Knowing Green Can Save You Green

liability-shutterstock217936357

Liability Headaches

Real estate practice, both valuation and brokerage, are professions that are open season for law suits.  Let’s face it, consumers can be very litigious in many situations.  Reducing liability is something we should all try to do in our professional work.  But outside of decreasing liability, what agents do, as well as appraisers, is work with an important element of the economy.  Housing is an integral element of the overall economy and it is our collective jobs to try and protect it.  That is why it is so important that we all get as competent as we can.

Pricing and valuing homes is sometimes tricky, and it is important that we all understand our markets.  One area that I get lots of feedback from agents and builders, and even consumers, is dealing with high-performance, or green homes. We are starting to see data that supports homes are being both under-listed and undervalued.

Support for My Claim

Ken Harney, the real estate columnist for The Washington Post wrote a piece last fall about high-performance homes and why it is important to work with experienced green professionals.  He wrote:

“Adomatis (An appraiser interviewing agents), told me that in interviews, some agents who listed certified green properties in California admitted they “had no clue what they were selling.” A few even said, “I don’t know what makes a house green.”

That’s a direct violation of the code of ethics of the National Association of Realtors, which prohibits members from marketing types of property that are “outside their field of competence” and training. The association offers members in-depth courses on green-home marketing and has urged MLS’s across the country to include “green fields” in their listings.”

In 2017, I was part of a team of experts, led by Sandra Adomatis, SRA, that did a study on the Pearl home certifications.  We found in that study that the certification could add 5% in value.  That’s a big number in some cases, and one that requires some marketing to achieve.  We found that in some cases that agents were not marketing homes that had the certifications, thus the potential buyer pool was unaware of the features.

We noted in the study that listings that conspicuously placed the green certifications up front in the listing and marketed the features saw the best return. From the study:

“MLS marketing practices in promoting Pearl-certified home features varied and may account for some of the pairs that show little or no sales price premium found. For instance, in Silver Spring, MD, and Great Falls, VA, the pairs with the highest negative results were sales where Pearl Certificates and documents were not included in the MLS listing as attachments or as jpg files in the photograph gallery.”

This is a potentially big oversight if missed.  I would think that many agents would want to cover all their bases and inquire when taking on a listing if the home has any green certifications or features.  There are readily available databases that will tell you.  Resnet has a data base where agents and appraisers can locate HERS rated homes.  Pearl Has one as well located here.  It may be a good idea to search these and other databases prior to accepting a listing.  In truth, all home certification programs should have a searchable database, but many do not.  That is why when you see much of my writing that I write about Pearl and Resnet so often, they have these databases.  I would challenge that any certification program without a searchable database is not worth using. How else are agents and appraisers going to track quantifiable data?

What Can Agents Do?

What happens when you find out the home has a viable energy certification?  You must make sure the consumers are aware, and that comes from careful and transparent marketing.  This could mean placing feature signage throughout a listing that highlight the features. Having a well laid out feature sheet that includes the features an infographic or two dealing with the high-performance features.

Taking it a step further, it would not be a terrible idea to also include language in your contracts that a competent appraiser must be retained to do the work.  This means the lenders will have to locate and utilize an appraiser that has experience doing it.  With Fannie Mare, FHA, USDA and Freddie Mac this means that the appraiser has demonstrated competency, or rather has done this kind of work before.  While the agents cannot be involved in selecting the actual appraiser used, limitations can be placed on not using unqualified appraisers.  I have seen this and have been chosen for assignments in the past because I am one of a few appraisers in my market area that do the work.

The National Association of Home Builders published a blog discussing the issue of high-performance homes and appraisals.  It states:

There are several reasons for this, but ultimately the issue is that too many green appraisal jobs are going to appraisers who simply aren’t trained to recognize the features and adjust valuations accordingly. This is unfortunate, because it hinders growth in high-performance homes. Builders and owners are simply less likely to invest in features they aren’t sure they can recapture when they sell.

