Controlling (And Conquering) Your Appraisals


I’ve addressed this topic several times in the forums, and much of this post is taken from an old forum post I wrote, but this subject is important enough to rehabbers and other investors that I wanted to make sure it was captured here on the blog…

One of the biggest areas where rehabbers and other investors are getting beaten up these days is in their property appraisals. They buy right, do a great renovation, find buyers happy to pay their asking price, and then find that the property doesn’t appraise high enough to make the sale! Obviously, you’d like your property’s value to stand on its own without any help from you, but in this market, anything extra you can do to ensure your property hits its target appraisal price is important.

So, below I will present some of the techniques I have used on all of my rehabs to help ensure that the appraisal doesn’t sink the whole deal…

First, it’s important to remember that appraisals are just as much an art as a science. Oftentimes, there is a lot of information that the appraiser is not privy to — such as what the interior of a comp looks like, the circumstances surrounding the sale of a comp, the circumstances surrounding the motivation of the seller of other comps, etc — so, while two appraisers may be equally experienced and skilled, they ultimately may select different comps, make different adjustments and come to different values of your property.

While it’s tremendously important to ensure that your rehab is top-quality in all respects (visually, functionally, price-to-value, etc), the key to ensuring consistently successful appraisals is to focus on your interaction with the appraiser himself. Because the appraiser does have leeway in making decisions on comps and adjustments, his attitude while preparing the appraisal — towards you and the property — may very well impact the result.

Specifically, when dealing with the appraiser, you should strive to do three things:

  • Provide Information
  • Build Rapport
  • Build Trust

By doing these three things, you can go a long way towards getting appraisers to err on the side of trying to help your appraisals come in at your target price. Let’s look at each of these in more detail…

1. From a Providing Information standpoint, remember that appraisers have a tough job these days. They need to make a lot of people (on different sides of the table) happy. Helping them do their job effectively and efficiently will make their lives easier (especially when the underwriter comes back and asks for more details to substantiate the number), and in return, make your life easier. And given new HVCC rules, you may be more familiar with comps in a given area then they are, so you may actually have better comps than the appraiser!

2. From a Building Rapport standpoint, if someone knows you and likes you, they are going to want to help you. Ask the appraiser about his family, ask about his business, ask him questions that allow him to feel like you appreciate his “help”, and (if it’s true) insinuate that you may want to use his services in the future. We don’t like to let our friends down, so the goal is to get the appraiser to feel as if you’re a friend in the short time you’re together

3. From a Building Trust standpoint, many appraisers (and others) are leery of rehabbers these days because a few of them give the rest of us a bad name (shoddy work, lie about repairs, etc). Oftentimes, when appraisers walk into a rehabbed property, they assume that the value is LOWER than an equivalent house that isn’t being flipped. By proving to the appraiser that you’re in the group of rehabbers who take pride in their work and do things the right way, you’ll get the him to appreciate your work and efforts and to trust that your house is probably MORE valuable than an equivalent house that isn’t being flipped.

With that background, here are my concrete suggestions on how to work with appraisers:

  • Always ensure that you know when the appraiser is coming to your property. We make sure that our properties are on an agent lockbox and are alarmed. We then tell the lender/broker that the appraiser needs to call us to get access to the property. Nine out of 10 times we’ll get a call the day before the appraisal, but occasionally the appraiser will call while standing outside the house when he sees the “Alarm” sign on the door; when that happens, we tell him how to disable the alarm, but now that we know he’s at the property, we can rush right over or send our project manager over to meet him.
  • Always make sure you are present when the appraiser is doing his walk-through. This is your opportunity to build rapport, provide information about what work you did, brag about the fact that you pulled all required permits and only used licensed contractors, and to generally take credit for the great rehab your team has done.
  • At the end of the walk-through, you have an opportunity to provide information to the appraiser that he can take back to the office and review. This is the information that will help him do his appraisal and help him justify the number he comes up with in case anyone asks. Here are the things I provide (nicely organized in a folder):
  • Of course, while most appraisers are happy to have you around during the inspection and happy to take the information you have, don’t just assume this. I will always ask upfront, “Do you mind if I stick around during your walk-through” and then before I hand them the folder, I will always say, “I certainly don’t want to do your job for you, but I have some documents here that will give you more information about the rehab I did, the money I spent, and some of the comps I know about in the neighborhood…would you like them?”

I’ve never had an appraiser who seemed bothered by the fact that stuck around during the walk-through (most of them are talkers and like the company) and never had an appraiser who didn’t want my extra information (again, most of them were very appreciative of anything I had).

Do these things, and you can be sure that the appraiser will at very least be “on your side” and hopefully use the leeway inherent in the process to your advantage…

Photo: Erich Ferdinand

About Author

J Scott runs a real estate company that invests in several parts of the country and that specializes in new construction, as well as purchasing, rehabbing and reselling distressed properties. J is the author of The Book on Flipping Houses and The Book on Estimating Rehab Costs, which you can get here on BiggerPockets.


  1. Amazing how all elements of any business involve building rapport with people. That is a true secret to success. Build genuine rapport and the results you achieve will far exceed any that you could achieve without doing so. BTW, your before and after pictures are AMAZING!!!

