Should the appraiser call the agent before doing the inspection?

Should the appraiser call the agent before doing the inspection?

The appraiser can learn a lot when calling the agentI was in a real estate office recently and was talking about calling an agent for a listing of theirs that I was appraising. This seemed to surprise the agents I was speaking to. They told me that they rarely get called by the appraiser to get access to the home for the appraisal they are doing. This surprised me since I always call to at least find out if it is occupied and if it has a lock box.

What do you think, should the appraiser call the agent before doing the inspection? Let’s take a look at the benefits of doing this and whether it’s worth it.

Benefits of calling the agent

There are numerous benefits to communicating with the listing agent during the appraisal process. These include:

Obtain information used in the pricing of the home- I’ ve written about this in the past but now is a good time to remind everyone of how appraisers can use this information. If the agent has completed a thorough CMA to price the home then providing this to the appraiser could be helpful. While some appraisers may not be open to receiving this information it would be worth the time to offer it to them.

I always tell the agent that I will take a look at their sales and if they meet underwriting guidelines I will consider using them. Even if the sales turn out to be unusable then the appraiser can still understand how the agent came up with the value, which can provide some perspective.

Obtain information about recent updates and renovations- Of course the appraiser walks through and observes the house and its improvements but knowing exactly what has been done to the house and when it was done is valuable information. The agent can provide a list of improvements, when they were done, and even the costs if they are available.

The appraiser is actually required to include information on kitchen and bathroom improvements that have been done within the past 10 years. This can help the appraiser when estimating the effective age of the home and provides a point of reference when comparing the subject to the sales.

The age and condition adjustments are directly related to updates and renovations that have been made to a home so knowing this information  helps the appraiser provide a more accurate opinion of value.

Obtain information about features of the home or neighborhood- Sometimes homes may have features that are not readily visible so when this is the case a list of features and improvements provided by the agent can be very helpful. I once appraised a home that had heated bathroom floors that I would not have known about had the agent not informed me. Knowing this type of information can help the appraiser produce the most complete and accurate report.

Find out if utilities are on for FHA appraisals- I recently wrote about FHA appraisals and what agents must do before the appraiser visits the property. If the appraiser communicates with the agent before they visit the property then problems can be avoided.

Since utilities must be on for the appraiser to verify operation of mechanical and plumbing systems the agent should know about this so they can make sure they’re on. This can avoid delays in the sales transaction and additional costs to the buyer.

Contract activity- Appraisers sometimes get criticized for only measuring past activity, and their value opinions lag behind in an appreciating market. One way to combat this is to provide information on all contract activity with the property being appraised. During an appreciating market supply can be low while demand is increasing. This can result in multiple buyers being interested in the same property and multiple contracts at the same time.

If this is the case then the appraiser needs to know. If the contract amount is at the upper end of the price range the appraiser can include this information in the appraisal to provide support for the higher opinion of value that they arrive at. This type of information can only be obtained by talking with the agent and explaining to them how helpful the information is to the assignment.

Sales contract- The sales contract is a very important part of the information that the appraiser collects. The lender typically includes this with the order but if they don’t then the agent can provide it.

The appraiser is required to review and analyze any sales contract or listing on the property they are appraising. The contract will be reviewed to see what the loan interest rate is, down payment, seller contributions, or any other property included in the sale.

Conclusion

So after reading about the above scenarios can you see where speaking with the agent before the inspection could be beneficial? It can help provide the appraiser with the most complete information to assist in providing an accurate opinion of value.

Question

If you’re an agent how often does the appraiser call you, or if you’re an appraiser how often do you call the agent? I’d like to hear about your experience so let me know your thoughts by leaving a comment below. Thanks for reading.

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Comments

  1. I was going to say what Ryan said. My MLS also requires appraisers to contact the agent before going to a vacant house (hopefully appraisers would not do it with an occupied house). However, when I speak at real estate offices, someone almost always mentions that they hate it when appraisers go to the house without talking to them first. Some agents told me that they take the lock box off the property before the appraisal so that the appraiser has to call them. More appraisers need to read your blog Tom.

    • Thanks Gary. That’s interesting that is happening other places as well. I think appraisers really need to consider the information that they can get from the agent and realize that it can help them produce a more reliable report.

  2. My local market in Sacramento requires appraisers to call agents in advance if appraisers are using an MLS lock box key to access the property. An affiliate member of MLS (which is an appraiser) needs to get permission to access the property from a member (an agent). Many appraisers don’t know about this rule, but it is there. Besides that, I agree with you about opening up conversation. Why would I not call the agent? That is the better question. I can often glean so much perspective from that conversation. I’d rather do that than not.

  3. This post is an eye opener. If their are appraisers who don’t even call the listing agent on the property that they are appraising, one can only imagine what other important steps in the completion of an appraisal that they are omitting.

    In a perfect world the agent would not only meet me at the property but will have prepared a package with a list of property upgrades (with time frame of completion and costs), a list of the property listings and sales that were used to price the property, the sale contract, and a brief summary of buyer interest in the property (days on market, number of other offers, and the range of offering prices).

    • That was my thoughts to Tom. When the agent told me that the agent rarely calls them I was surprised. In today’s world where we have access to lockboxes it is possible to do the appraisal inspection without speaking to the agent but I don’t think that is advisable and this is why I wrote this post.

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