How to influence appraisal

Question

I have an accepted offer that is 20k over list price. Are there tips on influencing the appraisal or is that something I can't control?

J Scott · Answer

I wrote this over 10 years ago.  It was a highly controversial post (as you can see), but I still stand by every word of it 10 years later...

https://www.biggerpockets.com/...

Oh, and I now have over 400 personal data points that support this working...  :-)

Tucker Cummings · Answer

In the word's of Ron Burgundy, @J Scott is "kind of a big deal" so let's all pay attention when we see him in the forum!

I can personally attest to his post and linked forum.

- Provide Information

- Build Trust

- Build Rapport

Last year I was getting a home appraised and I met the appraiser at the house. We spent the first 20 minutes talking about his kids and grandkids, how he was getting out of a messy divorce, but met the love of his life at the age of 62 and, as a matter of fact, he started crying just talking to me about how joyful he was with his fiance. We talked about a handful of other things, but this was some strong rapport we we're building... it's not every day a stranger cries in my house!

I let him do his thing around the house, walked it with him, answered questions honestly, asked about how he got into the appraisal business, etc. Throughout this just "being a good dude" and welcoming to him, it seemed like we had built up a level of trust. I felt like he could tell I cared about this house and what it meant to me.

Lastly, as we we're wrapping up, we convened in the driveway and I just asked him, "So what do you think this house should appraise for?" He said, "Well, just first glimpse, I think it's around 260k based on the comps and what you've done with the place." My response was, "Man... that's disappointing, I was really hoping for about 275k. You know, I really appreciate you coming here and doing this. I don't want to tell you how to do your job, but if you have a chance to look it over I put together this packet of the comps in the neighborhood, before pictures of my house and a list of all the repairs we've done to it since we got it. I thought it might make things a little easier for you." (Provide information"

He said, "I appreciate that and I'm not too proud to take a look at what you've got."

Appraisal came in a few days later for 277k!! Was it totally based on the conversation we had and the information I provided? I like to think so, but I can't be certain. What I do know is if I hadn't met him and talked with him, provided information, etc. and the appraisal still came in at 277k, I'd be sitting here thinking, "geez... maybe if I had done the extra credit work, I could have got 285k!"

Hope this helps and Good luck!

Freddy Morales · Answer

Thanks for this brilliant story. I’m analyzing a flip and the seller’s agent is throwing out an ARV estimate based on her knowledge of the area that is much lower than what the comps imply. I was just running if/then scenarios related to the appraisal when I saw this. Good perspective that’ll help get me closer to my desired profit.

Jason Richards · Answer

Hi Matt,

Be careful with the term 'influence'.  In many jurisdictions, the legal definition of the term carries a negative connotation and is not allowed.  I will first disclose that I'm not qualified to give you legal advice regarding what is or is not allowed in your great state of Wisconsin.  That said, USPAP guidelines generally allow an appraiser to accept data that helps the appraiser properly valuate the subject property.

I recommend consulting with your real estate agent on the process, but generally the appraiser could be provided a list of comps, a schedule of repairs/upgrades performed on the property, or a variety of other data points that could help the appraiser better understand the condition and value of the subject property.

As an example, I know of instances in Colorado where a specific model or style of home sells for a higher premium than other styles.  In one instance, our borrower (flipper) was selling a mid-century modern home.  The agent provided comps of other mid-century modern homes of comparable condition to prove the value for this model was higher than other so-called 'comps'.  In this case, the appraiser was able to justify and appoint a higher value.

Again, be sure to know the rules in your area.  Going about the process the wrong way could jeopardize the deal or maybe even result in regulatory consequences.  Make sure you consult with a professional on the matter.

J Scott · Answer

Yup...  I've done several hundred times (or at least my wife has) and I can count on one hand the number of appraisals we've missed in the past 12 years...

Matt Stoltzfus · Answer

@Tim Delaney

So my appraisal was yesterday and I showed up at the property and everything went well. Appraiser was full of questions about what we did and the costs involved etc. Now it's a waiting game to see what happens.

I would say to definitely show up if possible.

J Scott · Answer

Love it! My wife gets all the credit for working with appraisers, but she could probably tell a few dozen stories exactly like this.

At the end of the day, part of the appraisal process is subjective. And when we have to make subjective assessments, emotion for who and what it is we're assessing will come into play.

There's a reason why we talk about business deals being closed on the golf course and at bars...  As much as we may not like it (I don't play golf and I don't drink much), it's just the way life works.

Embrace it.

J Scott · Answer

When you say "not allowed," do you mean it's against the law?  If so, what law (specifically) are you referring to?

Account Closed · Answer

@Matt Stoltzfus

Interesting idea! Have you had any success with it before? Didn’t know this could be done....

Karla Simmons · Answer

@Matt Stoltzfus

We recently sold one of our rental houses in California and the market is crazy here as it is in most of the nation now. Our realtor asked us to list and calculate what we had put into the home (improvements)  before we put it up for sale, and she met the appraiser at the house when he came to do the appraisal. The appraisal came in just a little shy of the offer we accepted, but the buyer wanted the house and realized how fast things are moving right now. I do believe that what our real estate agent did (providing a list of improvements we had made) helped us to get a higher appraisal. Good luck!

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