  2. I don’t know where to begin. This is the worst case of trying to influence an appraisers since the old before HVCC days. Then Realtors used to hand me a bunch of their “comps” geared towards the highest possible value. Never mind that they often were complete different from the house or worse in a different better area. Off course their house was the best thing ever built. If value did not come in, they called and complained. Off course a Realtor with a one week training, tops, and having sold a few homes, knew EVERYTHING better. Not to mention the bored converted housewives, now posing as Realtors, who were total experts but had NO clue about building material or much else. They should be selling cars. Not even. Cookies maybe.
    Now you suggest to influence an appraiser by giving a bunch of comps GEARED towards high value ! Of the appraiser takes that and really uses it, he/she is totally incompetent and is breaking the law. Great advise.
    “Helping them do their job effectively and efficiently”, THANKS ! Maybe we should give you part of our ever diminishing fee for the “help” !
    I am sure EVERY appraiser agrees with me that we truly appreciate when we are left alone to do out job instead of having a salesperson follow our every step and pointing out how fantastic the crown molding is.
    I am an appraiser, RE investor AND a rehabber, and this advise was just dumb. Do a great job on the house and the appraiser will see it for what it is. Sure, point out a few things that maybe cannot be seen (new plumbing, electricity). But don’t expect miracles. Our hands are very tied. Unless you know the rules and laws of appraising, don’t think that an appraiser can do just anything in order to finish a report quick and easy. If that was the case, those housewives would be taking our jobs too.

    • Christian –

      First, I’m sorry if — as an appraiser — you are offended by my post. But, my post is not directed at appraisers…it’s directed at real estate investors.

      I’m certainly not suggesting that an investor ever do anything illegal or unethical; I’m merely making suggestions on how investors can use the wiggle room that is inherent in the world of appraisals to help tip the scales in their favor when the ability arises. In many cases, whether a value is under or over the contract price of a house is very obvious…and in those cases, an investor should have absolutely no influence on the ultimate value. But, there are many cases where the value is very close to that of the contract price, and having all the information (including beneficial comps) can make the difference between an investor’s hard work paying off and an investor getting hurt by the appraisal.

      In those cases — where the value is within a range that includes the contract price, I see nothing unethical about working with the appraiser to help ensure the value comes back on the “correct” side. With HVCC, the process is pretty well stacked against an investor — many HVCC appraisers don’t know the areas where they are doing their work, most appraisers will artificially lower the value if it comes in well above the contract price, and I’ve even had appraisers tell me that they’ll get fired for saying market values in an area are improving — even if they really are!

      Btw, I’ve seen many of the same appraisers at my properties over and over (I guess the FHA pool of appraisers isn’t too big in my area), and they always seem happy to see me, and always seem grateful for the information I provide to them, regardless of whether they use it or not.

    • Btw, I was going to save this for another post, but just to give you an idea of what investors have to deal with these days, here’s a story about an appraisal I had two weeks ago:

      The house was under contract at $97,000. The appraisal came in at $92,000. I looked at the comps and the adjustments and they were ridiculously skewed towards a lower value than they should have been.

      I called the appraiser and told him that I was surprised that the appraisal came in so far below the contract price. His response was, “It came in $2000 above the price!”

      After going back and forth for a couple minutes, we both realized that he was looking at the original offer price on the contract he was given (which was $90,000), instead of looking at the final negotiated price (which was $97,000) located on a counter-offer page at the back of the contract.

      He basically told me that he adjusted the comps more than he otherwise would have to keep the value near what he thought the contract price was, but that had he known the contract price was $97,000, the price would have come in higher (he obviously didn’t say this in those words, but the meaning was clear).

      Ultimately, he told me to have the broker submit a rebuttal and he’d take care of it…which he did…

      Two weeks later, we got the second appraisal on this property (it was an FHA loan within 90 days of purchase). That appraisal came in at $99,000.

      So, unless there really was 10% wiggle room in the valuation of the property, the most likely conclusion is that the $92,000 value that the first appraiser originally came up with was bogus.

      Long story short, the lack of honesty and rigor in the appraisal process almost hurt me in this case…

      • I am also an appraiser and agree with Christian. Your last post about the appraiser missing the amended sale price of $97,000 and the appraisal coming in at $92,000 tells me that your property probably wasn’t even worth $92,000. He adjusted more than he normally does to make the sale price of what he thought was $90,000?? In this day in the real estate market, it is not unusual at all for the appraisal to come in lower than the contract price, especially a home sold by owner/investor.

        • Gary,

          If the value really was $92,000, then this wouldn’t explain why the second appraisal came in at $99,000 (which was much closer to the first appraiser’s revised number of $97,000).

  3. Christian,

    You hit it right on the head. As an appraiser, if we have questions we will ask you. There are many issues behind the scenes that we can not control in our profession. If rehabbers would look at ALL THE SALES, not just ones that benefit them, then maybe they would buy their properties at the right price and sell at a price in line with market values. All this rapport stuff is complete garbage and anyone that follows this guys advice is an idiot. The whole purpose of an appraisal is to have an objective opinion supported by facts.

    Chris S.

    • Chris,

      You hit the nail on the head when you said:

      “The whole purpose of an appraisal is to have an objective opinion supported by facts.”