The blog goes on to showcase a builder who requires that a qualified appraiser be used

Appraisers

Homes with solar panel valuation are complex valuation assignments and so are homes with green certifications.  The biggest problem sellers run into with appraisers on these homes is that the appraisers with no experience will sometimes write off the features as having no value.  The appraisers will make comment like, “I cannot find any homes with solar panels; thus, the market recognizes no value.” This is not true in many cases. Perspectives like these can create a unique liability for that appraiser as well, because that is simply not sound valuation theory or logical.

When an appraiser catches an assignment like this, there is lots of involved research to undergo.  One of the simplest ways to debunk the lack of comps argument with solar panels is to ask, “Have you spoken with all the local solar panel companies and asked about all of the installs over the last 12 to 24 months?”   The premise to this question is that installs do show demand.  I will agree that it’s difficult to ascertain a supportable market value when you have no sales, but there are other methods to use.  The Appraisal Institute (AI) teaches a class on using a discounted cash flow analysis to support value.  One can also capitalize the savings gained, among other things.

I wrote a blog for appraisers last year that deals with appraisers can do to help themselves become competent.  The demand is strong out there for this specialty practice but there are not many appraisers doing the work.  I have a strong suspicion that is because the lenders and appraisal management companies are not trying to hire appraisers that do the work.  If they were, I feel like more appraisers would be grasping at the opportunity.

Lenders and Appraisal Management Companies (AMC)

The lenders and Appraisal Management Companies should be making sure the appraisers retained are qualified, but borrowers will often not mention or have any clue the home under contract needs such expert valuation services. I sometimes get on site for a lender and must call them and explain that the subject home has a large solar array and is a platinum Pearl home.  It is not the lenders fault that the borrower failed to communicate the information to them.  But I do hope that the lenders are asking about high-performance features during the application process.

If you are a lender or work with an AMC there is a great resource through the Appraisal Institute (AI).  You can locate appraisers that are trained in the valuation of green homes through their registry.  This is such a great resource that the AI allows non-AI members to be included on the registry. There truly is a responsibility on the lenders that extends to the AMCs to locate and utilize competent appraisers.  I have yet to find one lender or AMC that qualifies appraisers based on high-performance homes. Some do ask if I do them, but they never ask for sample reports which show demonstrated competency (something required by the secondary market and agencies).

When you sign up with a lender or AMC, they always want sample reports, but I have never been asked for a high-performance home sample report.  They usually want a sample of an FHA report, a condo report and some type of complex assignment.  Some lenders that do lots of new construction even ask for a new construction sample. That no clients are asking for high-performance home reports is concerning.

Conclusion

In the end, high-performance homes offer a unique and complex assignment type for both agents and appraisers.  The only way to competently accept this work is to get educated and get some experience to do the work.  For agents, who can advocate for their clients, it is important that you communicate what you are selling to the consumers, to the lenders and finally to the appraisers when they come out to do their inspections.  That is a lot of responsibility, be mindful of it.

Moving to a New Market

 

moving-truck

I have seen several folks on social media asking what it takes to pick up stakes and move to a new market.  I am surprised at the advice and lack of GSE and FHA/USDA understanding out there regarding such a thing.  While Fannie Mae, Freddie MAC, FHA and USDA do not prohibit an appraiser from moving to a new market, they do prohibit one form doing any work in the new market until the appraiser becomes competent.  Each entity requires that competency already be established when talking on a new assignment.  In this blog, we are discussing a specialized competency: geographic competency.

Over my career, I have moved four times where I required to become market competent.  I was careful in each case to do so by working with offices that could help me become competent. It was not an easy task, but one that I knew was required.  Yes, it meant taking less fee for a bit, but I wanted to be bullet proof from a possible complaint. I will add that each experience served as rewarding one.  If you move you must retool your processes for each market.

