Why can’t the appraiser call me when the value is not working out?

communicating with appraiserHave you ever asked yourself “Why can’t the appraiser call me when the value is not working out?”. If you have then you’re probably a real estate agent that was concerned that a home may not appraise for the contract amount. In today’s highly regulated and monitored market the appraiser is very limited in what they can and cannot say to all parties to the appraisal transaction.

Because appraisers interact with real estate agents a large percentage of the time I thought I would focus on what communication is allowed between the two. The main concern is that the appraiser will not be influenced with undo pressure to reach a certain number during the appraisal process. If the appraiser makes contact with the agent after the appraisal is finished then the major reason is to discuss value, or lack of it, and that can be a problem. If there is a problem with the value after the appraisal is completed then the best course of action is for the agent to communicate with the loan officer, who can then pass along any additional sales or relevant information that the appraiser did not have previously.

The best course of action is for the agent to be proactive during the appraisal process and communicate with the property information packetappraiser prior to the appraisal being completed. The best time to do this is during the appraisal inspection, where the agent can personally meet the appraiser and provide him/her with all the relevant information that the agent used when pricing the home. I know that agents are very busy, and that many appraisers use electronic keys to gain access to the house, so if it is not possible to meet the appraiser that is o.k., however I would suggest that real estate agents still make contact by email or other means and provide all the information they can to them, as well as be available to the appraiser while they are completing the assignment in case they have any questions. One way to do this is to have an information packet that can include information such as a list of recent improvements that have been made to the home. It would be a good idea to go back as far as 10 years if you have the records because appraisers are required to make note of any updates or remodeling that has occurred so this will assist them with that information. In addition, these improvements help to reduce the subjects effective age which can help boost the value of the home.

Including information about neighborhood features or amenities that can potentially add value to the property is also a good idea. This may include things such as membership in a club, use of a lake or golf course, or something else that adds value to the home. If an appraiser uses comps from within the subdivision then the value of these amenities will already be reflected in the sales prices, however if they have to go outside of the neighborhood to get comps, and the neighborhood of these sales do not have similar features, then adjustments must be made to the sales to reflect this. This information is especially helpful to the appraiser if the subject property is selling higher that many of the other homes and the list price was set to reflect the positive features. A good point to remember though is that this value must be measurable through other sales comparables in order for the appraiser to account for it in the appraisal.

The last thing that you should include in your information packet is a list of the sales that you used in arriving at your list price. The appraiser may already have access to these sales but it is a good idea that you make him/her aware of them. The appraiser will need to review each sale to make sure that they are truly comparable to the subject and meet underwriting guidelines that are imposed by the lender. Knowing what types of sales an appraiser can use and how they choose their comps can go a long way in helping the real estate agent come up with the sales that they base their list price on. By using sales based on criteria that the appraiser uses there is less likelihood that there will be value issues.

By being proactive during the appraisal phase of the sales transaction the agent can provide all the information they used to arrive at their list price upfront so that the appraiser can utilize it when completing the assignment. What are your thoughts? Leave me a message below if you have any comments or questions.

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Comments

  1. Darlene A Harris says

    I’m upset because my Appraiser supposedly told the workmen to take my Burglar Bars off my house or put the Quick Release Mechanism on them! So of course they went the latter & the cheapest way to go! I ask my Realtor to have them put in the Shed, but they didn’t, & of course now they’re gone! They Advertisement’s Posting had the Home listed, with the Mechanisms on them, & it’s not my fault that the Seller’s Listing Agent forgot to remove that part on the Advertisement! This was 1 of the MAIN Features & Factors that sold me on buying this House! Was it okay for the Appraiser to have told them to do that? According to my Realtor he actually told them that if it was him, he’d take them down to save time so that I & the Seller could go on & Close! So now, I gotta buy the Home without the Bars, & no Concession for that!

    • Sorry for the unfortunate situation. From an appraiser’s perspective, it is only our duty to inform our client, the bank, about the property’s conditions. It is not our job to direct workers in doing that.

      • Darlene Harris says

        I do understand that totally; however, what can I do about it? The Home was Advertised with the Mechanisms on there, but the Listing Agent said he forgot to delete that part off! So my Realtor said we can’t rock the boat now with the Seller to ask him to do this! I’m like so I’m having to pay for something that’s not there anymore for 30yrs? Then the workmen cut my Kitchen Linoleum too short, & now they’re stating that they can not do my Kitchen, nor the connecting Den because the Linoleum is Discontinued! Then to make it WORST they dug up 2 BIG gapping holes of my Parquet Flooring in 1of the Bedrooms to fix the Hallway Floors that the AC Unit leaked on & ruined! No Sanding, Staining, Varnishing, or even Cleaning the Floors! Just some Wood Glue, & that’s it! She said there again they don’t want to rock the boat with the Seller, asking for anything more! I Love this Home, but it’s just not right that they’ve cut corners, & now I’m left to pick up the costs if I want my Home to look right!

        • I agree, that does not sound right. Your agent is supposed to be your advocate but it doesn’t sound like she is doing that. I would complain that the house is not in the condition that it was when agreed to purchase it. You might want to contact your state real estate commission to find out what your options are if they will not agree to perform the work in a professional manner.

  2. we are selling my mothers house and are getting a 70,000 spread between one agent and another but still not the price we are asking.when we try and do comparables with houses that are selling nearby ,they dont have the items we do and are not updated or have a view of the lake nearby or the basement levels we do,so we never really get an answer just thats the price we got

    • So it sounds like the agents are trying to set a list price? Has an appraisal been done? If not you may want to get a professional appraiser’s take on the situation.

  3. Bill Baughn says

    The value is working out. It’s just not the value you were wishing for…LOL

  4. Tom, I think you are so right about the importance of agents being proactive about working with appraisers. Too many times there is good information to share, but it’s sort of lost in the haystack of the transaction. The appraisal is one of the most important parts of a mortgage finance transaction, so it’s important to really seize all opportunities to help communication flow (without pressuring to “hit the number” of course). Nice job.

    • Agreed Ryan. I think a lot of agents have been confused lately about the correct protocol for communication, however I am working on educating those in my area and have gotten positive feedback as they believe that having an “info pack” is a good idea.

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