      Unfortunately, in today’s HVCC world and where banks are selecting the cheapest appraisers as opposed to the best one, the investor often has more facts than the appraiser does.

      As an example, I had an appraiser a couple weeks ago who was amazed that there had been absolutely no retail sales in the neighborhood for 16 months; he had no idea that this neighborhood was one that was featured on national news networks 16 months earlier when horrible flooding hit the city. An appraiser who was at all familiar with the area would have known that before he even came to the property.

      It’s the investor’s job to make sure that the appraiser has as many facts as possible to support the value of the property, which will ultimately allow the appraiser the ability to do the best job possible.

  4. I do appreciate that there has been an increasing market bias to select the least competent appraiser, since this selection more often tends to be “fee” driven rather than “competency” driven; and which plays a role in creating a broad range of expectations as to what appraisers do and the level at which they perform their role. So while I understand the source of many misconceptions that are prevalent, I should point out some very important errors in this article.

    Firstly, the appraiser doesn’t and cannot advocate for their clients or anyone – I know, that is surprising and it is unlike many professions where the professional advocates for the client (such as, a listing agent, an attorney).

    In the language of the appraiser, keeping clients happy means doing a professional appraisal analysis on the appraisal and meeting time commitments. Keeping homeowners happy means showing up on time for the inspection and treating them courteously, and with respect. It is often believed that appraisers try to hit values that “make a deal work”. Rather, the appraiser uses market analysis and mathematics to arrive at a value. If it is higher than the sale price, or lower, or at the sales price, then that’s what it is, it isn’t done throught reverse engineering (The solution to the problem -value- is not known until employing the appraisal process).

    Unforntuately, there are always those that perform their professional roles outside of the mandates of their profession and while doing so, commit fraud, damage the credibility of the professoin and mislead the public.

    An appraiser should have access to the same MLS that the realtors have; but more importantly, the process for selecting comps is through the analysis of a broad range of properties that may compete with the subject home. It is by understanding this range of sales that one can pick the best matches to the property (remember the term “best matches” implies that the lesser matches are known). This process does not involve “cherry picking” to hit a value but rather choosing the most representative sales and then determining the value. The adjustments applied to the comparable properties for differences to those sales will allow a comparison to the subject.

    If someone has information they wish to provide an appraiser or if they wish to be present during an inspection, many appraisers will find it helpful. For one thing, they can corroborate their observations in real-time while doing the inspection and obtain information about what was done to the home so that they can match that up with what was apparent in the visual inspection. If “comps” are provided, the appraiser will often take the comps only to be certain they didn’t miss one in their analysis, if only to be sure. Errors can occur with MLS searches and even with appraisers. However, it should be highly unlikely they were not already aware of these properties when they did the preliminary analysis of the competitive market.

  5. The article about working with an appraiser is well written and makes a lot of sense. I, as an appraiser, appreciate some of the things you describe in the article. However, from an appraiser’s perspective, here are a couple of pieces of insight. Appraisers are under the gun from a lot of areas and we don’t have a lot of time to “socialize” with realtors while doing inspections. We’re trying to remember numbers, make sure we look at the building for problems, and work expediently and efficiency, while onsite. Someone talking to us while we’re taking measurements doesn’t help. Make your introductions, give the appraiser the comps, and then leave them alone. You’ll get a better quality inspection that way. Also, comps are appreciated. But make sure the comps are not out of date and are relevant or they just waste time. I can’t count how many times I’ve seen comps that were a year old (or more), are 50% larger than the subject, and 5 miles away. We know the realtor has good intentions but they just don’t know what is a good comp vs a bad one. They just want to help. ‘Nuff said, but keep helping the appraiser. In most cases it’s appreciated.

    • M Allen,

      You make many great points in your comment. Investors certainly need to understand that the appraiser is there to do a job, and the most important consideration is not to impede the process, slow the appraiser down or make that job any more difficult than it already is.

      That said, in my experience, appraiser’s seem to appreciate the value I try to add, and ultimately the time we save them hopefully outweighs the time we spend talking to them.

  6. Seems the appraiser’s are a little “testy”. And it’s certainly not easy to place credence in a comment from someone who’s art is to write when they are grammatically challenged.

    I have been buying and selling distressed properties for over 30 years and have been appraising properties, both fee and ad valorem, in 18+ counties for over 20 years. I’ll spare you the rant on jurisdictional competency, as I consistently produce statistically significant data to support the fact I run circles around most appraisers and especially in court. If an appraiser is offended by Mr. Scott’s post, I suspect they haven’t been around much. And if they’re worth their salt, they haven’t been effected by fees.

    One of the greatest aspects of this job is the ability to interact with people and if it’s difficult to walk and chew bubblegum (e.g. conduct a discussion while conducting a competent property inspection) perhaps one might be in the wrong profession.

    While I consistantly receive impertinent data from Realtors, agents, buyer’s and seller’s I nonetheless graciously accept it, stating that consideration is obviously conditioned upon the relavence of the information provided. And this is precisely why appraiser’s (and assessor’s for that matter) shouldn’t get their shorts in a wad.

    The inspection is not only an opportunity for participants to provide data (almost always a matter of public record that the appraiser should be analyzing anyway), but a significant opportunity for the appraiser to educate the transaction participant as to what we do and how we do it, obviously within the confines of our professional obligations.