When I moved to Charlottesville (Blue ridge Mountains), I came from a coastal plains area (Hampton Roads).  When I lived in Hampton Roads there was almost no such thing as a basement except in rare cases.  I had no choice but to learn about this and many other things that were common to a Piedmont location.  That meant doing case studies to prove contributory values, etc.  Thank goodness I had experience with Excel and other tools like Regression+ to help me do my job well enough.

GSEs and Agencies

Many would argue that USPAP allows one to become competent, which it does.  But the issue with the GSEs and agencies is that they require demonstrated competency. So, there is an assignment condition which makes that flexibility found in USPAP not applicable to the assignment. This what they say about it:

Fannie Mae Selling Guide B4-1.1-03

Knowledge and Experience

Lenders must use appraisers that

  • have the requisite knowledge required to perform a professional quality appraisal for the specific geographic location and particular property type; and
  • have the requisite knowledge about, and access to, the necessary and appropriate data sources for the area in which the appraisal assignment is located.

Appraisers that are not familiar with specific real estate markets may not have adequate information available to perform a reliable appraisal. Although the Uniform Standards of Professional Appraisal Practice (USPAP) allows an appraiser that does not have the appropriate knowledge and experience to accept an appraisal assignment by providing procedures with which the appraiser can complete the assignment, Fannie Mae does not allow the USPAP flexibility. (emphasis added)

 

FHA 4000.1 I-B-1-b

(B) Competency Requirement

The Appraiser must be knowledgeable of the Uniform Standards of Professional Appraisal Practice (USPAP) and FHA appraisal requirements. The Appraiser must meet the competency requirements defined in the USPAP prior to accepting an assignment. The Appraiser must be knowledgeable in the market where the assignment is located. (Emphasis added) (this applies to USDA as well since USDA requires adherence to FHA protocol)

FHA 4000.1 I-B-1-d-ii

The Appraiser assigned to provide the appraisal must be able to complete an assignment for the property type, assignment type, and geographic location of the subject Property.

The Appraiser must comply with the USPAP, including the Competency Rule, when conducting appraisals of Properties intended as security for FHA-insured financing.

What do the Experts Say?

I even took the time to interview a USPAP instructor, Maureen Sweeney, SRA, AI-RRS, IFA, CDEI on the topic and she wrote me up this ditty (I use the word ditty on purpose, as anyone that knows Maureen knows that she likes to sing):

“Competency is competency, and it is not to be sliced up like a pie of different categories. You either have it, or you don’t, and it is not sliced into demonstrated or normal or abnormal; it just is. Credible assignment results are based on the appraiser’s total ethics and total competency. The assignment results either has it, or it doesn’t. USPAP is very specific in what Competency requires, how it is acquired, and what to do if you lack it.  USPAP required the appraiser to be competent when they sign the report.  Fannie Mae goes one step further.  They want you to be competent when you accept the appraisal assignment.  Per the Fannie Mae Selling Guide, dated June 24, 2014, page 549 under “Knowledge and Experience”: “Although the Uniform Standards of Professional Appraisal Practice (USPAP) allows an appraiser that does not have the appropriate knowledge and experience to accept an appraisal assignment by providing procedures with which the appraiser can complete the assignment, Fannie Mae does not allow the USPAP flexibility.”  Fannie Mae wants their appraisers competent when they accept the assignment.  The Selling Guide states, “Lenders must use appraisers that 1) have the requisite knowledge required to perform a professional quality appraisal for the specific geographic location and particular property type; and 2) have the requisite knowledge about, and access to, the necessary and appropriate date sources for the area in which the appraisal assignment is located.” https://www.fanniemae.com/content/guide/sel062414.pdf  For those who think FHA is going to give them a pass, too bad.  Per SF Handbook, I.B.1.b.i.(B) Competency requirement, “The appraiser must be knowledgeable of the Uniform Standards of Professional Appraisal Practice (USPAP) and FHA appraisal requirements.  The appraiser must meet the competency requirements defined in the USPAP prior to accepting an assignment.  The appraiser must be knowledgeable in the market where the assignment is located. Fannie Mae and FHA are making suggestions that appraisers should maybe be competent.  The say we MUST be competent PRIOR to accepting the assignment.”  https://www.hud.gov/sites/documents/APPR_ESSENTIAL_09-14-16.PDF There is no wiggle room around this requirement. If an appraiser doing work for Fannie Mae and Freddie Mac is not competent at the accepting of the appraisal assignment, and they hope to gain competency prior to signing the report, and this is your current practice, please stop.”

