Watching all the comments of my previous Blog I took the time to make this list of F.A.Q when it comes to Appraisers and Appraising.
What is an appraisal? An appraisal is defined as an opinion of value by professional appraisal standards (Uniform Standards of Professional Appraisal Practice, see below). Appraisers consider appraising to be both an art and a science. You probably have an opinion of the value of your home. Your opinion and a professional appraiser's opinion may be the same. But appraisers are required to be objective and impartial in their analyses and opinions. A professional appraiser has been trained in appraisal methodology and looks at how your home compares with sales and listings of homes similar to yours, considers many factors such as price trends and proximity to a freeway, complies with professional standards, and usually completes a written report.
Why do some appraisers have to walk through my house? Last time, they just drove by. The type of appraisal needed for a mortgage loan depends on many risk factors, such as loan to value, loan amount, borrower's credit, etc. The determination is made by the lender. Some loans are made using Automated Valuation Models, with no "human" appraiser involved.
Appraisers and lenders - what is the appraiser's role? Most appraisals in this country are done for mortgage lenders. Most appraisers work for lenders, particularly if they specialize in appraising homes. The appraiser's role is to provide an objective, unbiased opinion of value to the lender. Appraisers work for the lenders, not the owners, buyers, or sellers, even if one of them pays for the appraisal by writing a check to the appraiser. Federal banking regulations require that the lender order the appraisal. This was a result of regulations coming from the Savings and Loan scandals in the late 1980s.
What state laws are appraisers subject to? State licensed and certified appraisers are also subject to their state's Appraisal Regulator's requirements. When doing work for lenders, they are subject to the lender's requirements. For links to your state's appraisal regulatory agency, try the Appraisal Subcommittee site at www.asc.gov. Look for a link on the left side of the screen. Or, try your state's government Web site. Search for appraisers or appraisal.
What do appraisers really do? When I inspect a home for an appraisal, the inspection is really the "tip of the iceberg" of the work I do. Before I go to the house, I research public records information, get a plat map, check the zoning and flood data, and printout sales and listings of similar homes. During the inspection, I make a drawing of the home and other improvements such as a swimming pool and make notes on physical characteristics such as floor coverings and built in appliances. I check the site boundaries against my plat map. I look at the adjacent properties. After completing the inspection, I select comparable sales and listings and take photos of them. Back at the office, I contact real estate agents for more information on the sales terms, condition of the home, etc., reconcile conflicting information from different data sources, and write up the report. Total time? About 6 to 8 hours, on average. I work in the San Francisco Bay Area, where data is computerized and plentiful. Appraisers working in rural areas or with less data availability will take longer to complete an appraisal.
What if you don't agree with an appraisal? Appraisers are required to be objective real estate observers, reporters, and analysts. Ethically, appraisers cannot accept an appraisal assignment contingent on a certain appraised value, direction in value, or minimum or maximum value.
If the appraisal was done for lending purposes and you think the appraiser has missed higher sales that could have been used in the appraisal, or missed valuable features in your home such as a remodeled kitchen, contact your loan officer with specific information such as the address of a sale.
If you think fraud was involved or the appraiser was very inexperienced, lazy, or just plain stupid, contact your state appraisal licensing agency. You will need to have more than "I think the value was too low (or too high)." You need the "why" also...didn't use nearby similar homes that sold recently, missed a swimming pool, etc.
“The appraiser's role is to provide an objective, unbiased opinion of value to the lender. Appraisers work for the lenders, not the owners, buyers, or sellers, even if one of them pays for the appraisal”.