    I suspect while not for everybody, this model has served me well through the years as many Realtors, agents, buyer’s, borrower’s and yes, AMC’s paying full fees have consistantly come back to my firm for, as I’m told, “Outstanding Professionalism” in addition to quality products. While I clearly make every effort to insure quality products, I have no dillusion that their feeling that way, regardless of the value contained in the report and potential adversarial position, is a direct result of the lost art of “Customer Relations”.

    My $0.02.

    Mark Z

  7. J Scott –

    I found your article and the ensuing discussion interesting. I’ve been appraising for 20+ years and although your tips to investors is not really news it’s also just a bit shocking to be reminded of the perceptions that exist out there in the real estate world about the appraisal function.

    I for one don’t mind a chatty owner or investor at the inspection and I’ll even trade pleasant conversation for a smooth inpsection, it makes my day nicer. And, I never ever refuse any and all information handed to me during the course of an inspection because knowing where the owner/seller/investor thinks the value is helps me (not them) in the end. If the owner/seller/investors opinion of value is way off reality knowing that helps me to go the extra mile in writing commentary to support my opinion in the appraisal report. It also helps me prepare for the market value dispute that will come when the owner/seller/investor is unhappy that I didn’t do it their way.

    You see, nice conversation and a packet of comparables will never influence me because I like my license. It’s really that simple. Don’t get me wrong, I think your advise about decorum at the inspection and preparation of data for the appraiser is right on. I just think that your implication that these things will result in a outcome that is more favorable to you than the appraiser’s love of his license is wrong. Most appraisers are smarter than you seem to give them credit for.

    Also, if you really want to understand how the appraisal process affects your deals you should talk to some review appraisers, quality control reviewers and underwriters. The appraisal industry has evolved and in the current world, it’s not so simple as joe the appraiser makes an inspection and writes a report that is relied on for a loan decision. In this day and age that report has been reviewed, criticized or praised, corrected and/or clarified well before the loan decision is considered. Rarely does an appraisal go straight to the entity lending the money. It’s impossible for the investor/owner/seller to influence all the people and functions behind the scenes of the appraisal process. There are also lots of appraisal products out that there outside of the traditional appraisal report that are being employed to either determine value and/or verify the validity of an appraisal report prepared in the field. Real estate valuation has become more complex than you may think 🙂

  8. Mr. Scott,

    I am a commercial appraiser in Diamond Bar, CA. Rehabbers and investors will continue to have this problem as long as the AMCs control the appraisal process and obtain the “cheapest and fastest” appraisal product. AMC appraisers have no incentive to do a competant job because they are not paid well enough and are not being given adequate time to research the data.

    Having a rehabbed home in a forest of REOs and Short Sales makes for a difficult valuation assignment. The issue is trying to giving contributory value to the upgrades and remodeling that you rehabbers have completed.

    The first thing I would advise, when the appraiser calls, is to find out where the appraiser is coming from. In CA, when you get the name, you can double check by going to and plug in the appraisers name. If they are from out of the area, I would question their geographic competancy. Ive’ seen several posts so far that talk about MLS access. If the buyer’s appraiser shows up without 8 or 9 MLS listings, I would be very concerned about their access to data.

    I would also suggest developing a stable of lenders who don’t utilize any of the big AMC’s but have an ordering entity that focuses on quality and competancy rather than speed and cheap. You can then try to steer your Buyer to one of these lenders. This is going to be tough to do. Of course, this is all for naught if your rehabbed home is not priced well.

    Unfortunately, you can’t control all of the issues and in the end, you just have to hope that a competant appraiser is sent out. I am an Expert on one of the On-line Ask-The-Expert sites and 40% of the questions asked of me in 2010 were along these lines: “Mr. Carlson, I just had a (refi/purchase) appraisal and the value came in too low because the appraiser used bad data. What can I do?” This is a national problem, no it is a national “embarrassment” that has to be corrected.

  9. I have been in the home building business for many years. My brother used to handle all of the visits by the county inspectors. I know that on all occasions it was kind of like a social meeting between him and the inspector in which he would walk through the property and shoot the breeze as well as back up any of the building practices that came into question.

    It is amazing what a little attention to an inspector or appraiser can do!

  10. 1. When an appraisal comes to do an appraisal for a refi does he pull all permits on the property before doing the appraisal? Does he check to see if everything is permited?

    2. What if you didnt used licensed contractors to do the work… will he know and will he value the property less?

  11. This article has already been posted and responded to earlier on the forum:

    There are numerous inaccuracies in this article. The inaccuracies indicate the author is not familiar with the appraisal process.

    If you want to ensure your property appraisal meets your expectations, then you need to ensure your expectations are supported by the neighborhood market data.

    There should not be any surprises in an appraisal. If there are surprises, then you did not perform your homework or you should be able to prove the appraisal is bad and have it modified. If you claim a bad appraisal and do nothing, then you didn’t do your homework and have no basis for your complaints.

    Personally, I’ve instructed my clients to require a $$$ deposit from the Seller if the Seller is unhappy with the appraisal and submits alternative Comp Candidates. If the new Comp Candidates are accepted, the deposit is returned. If the new Comp Candidates are shown to be worse Comp Candidates then the original Comps, the deposit is split between my client and myself to cover our wasted time with the new Comp Candidates. So far, all the deposits have been kept due to the inferior new Comp Candidates. The Sellers do a lot of complaining, but have nothing to support their complaints.

