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Top Quality Info Limits Issues With Appraisers

Posted: December 21, 2013 2:00 a.m.
Updated: December 21, 2013 2:00 a.m.
 

Improving communication between real estate licensees and appraisers would minimize valuation issues that stall all too often or doom the sale of a home.

That was the consensus of a panel of real estate experts at a recent realtors’ conference and expo.

The issue continues to cause problems in too many transactions, partly because lenders implemented tighter lending standards in recent years while 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, as well as with whom real estate professionals can talk to if they have a complaint about the results of an appraisal.

John Anderson, a Sacramento realtor, 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,” Anderson said. “I’ve personally had more appraisal problems in the past year than I’ve had in the past three decades.”

Anderson said he 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 the assignment of appraisers who do not have the necessary competency, such as geographic expertise, to complete an appraisal report.

Vic Knight, an appraiser 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,” 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 the local neighborhood with appraisers.

Once an appraisal has been completed, however, any communications about errors or offers of additional information must be with the client who ordered the appraisal, which typically is the lender.

Anna Ruotolo of San Francisco, who has more than 30 years of experience in the mortgage industry, stressed that up-front communication is vital.

“I wouldn’t let an appraiser enter a home without being present, so I have an opportunity to provide them with information about the property,” she said. “You can conversationally determine their geographic competency by asking how often they’re in the area or if they’re aware of a particular development.”

Appraiser Marty Wagar said the intent of an appraiser management company is to provide a firewall between lenders and appraisers.

“AMCs should be charged with having local competency rather than focusing on speed and cost,” he said. “The primary consideration for an appraiser is geographic competency.”

Wagner said some lenders create problems by prohibiting any communications, even if it doesn’t involve valuation.

It’s not easy to get a change in an appraisal, the panelists agreed, but it can be done, especially if the error focuses on a comparable property that should have been used or excluded.

The ongoing evolution of the Uniform Standards of Professional Appraisal Practice helps ensure that appraisers are competent, independent and have integrity, they said.

Bob Khalsa is president of the Santa Clarita Valley Division of the Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your realtor or other realty related professionals.

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