Issues with appraisals continue to impact real estate transactions, but better communications between real estate agents and appraisers could help to minimize problems, according to panelists at a property valuation forum held during the 2013 REALTORS® Conference and Expo earlier this month.
Most of the attendees were both sales agents and appraisers.
Lenders implemented tighter lending standards in recent years, and appraisers must be able to conduct independent and impartial valuations due to increased government regulations. These requirements have left real estate agents and appraisers confused about what can or cannot be discussed during the appraisal process, and with whom agents can talk to if they have a complaint about the results of an appraisal.
John Anderson with Twin Oaks Realty Inc., in Crystal, Minn., said he recently asked a group of real estate agents to identify their primary concerns for the year ahead. “Eighty to 90 percent of those agents said appraisals were the top issue facing them in 2014,” he said. “I’ve personally had more appraisal problems in the past year than I’ve had in the past three decades.”
Anderson insists on being at a property when the appraiser arrives. “I present documents and information about the property, which might include comparable properties that were ‘pocket listings,’ those sold outside of a multiple listing service,” he said. “There is a misconception among some appraisers about the ability to communicate, but I present them with a folder of materials for them to consider.”
In today’s market, home appraisals that fail to provide credible valuation can postpone or cancel sales. Valuations that are not credible can be the result of lenders or Appraisal Management Companies (AMC) assigning appraisers that do not have the necessary competency, such as geographic expertise, to complete an appraisal report.
Vic Knight, an appraiser with Chapel Hill Appraisals in Raleigh, N.C., said timing is important in communicating with appraisers. “The window of opportunity to communicate with an appraiser is before the valuation is made. Once that window closes, you can ask for a correction of errors, or seek clarification,” he said.
Buyers, sellers and REALTORS® are free to ask appraisers or lenders to consider additional property information, documentation and comparisons. They may discuss the unique conditions of a home and its neighborhood with appraisers.