    Professional, responsive behavior will get you much further than the gimmicks suggested in this article.

    • Wait a second…let me get this straight…

      As an appraiser, you have a job where impartiality is paramount and even a perception of partiality risks your credibility. Yet, you’ve implemented a business model where, if the seller isn’t happy with the comps you chose, you will let him submit other comps for a fee. Further, after he pays that fee, YOU get to decide between the following two choices:

      1. You can admit you were wrong in your appraisal and return the fee; or

      2. You can determine that you were correct in your appraisal and keep the fee (split it with your client).

      And you expect us to be surprised that in every situation in your history, you’ve chosen #2?!?!?

      Just to summarize this one more time…

      You’ve implemented a business model where there is a financial incentive for you to choose bad comps, force a seller to pay you to consider other comps and then deny those comps as well, so you can keep the fee.

      I’m not saying that is what you’re doing, but you’ve certainly created a situation where one would wonder…IS THIS EVEN LEGAL FOR AN APPRAISER TO DO!?!?!

      If it’s legal for appraisers to coerce sellers into paying them additional fees for rejecting appraisal challenges, the appraisal industry is more pathetic than I ever imagined. And if you’re giving yourself a financial incentive (even if you’re not actually leveraging the incentive) to have appraisals come in low, you give the entire industry a bad name.

      I’m curious to find out if the TALCB is on-board with appraisers taking (and keeping) fees to review comps from sellers. I’ll be giving them a call…

      • Is an Appraiser permitted to charge an additional fee for review work which was not part of the original appraisal assignment? Absolutely.

        If a Seller wants to submit inferior Comp Candidates and pay to have these reviewed, then I’ll be glad to do so. In every case I’ve seen, the submitted Comp Candidates are significantly different from the Subject and inferior to the original Comp Candidates. When this is disclosed and documented, the submittor crawls back under the slimy rock they crawled out of.

        Please proceed with your call to the TALCB. You might also mention to TALCB that your article title is “Controlling (and Conquering) Your Appraisals”. Better yet, you might want to send them a copy of your article.

        The Seller does not “control or conquer an appraisal”. As identified on the forum post, you don’t understand the appraisal process and have resorted to gimmicks to try to influence the Appraiser.

        A good Appraiser will ignore your gimmicks and perform the service requested by the Client.


        • Alan –

          I sent an email to TALCB last night describing what you stated you were doing (and asking if it was ethical/legal), and I received a reply this morning encouraging me to file a formal complaint.

          Given that my complaint is solely based on what you’ve written here, you will get your wish and they will most certainly see this article in the course of their investigation. Of course, I have absolutely no problem with that, as I am in no way governed by TALCB, so it doesn’t matter to me whether they approve of my article or not.


  12. Excellent !

    I hope your complaint submittal brings the TALCB Staff the same laughter and entertainment that I obtained when reading your article(s). I especially liked the following comment:

    “Ask the appraiser about his family, ask about his business, ask him questions that allow him to feel like you appreciate his “help”, and (if it’s true) insinuate that you may want to use his services in the future. We don’t like to let or friends down, so the goal is to get the appraiser to feel as if you’re a friend in the short time you’re together”.

    Every time I read this I am rolling on the floor laughing.

    I eagerly await the TALCB response to your complaint, which is submitted by the author of the “Controlling (And Conquering) Your Appraisals)” article.

    I will not be surprised if the response is a big “Attaboy, keep up the good work”.

    I also found it interesting that you confirmed you were outside the TALCB jurisdiction before submitting your complaint. You’ve done more than I could ever do to prove my point.


  13. Alan –

    I’m glad you’re getting a good laugh. So far, nobody I’ve spoken with about this has gotten a laugh out of the fact that a licensed appraiser has created a business model where he is giving himself a financial incentive not to be impartial. The two appraisers I’ve asked about it were disgusted and one deemed it “extortion.”

    But I’m glad you’re getting a good laugh…

    Anyway, perhaps you can provide more information here about your business model. How many times have you taken money from sellers to “review comps?” How much do you charge them? What percentage of the time do you determine the seller-provided comps aren’t good enough and you put that money in your own pocket? Do you keep written records of the sellers who have paid you?

    Any information you can provide would be greatly appreciated!

  14. Thank you for this article, Mr. Scott! I am not a “rehabber” or investor. I AM a homeowner who recently purchased a new home and is in the process of selling my old home (along with my husband). Oh, the things I’ve learned in this (as it turns out) HORRIBLE experience. We bought our old home 21 years ago. We love our little brick ranch and refinanced a few times to invest in our home (completely remodeled kitchen, new roof, new porch, new driveway, etc, etc). We are strictly working class folks. We’ve been told many times how lovely our home is, inside and out. Before pricing our home, we looked at similarly priced sold homes (comps) and current for sale home in our area. We’ve had at least 10 offers within our price range (all HUD buyers) and finally accepted one. We went through the inspection process with no problems and then came the appraisal. The appraiser is from an area 50 miles away, our realtor provided him with carefully selected comps & as close to the same type and size of home as possible (one priced higher, one right near our price and one lower, from a surrounding area, less than 90 days old and within a mile of our home). The appraiser used none of them, priced our home 30% lower than the sale price (12% lower than our own purchase price 21 years ago). ALL of his comps were priced much lower and were from a 2 block radius, east of us. All of the comps he chose had less square footage and a smaller lot. Deal busted and it seems the seller (us) has no recourse. We now plan to hire a property manager and rent. I just don’t understand how one little person (appraiser) can have so much power. Reading your column and some of the comments has helped. Thanks 🙂