I also interviewed another USPAP instructor, Jim Atwood, SRA.  He takes it even a bit further, and states that if the FNMA 1004 is used at all, then because of certification-11, the appraiser must have demonstrated competency.  I agree with his summation.

cert 11 1004

“Certification -11, pre-printed into the Fannie Mae 1004 appraisal form, states: “I have knowledge and experience in appraising this type of property in this market area.”  When using this form for Fannie Mae, Freddie Mac, VA, or FHA purposes, the appraiser is indicating, by signing the certification, his or her pre-existing knowledge and experience (competency) regarding a particular property type or geographical area.  Although USPAP, assuming the client’s agreement, allows an appraiser, who is unfamiliar with a certain property type or geographical area, to perform the appraisal as long as he/she becomes competent prior to completing the assignment, this certification implies that the appraiser is to have sufficient prior knowledge and experience so as to perform the appraisal competently.   Certification #11 seems then to preclude accepting assignments for which the appraiser is not already competent.”

In Conclusion

I hope this was a meaningful post.  I am not writing this to sound pious, but to help my colleagues make pragmatic decisions.  This is an easy enough thing to overlook and I have seen several appraisers do it.  As the sergeant used to say on Hill Street Blues:

 

 

hill street blues
“Let’s be safe out there.”

The Queen of Green

July 6, 2018

 

sandy picture
Courtesy of Sandra Adomatis

Sandra K. Adomatis, SRA, LEED Green Associate, NAR GREEN Designee has been a meaningful member of the valuation profession for many years.  I first met Sandy when I was taking the last class and demonstration alternative for my SRA designation.  Sandy was the facilitator for that week.  I was immediately impressed with her knowledge, astuteness and love for valuation.  There was no doubt that she loves the profession and believes in doing it the right way.  She is a great instructor, one of the best there is in my opinion.

Sandy has been a thought leader in the profession, most notable in sustainable residential technology.  She is the foremost authority in valuing residential solar PV systems and has been crucial in assisting the Appraisal Institute in developing the Residential Green and Energy Efficient Addendum.  She has also authored a book, Residential Green Valuation Tools, which is a must have for any valuer’s library. She is also a developer and course writer for several classes including the green series.  I have had the pleasure to work with her on a team that she led that focused on extracting a premium for PEARL home certifications which was published in a report here.

On a personal note, there are few valuation professionals that I hold in a higher esteem.  I am thankful to her for being a mentor to me, and for helping me along in my career.  Just to share one quick story about what a good person that she is:

My wife and I have a son that has some special needs.  Sandy met my two youngest children (twins, a boy and a girl) and my wife when she came to Charlottesville to teach the green classes a few years ago.  My twins have since nicknamed her “Sandy Starfish”. Our son has been in a facility moist of this year to help with some of his issues and when Sandy found out she started sending him correspondence by mail.  That meant the world to him, and to my wife and me.

So that is the setup for a Valuer’s Dozen that I am most proud to publish.  Ladies and gentlemen, the Queen of Green, Sand Adomatis:

 

VN:  How long have you been in the profession?

SA: I started appraising in 1981 after two years working for a builder, 1 year for a retrofit contractor, and 1 year managing an appraisal business.

 

VN: What is your favorite thing about the profession?

SA: Appraising is a puzzle that offers a new picture and challenge with each assignment.  As a certified general appraiser working many years with my MAI husband, I had the privilege of inspecting a wide variety of properties from nudist camp, farms, adult toy store, railroad right-of-way, 16,000 sq ft houses on the Gulf to 800 square foot cookie cutters.  How many people can say their job is that diverse?  Not only have I learned much about appraising methodology but have also met many interesting people and learned lots about businesses.

