Monday, June 14, 2010
My issue is that if buyers, who have certainly done their homework, are willing to pay in this market, and sellers are willing to sell, how can the appraiser, who many times is from a completely different market and often a different city, have such power to squelch the deal.
Our contributing lender, Bonnie Vasilion of 1st Advantage Mortgage, has a few tips. She also has what is called "Exempt Broker Status" which means in some cases she can select the appraiser to use who is familiar with where the property is located.
Due to the “Home Valuation Code of Conduct Law” (“HVCC”), lenders are no long able to discuss value with appraisers, nor can lenders speak with appraisers or even choose who will be appraising your home.
However, there are some things that can be done to work toward receipt of an appraisal with the most realistic assessment of value:
1. When meeting the appraiser on a purchase transaction, have the listing agent provide the appraiser with relevant recent comparable sales and any information about improvements made to a property. Include the value of improvements made.
2. Provide a floor plan and survey.
3. For borrowers refinancing, do what is suggested for listing agents: let the appraiser know of sales in your neighborhood of homes you feel are similar—many times properties sell “off market” and don’t show up on the records used by appraisers. Also, provide the list and value of improvements, as well as a copy of floor plan and survey if you have that available.
Don’t wait until the report comes out; once those reports are issued, it is nearly impossible to refute an appraisal.
One important note: I have “Broker Exempt Status” on a very competitive Jumbo financing program, meaning I am authorized to select the appraiser. Though I cannot discuss value, I can choose appraisers who are knowledgeable about our local markets, so keep that in mind: it can be a deal saver!
Finally, it is true that a lender cannot “toss a bad appraisal” and simply order a new one. If your appraisal doesn’t work out with one lender, you might need to go to another lender and start the process over.
Appraising a property is not scientific; there are variations. Be prepared; give the appraiser as much information up front as you can, then let them do their report and hope the value supports your transaction. As always, feel free to call me at 847-869-7100 ext 3322 or 312-502-0136 with any questions you might have.