  15. Hi appraisers –

    I found this post interesting, but the rebuttals by appraisers were even more interesting. 5 years ago I bought my first home and the closing was scheduled on a day that happened to come one week after IndyMac bank failed, triggering the mortgage bubble collapse. We lost one lender, and in order to close in a few days I contacted two banks and a mortgage broker and openly told all of them that whoever gets us the best loan wins our business. This meant paying for 2 different appraisals (one bank was willing to use the other’s appraisal).

    When they both came in, there was a $26,000 difference in them. One was above the contract value and the other was below. So, my first experience with the process is that it is not very objective at all. Some appraisers do more homework than others and others know the comps better. Two appraisers working on the same home independently can come to two incredibly different answers, even when looking at the same comps!

    I read this post because I am going through a major renovation and wanting to borrow money. My bank ordered the appraisal late, unbeknownst to me, and now my kitchen is demolished the day before the appraisal. I have to show the appraiser the blueprints, the contract, and the permits and ask for a cost of cure or prospective value to be included in the appraisal for our lender. Hopefully they won’t be insulted by that. I fully realize that they have to appraise what they see. But the appraisal is in fact more than just a number.

  16. Yes, it happens that an appraiser does not pick the best comps. We are humans and we can miss things too… But to have a Realtor or home owner pick comps, when they often have little clue about the appraisal process, or know what is allowed and not, is ridiculous. Picking comps is one of the most crucial aspects of appraising. Then there are lender requirements we have to deal with as well. As far as different appraisers coming in with different values for a subject, thats normal. The difference should not be that large however. But you should all know, there are NO instructions and guidelines for how to adjust differences between comps and a subject. Thats up to the appraiser. We decide what a difference is worth. It is supposed to be what the market tells us, but that is a matter of interpretation. So same comp used in 2 different appraisals will have 2 different adjusted value. After all, if there was an EXACT method on how to pick comps and how to adjust differences and determine a value, it would have been done by computers, and appraisers would no longer be needed.

    So leave the appraiser alone when doing his/her job. Best is if we are along. We do not want to be influenced. We are not there to socialize. We dont tell a homeowner how to renovate in order to maximise value, we dont tell a realtor what to sell a house for. We do NOT need anyone handing us comps, after all that’s OUR JOB. Of course if an AMC picks the cheapest appraiser, you will get one with least experience…

  17. Here’s an update to my earlier comment. Before we even had a chance to contact a property manager to rent our home, our realtor had several requests to show the house. We immediately had another offer (same price as before) to a buyer with a conventional loan (credit union). Another appraisal….and, THIS appraisal was $18,000 higher than the previous one, from 2 weeks earlier! How can that possibly be? Obviously, the system is really screwed up. Appraisers have way too much power in this process. One of my friends said to me, “I know 2 people who are appraisers. Neither one should have power of any kind”.

  18. Everyone keeps attacking the appraiser. When are you going to realize that the LENDERS choose the “quickest and fastest”, that is the only thing they care about. You need to focus on getting the entire appraisal ordering paradighm changed. That is going to be very difficult because of the $$$$ lenders make on the backs of appraisers.

    I have never competed in the AMC arena, because of the rediculous fees they want. I got a request to appraise 10-acres in Apple Valley 2 weeks ago. 3500 SF house, private road, propane, private well, septic system, crops growing. AMC asked me to accept fee of $225 & said they wanted to get the appraisal back day after tomorrow @ 12 noon. I told them $1,000 and I needed at least 7 to 9 days. The caller didn’t have the courtesy to say “thanks-but-no-thanks” they just hung up on me. I know they got some appraiser to do this assignment, what kind of an appraisal do you think was received?????

    THIS IS WHAT YOU ARE DEALING with!!! Of course your going to get the most inexperienced, least qualified form-filler for your appraisal. They are the only ones that chose the quickest to find comps, slam them on an appraisal & provide no analysis because they have to get the report in 24-hours after they see the property.

  19. Again Cindi, we are not machines. We do not run numbers through a computer and it will spit out an exact value. I often do review appraisals, and also 2nd appraisals for high value homes and loans. Mine will NEVER come in at exactly the same value as the other appraisal. $18000 difference is not much, at least not when a house is worth over $300K or so. I can give a site adjustment maybe with $5 per sf, and the other appraiser gives $6. If a lot is 10000 sf different that’s already $10000 there. It takes at least 2-3 years to become an appraiser. We have to take many specific appraisal classes to get certified, have previous degrees, have 1000’s of hours of appraisal work, be a apprentice for at least 2 years. So its ridiculous to think that a homeowner, rehabber or realtor has the same full knowledge as an appraiser has. You don’t.
    We have the power given to us for a good reason. Thats why realtors do not appraise, thats why homeowners are not asked what their house is worth.