 

VN: Who are your mentors and idols within the profession?

SA: My biggest mentor is my husband, Richard Adomatis, MAI.  He has been retired for more than 25 years but has a great mind and has not forgotten the business.  I can still discuss an appraisal problem today and get direction or suggestions that lead me in the right direction.

I don’t have any idols in the profession, but I have several people I truly respect and admire.  They are all Appraisal Institute members and to name a few – Maggie Hambleton, SRA; Tim Runde, MAI; Kathy Coon, SRA; Scott Robinson, MAI, SRA; Donald Boucher, SRA; and even you Woody.

 

 

VN: What are some of your passions inside the profession?

SA:My passion for the profession is to see more young people come into the profession with a desire to be the best they can be.  That means learning as much as you can and looking to be more than a mortgage lending appraiser.  There is so much work out there that pays well outside the mortgage lending world.

Appraisers that specialize in mortgage lending work have a challenge going forward with low fees, increasing regulations and guidelines, and automated valuation models that will take away the easy assignments.

My passion is to see more appraisers learn about the green features that are beginning to become code in many markets on the residential and commercial side.  I’ve been on this track of learning all I can about the buildings science and dedicating much of my time in sharing what I’ve learned.  Our professional is so slow to move in a direction that is not the norm and sometimes don’t see the train until it is upon them.  I’ve recently been engaged in working with appraisers in three states that are very green and learned that we still have lots of education needs to bring our profession up to speed.

 

VN: What are some passions of yours outside of the profession?

SA: My passion outside of the industry include photography and spending time with family.  Photography is a hobby and I enjoy doing photo shoots for high school graduates that do not have the funds to buy the expensive photographs from the school.   I’ve done prom pictures for some of these students as well.  Little kids are really a pleasure to photograph.  My children and grandchildren are getting older now, but they gave me lots of joy in photographing them as they played.  I did the formal event photographs for the Charlotte Harbor Yacht Club for about 10 years.  (My photography is all volunteer because I love it.)

 

VN: Where do you see the profession in 3 years?  5 years?  10 years?

SA: In 3 years I do not expect major changes in the profession.  In 5 year, we will begin to see more AVMs taking the simple assignments for the mortgage lending work.   We’ll begin to see more appraisers leaving the business due to age and loss of mortgage work if they have not prepared for other client types.

In 10 years, the databases will be incredibly different, larger, and yet still lacking important data needed to truly understand the more complicated property types.  This means appraisers with skills in complex assignments will always have a space in the real estate transaction.

 

VN: What is one thing about your personal business that you are most proud?

SA: My personal business has flourished over the last 25 years.  I’ve seen some appraisers in my market move to other areas or take government jobs because they could not survive during the lean years.  Fortunately, my mentor taught me to  diversify and have a variety of clients.  He also taught me to find a niche that no one else is filling and be the champion.  That is how I gained the title “Green Queen.”

 

VN: If you could change one thing about your business model what would it be?

SA: If I could change my business model it would be to have brought a couple trainees along 10 years ago.  I’ve worked with assistants that were very good and made a difference in the work I could handle.  As I move toward the winding down years of my career (last 10 years) I could see another 10 beyond that if I had a couple trained appraisers that were younger and dedicated.

 

VN:  What are some present goals for you and what you do are doing in the valuation space?

SA: I have a goal of writing another book in 2019.  I’ve got a start on it and hope to have one finished by end of next year.

My current work locally is appraising for estate, divorce, listing, or consulting clients.  I do some governmental work for right of way projects as well.  My consulting falls into the space of builders and real estate agents that need help in marketing, preparing for an appraisal or challenging an appraisal of a high performance (green) property.

Much of my time is spent writing courses, seminars, and teaching or speaking on high performance properties or features.  Some local appraisers hire me to do the solar PV valuations because they have not taken the classes and need the assistance.

