There is much confusion about what you can and can’t do now with appraisers and the new federal regulations. It is well documented that builders, sellers and buyers argue that the appraisal management companies can sometimes magnify disparities in value. Generally, people don’t think to do any of these items below until after issues arise with an appraisal. Here are some helpful suggestions to minimize potential issues with value:
- Be proactive and do your homework. You are the experts in your areas and the transaction needs your expertise when is comes to comps. Check comps and find out if any of them are on the radar for the appraiser to use. Then, dig in. Did those comps attribute to a lower sales price because of a distressed sale (foreclosure, short-sale, divorce, financial distress)? Are there any pocket listings that you can share with the appraiser? These are always useful as they won’t appear in the MLS. Maybe ask your title rep for a list of recent sales in the area that possibly didn’t make the MLS.
- Ask questions before the appointment. You will have this opportunity when the appraiser calls to schedule the appointment. Is the appraiser local to the area? Does the appraiser know the agents in the area? Does the appraiser have a pulse on the market? If you have a concern, contact the mortgage professional handling the financing or the appraisal management company and request a more suitable appraiser.
- Show up to the appointment. Bring those comps and a written explanation of each to the appointment and include any knowledge you have that is useful. Make a list of any improvements to the subject property, including dates and costs. Any ‘value-enhancing’ information here is critical. Highlight the positives of the subject property – this should be the easiest part!
- Finally, if you get a finished appraisal report and the value is not supported by the appraiser’s analysis, examine the report for accuracy. Check the subject property data – square footage, bedrooms, bathrooms. Next, check the comps. Are they all accurate? You may need to call the agent involved with each transaction to verify details of the transaction, the size or any pertinent information pertaining to the sale that may have impacted the value. It is entirely possible that the appraiser was not aware of this information, which may result in adjustments that are favorable to the subject property’s report. by Tony Svoboda
The views, opinions, positions or strategies expressed by the authors and those providing comments or external internet links are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of First Capital, we make no representations as to accuracy, completeness, current, suitability, or validity of this information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any information provided does not constitute an offer or a solicitation to lend. Providing information to purchase does not guarantee a loan approval. All registered trademarks, copyright, images, or other items used are property of their respective owner and are used for editorial purposes only.
First Capital Mortgage is a subsidiary of PHH Home Loans LLC, a direct lender, Dept. of Corporations file #413-0713
Visit FirstCapital Online or call: 310-458-0010