  20. To appraisers – the value of a home is arbitrary, just like market value of anything else. For anyone to say there is a science behind putting a value on something that is stirred largely by emotion is complete over-estimation of their own value. I do not wish to attack appraisers because I understand this inherent variability in trying to assign an objective value to something that is almost completely subjective. But I wish to point out that the system gives these attempts at averaging other people’s emotions in a neighborhood (a.k.a. comps) too much power in the loan process.

    The bank has to take a leap of faith, no matter the appraisal. They could ask objective questions of the appraiser – is the house in good shape, is there major construction needed for livability, is the exterior in worse, average or better condition than other houses in the neighborhood, and what is the average sales price of homes of the same square footage in the last 6 months. Ultimately, the more important ingredients to the bank’s decision is whether the borrower is credit-worthy and whether they will have enough income to sustain the integrity of the home. Again, a value judgment. None of this should be treated as science.

    Christian, I am a Ph.D. in physical sciences. I have spent many hours, months, years working with vast data sets. I don’t carry myself the same way you do in regards to possibly being wrong about something, even when a lot of physical scientists are under attack today due to the conclusions they draw. Don’t worry about being wrong, and keep doing a good job. But try to breathe some life into the party and drop the “woe be me” attitude about appraisers. You have to understand that it is a sticky subject when someone else feels qualified to put a number onto something we value!

  21. The point that the author makes “build rapport with the appraiser”, is minimally true. When I’m doing my inspection, I don’t want someone following me around telling me things or asking me questions. If that happens, it causes me to be distracted from my job and I have missed things. Sort of counter productive, isn’t it? If the owner/realtor wants to tell me something, they should do it up front or at the end of my inspection. I appreciate “most” additional information or comps but don’t want to deal with it in the middle of my inspection. People would be surprised (maybe not) how many realtors and owners, don’t know what makes a good comp. It’s not one that closed 9 months ago or has double the square footage. I use closed sales within the past 180 days, having GLA within 25% +/- that of the subject. Bracketing is another foreign concept to realtors and owners, because they are NOT appraisers. The subject’s value will be between the highest and lowest comp in the appraisal, NOT above the highest valued one! No one loves the subject property more than the seller or the realtor who will be paid on a % of the sales price. The appraiser doesn’t care (or shouldn’t). They don’t have a nickel invested in it. ….so build rapport if you feel so inclined, but do it at the end of the inspection and don’t overdo it. Most appraisers are busy people and have to get moving. Also, don’t congratulate yourself or your lender for “finding” the lowest priced appraiser for your appraisal. Low prices are the ones that draw out the bottom feeders who can’t get hired by reputable lenders who are willing to pay for good/accurate appraisals. It’s an important item. Would you want to hire the cheapest surgeon??

  22. Brad R: I completely agree with you. Thank you for your well thought out comment.

    Christian: Please stop with the “poor me” attitude. All of us have to put in time/years to be educated to do our jobs. And I stick with my opinion that appraisers have too much power in the house buying/selling process. There is absolutely no recourse for a bad appraisal, especially for the seller. In my case, $18,000 IS a lot. Our house was listed for $91,000. The 1st appraiser was lazy and incompetent. And frankly, for you to make a flippant statement like “$18000 is not much” tells me a lot about you. Pray tell, Christian, what is the “good reason” appraisers have “the power given to them”?

  23. Cindi,

    Residential Appraisers who work for AMC’s have no power, none. They either do what the AMC wants, deliver the appraisal in 24 hours, whatever is required, or they get no more work.

    I again point out that the lenders are the ones in power here.

  24. Cindi, why don’t you tell the bank next time that you can do your own appraisal, that you know better than any appraiser what your house is worth. You cannot. There is a good reason there are appraisers, and every time there is a real estate crisis the requirements to become one become even tougher. Before the last crisis, brokers could do some basic appraising. NO more. They are no longer trusted. Wonder why. Because YOU and a Realtor and Broker has an interest in the house !!! Or may one day have. An appraiser cannot have any past current or future interest in a house appraised. And Brad, come on, are you a REGISTERED CERTIFIED scientist ? Does the state or government have special laws for how you do your science ? Are you tested every other year, and have to take continued education classes ? You can have an PH D all you want, it does not mean that you actually know anything or are an expert. Only through your work that is then judged by your piers will you be one. You are not an appraiser, But I am one and know the science of appraising. We don’t pull numbers out of hats you know… Why don’t you download the entire USPAP, study it and then we can talk. When you know it as good a me, when you have done 1000’s of appraisals like I, when you are highly regarded and entrusted to do appraisal reviews, then we can talk.
    But Cindi, I agree with you that for a $91k house, $18k difference is much. But if there are 10 comps that are all great, it will be unusual if two appraisers would pick exactly the same 3-6. And another comp means other adjustments and another end result. To think that every appraiser should come out with the same value OPINION (this is what it is LEGALLY called) is silly. IF you don’t like the appraisal, rebuttal it, ask for another one, or go to another lender and hope the next one will be more to your liking. I guess when you go to a doctor and get bad news, you go to another one until you find one who tells you what you like.

