Appraisal

5 Replies

I was talking with a RE agent and found out that the quality of appraisers differ greatly and this an investor can skew the property value especially in up-and-coming market. Is there a way to assure the appraiser? 

Originally posted by @Lizina Green :

Hi Lizina-

As an appraiser i can tell that there can be differences in appraisers. Some differences are based on factors that can at time be out of the control of the appraiser such as restrictions by the lenders on comparable selection that can be used or Appraisal Management Companies. I think you would find that on a typical home if you had multiple appraisal on the same property they would all differ as an appraisal is the opinion of the appraiser but they would all likely be relatively similar. You will find that you can have larger swings when you deal with unique properties as that requires experience from the appraiser to understand the market. I will admit there are some bad appraisers in the world but you can easily find one that is qualified to provide a quality appraisal. If you look to organization that provide credentials to appraisers like the Appraisal Institute, National Association of Appraisers, or other or you can look for VA roster appraisers you will likely find honest appraisers. You can also talk to investors, agent or LO and get there opinion. You will want an appraiser that gives you an honest appraisal opinion and just not what you want to hear. I will like to end by saying if you have questions about a specific market area an appraiser may be the best person to ask as they have no stake in the game and are not involved in your transaction. If you have any questions you can PM me. Thanks Chad

As an appraiser I can tell you that the estimated market value in an appraisal is only as good as the market data that is readily available. ie. comps...the problems with appraisals, which there are many, is that you are always looking in the rear view mirror at historical data...just like anything in real estate, local knowledge is also better than not, meaning that an appraiser who lives and works in the market area is better than someone coming in from 15 miles away and has no idea of the marketplace...I have seen appraiser come into my area and be off by $100k in value (on the low side)...just like anything in this world, there are hacks and there are true professionals...appraisals are a roll of the dice I'm afraid...just my opinion !

Another question:

The mortgage company appoints the appraiser? If that's correct, there is no way to control which appraiser is used to estimate the value of a property. 

The mortgage assigned the appraisal to management company. Every management is different some have a small panel of appraisers that they use other will blast it out and who ever has the lowest bids wins. A little messed up huh? The mortgage company can not engage or discuss the appraisal with the appraiser to after it has been completed. It is all handled by the management company. So technically no the mortgage company sends it to a management company and they assign it in most cases. Some mortgage companies have inhouse appraisal systems but that is kind of hard to explain and boring. There is no control over who gets it expect by the management company. This is to keep the appraiser insulated from the transaction and not influenced by buyers or sellers or the bank. 

Thanks for your help. I appreciate your time. 

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