Appraisers Kick Some Assets

Appraisers are annoyed that real estate agents blame them for the downward spiral in home values.

It’s true that it's appraisers's jobs to reflect the current market value of a property, not what the buyer or seller wishes it was. But as the spring selling season heats up, appraisers are getting a fresh dose of insult.

Exhibit A: this week’s story in  USA Today, which outlines the mounting friction between realty agents and appraisers. Recent research conducted by the National Association of Realtors found that low appraisals killed 10% of pending house sales in 2010 – and forced an after-the-fact price reduction for 15% more home sales.  Low appraisals have wiped out as much as 30% of new-home sales, according to homebuilders.

In New York, where real estate is a blood sport, the Brick Underground blog reports  a couple of l strategies for fighting a too-low appraisal: 

• ask the seller to owner-finance the difference between the appraised value and what you are offering, 
• present evidence of a bidding war that supports the hotness of the house

Both of those tactics are probably most successful in New York. Here’s one more that is relevant no matter where you live:  understand the current standards applied by lenders in your area, so you know what your buyer is up against.  

• Ask a lender in advance what kind of documentation successfully supports home prices in pending deals 
• Make sure you have that documentation on hand
• Be there for the appraisal, and make sure that the  appraiser makes the connection between the documentation (of improvements ) and what he sees

Appraisers make mistakes. We’ve seen appraisals that were off by hundreds of square feet; that overlooked entire bathrooms; and that did not count the value of very recent improvements.  Ally with your buyer and review the appraisal together.  You just might find enough omissions to get a do-over…and keep your deal on track. 

Image courtesy of Morguefile contributor Kevin Rossell.

Appraisers Fight Back

Appraisers are a tad testy these days, judging from the defensive tone of their otherwise homeowner-friendly new tip sheet.

"Credible opinions of value can help to stabilize the real estate market," said Appraisal Institute President Joseph C. Magdziarz. said. "Appraisals are especially important because they are an objective and unbiased source of information. Unlike others involved in real estate transactions, the appraiser is an independent professional who performs a service for a fee rather than for a commission."

Welcome, appraisers, to our point of view!

Sellers need every scrap of data they can get their hands on to support the asking, the selling, price of their home. Smart sellers think like potential buyers: what pricing data does the buyer have to bring to the lender to get financing? That’s the data that sellers get before putting the house on the market, and that’s the data that sellers use to price their house.

The very best pricing data comes from an independent appraiser who is familiar with your neighborhood. An appraiser who drives 100 miles to spend 20 minutes in your house is not going to produce the most accurate appraisal, and that could jeopardize your sale.

The Institute has just produced a tip sheet for consumers

Here are its highlights:
•    Understand the role of appraisals.
•    Make sure their lender hires a qualified appraiser (such as a designated SRA, SRPA or MAI member of the Appraisal Institute).
•    Accompany the appraiser during the inspection of the property if possible.
•    Request a copy of the appraisal report from the lender.
•    Examine the appraisal report and ask questions.
•    Appeal the appraisal if appropriate.
•    Ask the lender to order a second appraisal by a qualified and designated appraiser.
•    File legitimate complaints with appropriate state board or professional appraisal organizations.

What’s your house worth? Find out before you put it up for sale. A buyer’s market is no place to test the market with a guess.

Image courtesy of Morguefile contributor mhrubin.