    Lastly I want to add that not all AMC’s are bad. Some are great. You just have to be picky. And hopefully you can be. They pay me top money, and when they find a cheaper appraiser, they soon come back because of all the revisions and troubles with that cheaper appraiser… Its kind of like a bad scientist, predicting the end of the world or something… after a while people stop listening…

    • Christian, I actually don’t want to talk to you anymore. You lost me with “…a Ph.D. doesn’t make you an expert.” You have a completely myopic vision of your line of work and the world in general.

      Bottom line of original article, and supported by many posts despite Christian’s futile insistences: There is absolutely no science to assigning a numeric value to an object that contains different emotional attachments to buyers and sellers. Absolutely none.

      (BTW Christian, the fact that you have to be certified underscores 1. the appraisal is very important and 2. it is hard to normalize between individual appraisers. Try as the law may, there will always be subjectivity in the appraisal. That doesn’t make you more important than anyone.)

  25. Yeah, Christian…in any “market” where there is buying and selling going on, both the buyer and seller do have an “interest”. The seller’s (me) interest has to do with owning, maintaining and improving a property to make it “marketable” and a good value for the buyer; the buyer’s is to purchase a reliable and attractive home (i.e., shelter) that will keep them for as long as they’d like to live there (duh). You may not realize that the real estate agent does a lot of what you do – they examine the area’s housing “market” to come up with a reasonable price. A home inspection is scheduled to ensure the soundness of the property. There may be problems pointed out by the home inspector – if so, they’re taken care of and the transaction proceeds. There is no need for any adversity. And then comes the appraiser, who at his own discretion, can pick “comps” that don’t compare (as in our case) and blammo, after weeks of the house being off the market, the sale is busted. I repeat, the seller has NO recourse. I wrote to FHA, who said “not our problem”, I wrote to the lender, no response. Our buyer did not have the available cash to pay for another appraisal. So, he lost out and so did we. Fortunately, we quickly had another buyer (another indication of the listed price being reasonable) and this time, we had a decent appraiser who used comparable “comps”.

    Another thing, Christian, get rid of your god-complex. Please don’t compare yourself or your job to that of a physician…not the same thing or even close. And don’t take this discussion so personally. YOU were not my appraiser, so I’m not complaining about YOU so please cut out the bratty comments. Your insults to Brad were pretty mean-spirited and pathetic.

    Yes, John Carlson, I know the lender is the one behind the whole deal. But, the appraiser has the power, with his pencil strokes, to kill a good deal, with very little thought. If you know of a lender, instructing the appraiser to come up with a lowball, whacked out value, please report him or her. Yes, the system, as it is, pretty much sucks. Thanks.

  26. Cindi, an appraiser does not KILL a “deal”, nor does he save one… At least he/she shouldn’t. An appraisal is supposed to be completely unbiased and an appraiser should have NO interest in if a house gets sold or refinanced. A realtor sets a price usually well above market, so there is room to press down price. I know since I am one too. And some (most) just have totally unreal expectations of what a house is worth. Most homeowners do too. Often its only compared with the best houses and highest sales. I just had an appraisal like that, and I am sure the deal was killed with my appraisal. Its not that I think I am God Cindi, but I try to be realistic and moderate in my valuation. Unlike you or the realtor involved, I get paid either way. Or would you and Brad rather have t that we got paid based on value and ONLY if a “deal” was successful ?
    That would be interesting, as if we did not have enough of housing crisis already…
    And yes, off course an appraiser can be compared to a doctor or a lawyer. The certification process is similar. Its not all about education Brad. We have special laws we need to follow and have to go through constant training and scrutiny. Well maybe not a lawyer… None of us are Gods, sorry to say, but in general, we are experts and know what we are talking about. But as with all professions, there are bad apples around, lousy lawyers and crappy doctors too…

    • Christian, after reading the back and forth with yourself, Brad and Cindi I have concluded your way off base with your comments. An appraiser is just euphemism for ‘guesser’. For ‘all’ the training you people rigorously go through to get and keep that piece of paper…give me a break. To come back with an $18k difference should tell you and your piers that your job is not a science, but more subjected to opinion. Ever have a physician operate on your body by guessing? I doubt it and for good reason. I had an appraisal from bank to come back at $244k. A year later I decided to sell that particular property (I own several properties and invest in real estate on the side) and hired an appraiser. This independent appraisal came back at $227k. The closest comps this incompetent appraiser could come up with were at least 10 miles or more away in different counties, never mind there were several a lot closer that could have been used and adjusted for differences. So your industry is merely a guessing game that benefits only the lender if they are the ones that hire you or the buyer, which gives them even more purchasing power and quite frankly screws the seller no matter how you look at it. I don’t usually post such negative comments regarding another’s profession, but I dealt with this personally. By the way, this is no reflection on you personally, but it just feels like it in all these posts probably because it sounds like you are defending your industry as a whole. As a side note, I am a retired neurosurgeon from Germany, but have worked (not practiced) in the U.S. for over 22 years before retiring.

  27. I didn’t realize that you had to take years of training to become an appraiser. I remember about 3 years ago a colleague of mines son had thought to get into real estate appraising and said “I thought I could apply what I learned in high school to assign a value to a home. Login to my laptop, search for three similar comps and divide by 3′. Just a funny side note I remembered pertaining to appraising, not to offend anyone.

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