We have a problem that we need to stand up against—and we need to do it together. It’s something that affects each and every one of us.
As real estate agents, we all need appraisers. Many appraisers are top-notch professionals as well as wonderful people. I am great friends with many of them. But the appraisal industry is being forced to take a turn that is becoming a thorn in the side of the entire real estate industry.
Case in point: A client of mine called me last week.
“Denise, I’m so upset,” she said. “I represent a seller and we had a deal that was about to close. Then, the appraisal came in extremely low—from an appraiser who has an office a couple of counties away from the home that they appraised, in fact the appraiser didn’t even know how to get to the property and had to ask me for directions. The buyers then responded to the appraisal by demanding that we lower the price of our house by over $50,000. My seller is overwhelmed and can’t reduce the price by $50,000 and the deal is going to collapse because of this ridiculous appraisal.”
Actually, this isn’t the only phone call like this I’ve had recently. In the past two months, I’ve had at least thirty such complaints from agents who have to deal with out-of-town appraisers who sour deals by coming in with low—and totally inaccurate—home prices.
The problem is that appraisers are allowed to take on clients many miles outside their area of expertise. Funny thing that agents are expected to have direct market knowledge and encouraged not to sell homes or help people buy homes in areas they are not familiar with….and for good reason. I think it is essential that agents work in an area that they are familiar. So why are appraisers doing work in other counties that they may not be familiar with? I guess I still believe that the appraisal on any home depends as much on the location of the home as the actual sticks and stones of the home. In other words an appraiser needs to be familiar with the community and the neighborhood.
There’s a very bad precedent being set here. It’s high time that we speak up and put an end to this madness before it gets completely out of hand.
Local appraisers should be the only people allowed to appraise properties in a particular area. There is so much that goes into an appraisal. An out-of-towner just isn’t equipped with enough information to make a valid assessment of a property’s value.
When a local appraiser examines a property, it’s more than just numbers and photographs of similar homes. Local appraisers have the bonus of deep knowledge about the area—from experience having done many other nearby appraisals. Personal experience has taught this appraiser exactly what to look for in the neighborhoods of his or her area.
They know the particular problems that any particular area has suffered over the course of a period of years. They know the perceived value of living in a certain neighborhood—because they have probably appraised in that neighborhood before. They have the benefit of seeing first-hand market changes in their area of expertise over time.
None of this knowledge is available to an outside appraiser because to know an area is to live and work in it every day. That’s the value of a local appraiser—who more often than not, gets the price right by virtue of just being a part of the area.
Anyone from the outside can come in, snap a few pictures, and make a judgment based on appearances alone. But does he or she know about local selling trends—such as little “pockets” of homes that sell faster because the surrounding neighborhood has a huge public appeal? This is knowledge that only a local appraiser would know.
The big question here is: Why are appraisers allowed to practice outside of their area of expertise? The question I have is this: Is this in the best interest of our buyers and sellers? I would emphatically say NO!!!
Appraisers can come in from two counties away, make a quick appraisal, and get away fast. Is this fair? No. Is this reasonable? No. Is this something we’re going to let slide? NO!
It is time that we get together and unite against this unfair practice that affects our livelihoods. We are at the mercy of inaccurate pricing that directly determines our bottom line. It is our duty to our businesses, our industry, and our own self-respect to stand up for our rights and fight this practice.
If we don’t, we will lose many more transactions to this unprofessional behavior. An out-of-town appraiser just can’t make an accurate assessment of a property in an afternoon of research. I believe it’s impossible.
Do you believe it’s impossible too? Then I want to hear from you.
I want to hear your own experiences with this problem. Email your appraisal experiences and then let’s unite and send this information to the State and National Association of Realtors and the Department of Licensing. This is a big issue that needs our attention. We need to work together on this. I look forward to hearing from you.
By Denise Lones CSP, M.I.R.M.