the agent knows it's going to be rough, write a little narrative to explain things. No appraiser wants to "kill" a deal - an appraiser simply wants to move on to the next job - nothing is gained by having to answer complaints.

    http://hankmillerteam.com/category/appraisals-valuation/

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  • Comment Link Tobias C Kaiser Wednesday, 04 December 2013 8:13 am posted by Tobias C Kaiser

    Good piece - will also share this with may agents!

    My experiences along the same lines:
    1. Politely ask for an appraiser who has appraised in the area and in your niche before (aka, my specialty: modern architecture)
    2. Be present if possible (listing or selling agent)
    3. Offer as much material as you have (stats, floor plans, old data, CS/PS/A data - but in raw form. Don't pretend you're better in running an analysis then the appraiser)
    4. Be available for questions and support afterwards. On my last sale a week ago, the appraiser called me at home Friday and Saturday because he needed more data, and I was only happy to help him.

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  • Comment Link Mike Tuesday, 03 December 2013 6:30 pm posted by Mike

    This is a really useful article, I'm going to be showing it to some of my agents.

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