The myth of the good, cheap, and fast appraisal

Can an appraisal be good, fast, and cheap?

It seems that in today’s world appraisers are being asked to do something that’s impossible. Most appraisers are deluged with work as a result of low-interest rates and the surge in refinances due in part to Brexit. Still, some clients believe that the myth of the good, cheap, and fast appraisal exists.

In spite of appraisers being busier than a one legged man in a butt kicking contest, some lenders and AMC’s are still looking for good, fast, and cheap appraisals. The only thing wrong with this is that having all three of these desirable features occur at the same time is not possible. You’ve heard the old saying, “you can get it good, fast, or cheap, but you can only pick two”, right? Well, the same applies to real estate appraisal.

The appraisal profession has been built on appraisers gaining and preserving the public’s trust in what they do. Appraisers provide a necessary and valuable service to the public and producing a reliable report is part and parcel to this endeavor. With that being said, a credible report takes time and effort and this cannot be done in a good, fast, and cheap manner.

A Close Look at Good, Fast, and Cheap

Good- What constitutes a good appraisal? This can vary depending on who you talk to. On one hand, a good appraisal can describe its quality and accuracy. It’s important for the information in the appraisal report to be as accurate as possible.

The quality of information ranges from a detailed physical description of the property to a careful analysis of the sales comparables used. When these two factors are present then the final opinion of value will be the most accurate, which is the most important trait of a good appraisal.

Some people believe that a good appraisal means that the value is what they want it to be, but there is much more to it than that.

Fast- A fast appraisal does not always signify a bad appraisal. It is possible to turn an appraisal around quickly if the appraiser is very familiar with the area and is aware of market conditions and sales that have recently occurred.

As an appraiser, I can tell you that I love it when I get a job in a neighborhood that I just completed another assignment in. It’s even better when the houses are very similar to each other. The market data gathered from the first assignment can be used on the new one and the job can be turned around quickly.

On the other hand, if an appraisal is turned around quickly because the appraiser is speeding through the property observation, and then takes shortcuts to complete the research and analysis, the results may not be accurate or reliable. There are many factors that go into an assignment, however, each job is different and this must be determined on a case by case basis.

Cheap- The word cheap can often connote something that is not done very well or is of bad quality. Completing an appraisal assignment usually takes significant time and effort if it is done well so charging a sub-market fee is not wise because it does not pay the appraiser a reasonable fee for their time, expertise, and experience.

In my 25+ years as an appraiser, I’ve reviewed numerous appraisals where I have known how much the appraiser charged. It’s interesting to note that many of these appraisals exhibited errors and inaccuracies that were probably the result of the appraiser rushing through the assignment so they could move on to the next one in order to make money on their volume of work.

As I noted above there are some situations where it may be possible to charge a lower than typical fee but these usually don’t occur very often. In most situations, an appraisal takes a certain amount of time and effort to complete and it is necessary to charge a fair and reasonable fee to compensate the appraiser for their professional services.

Now that we’ve reviewed what each of these characteristics of an appraisal looks like alone, let’s take a look at how they work together. I’m also including a graphic to help you understand it.

via GIPHY

Good + Fast = Expensive

Completing an appraisal that is good and fast cannot be done cheap. A good appraisal requires a lot of work so if you attempt to do it quickly you must devote all of your time to it, at the expense of other jobs.

If you forego other jobs you have to make up for it with what you charge on this one, which is a higher than normal fee.

Good + Cheap = Slow

A good appraisal done for a cheap fee will usually take longer than normal. Most appraisers will give higher paying clients priority over those paying less. Jobs like this are usually done between other higher paying jobs because they don’t pay well and because appraisers, like other business people, must pay bills so they must work the better-paying jobs first.

Fast + Cheap = Poor Quality

If an appraisal is done quickly and for a cheap fee it will usually be of poor quality. It is difficult to produce a quality report quickly and for a low fee because corners will inevitably be cut since the appraiser will want to move on to higher paying jobs that have normal turn times.

As the old adage goes, “you get what you pay for”, and this could not be any truer than with this scenario. If you are looking for a good appraisal for a low fee, keep in mind that the quality of the product you get may be less than you expect.

You should remember this when ordering an appraisal by giving the appraiser a reasonable amount of time to complete the assignment. If you do need the appraisal done quickly expect to pay a higher fee.

As you can see, the old saying holds true because you can’t get a good, cheap, and fast appraisal so pick just two.

Question

Do you need a good and reliable appraisal to help sell your home or to give you better peace of mind when paying cash for your home? If so give me a call or email me and I’d be glad to answer any questions you may have. As always, thanks for reading.

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