 

VN:   If you could change one thing in valuation, what would it be?

SA: The image.   There are 77,000 licensed appraisers in the US and far too many do not present a professional image to the people they serve.  We are in a service business and we must take the time to do our work well and to serve the people we call our clients.  If we tell them we’ll have a report in 5 days, do it.  Why do appraisers think they only need to take the number of classes needed to get the required CE?  What does this say about our dedication to be the best we can be?

 

VN:  What advice would you give someone just getting in the profession?

SA: If you plan on making this profession a career, take quality education and work under an appraiser with a good reputation.  Take pride in your work and find a space where you can specialize and learn everything you can about it.

Network with other professionals and organizations that will add to your knowledge base, skills, and potential clients.  Attending meetings and educational offerings by right of way organizations, attorney education, and building science classes are just a few of the ways I’ve found were most helpful in gaining a presence in the space I wanted to serve.

 

VN: This last one is for you to discuss or talk about whatever you would like.

SA: I love my profession and I want to see everyone in this business love it like I do.  We need to work together to make it what we want it to be.  The low fees we accept can only be changed by appraisers.  Charge what you are worth.  I am not on sale today and I am not a .org.  Keep that in mind when the next client calls.

*****

I hope that you all enjoyed this one.  I am getting lots of great feedback on this series and I consider it a success already.  Please keep the suggestions coming.

Real estate Agents and Appraisers

Real Estate Agents and Appraisers

July 5, 2018

Woody Fincham, SRA, AI-RRS, Member of RAC

 

cville

I live in a wonderful community.  I love Charlottesville, VA.  We got some bad press last year because of a bunch of outsiders using our community as a match to set off a flame.  This area has a very diverse group of people from all over the world.  The University of Virginia attracts some of the best and brightest from all over, and the locals are accepting and friendly for the most part.  Because of the diversity we have some great ethnic restaurants in addition to the myriad of farm to table and haute cuisine from the region.  This diversity also offers lots of great professionals in the real estate profession.

The spark for this blog has come from my interaction with agents and brokers here in Charlottesville.  I have worked in four distinct markets in my career.  I have found that since I have been here in Charlottesville that the agents that I work with are a bit stand-offish.  I do not mean that in a negative manner, as they are very polite and professional but pretty much steer clear of the appraiser. In every other market I have worked in the agents were very interactive with the appraiser, in some cases almost too much so; like anything there is a balance.   This is problematic in many ways and I think the reason why I say that will be evident in the following narrative.

 

Before I dig too deeply into the purpose of this blog, I want to make something clear.  I have nothing but respect for professional real estate agents and brokers.  They represent an important function in the real estate transaction.  I have tried myself to work as an agent and learned quickly that it is hard work and requires a set of skills that must be honed.

 

 

Why is the Relationship Between Agents and Appraisers Important?

 

I teach residential valuation classes for the Appraisal Institute.  This means that I facilitate and lecture education for those starting out in the profession, those that are seeking continuing education and those seeking the prestigious SRA and AI-RRS designations.  I mention this because every class that I do facilitate, I inevitably talk about the psychology of the real estate transaction. This requires discussing the importance of an open, honest and transparent communication between valuers (appraisers) and agents and (brokers).

 

Valuers analyze data and legally are required to maintain an unbiased position within the transaction.  This means that we are not able to consider emotional reasons or circumstances to influence what we do, or we can face lots of trouble. Why do I mention this?  Because, with residential real estate, there is often lots of emotions tie d up in the transaction. This, after all, will be someone’s personal residence; their castle.  This can include purchases of vanity homes, homes to raise children in, very simple homes etc.

 

Appraisers do not normally deal directly with the consumers that are buying and selling real estate directly. Often, we are dealing indirectly with consumers through the lens of the agents that were involved with the sale, both the selling agents and the listing agents. Therefore, the relationship is important.  I have a requirement to verify sales information like concessions, buyer and seller motivations, and other things that relate to confirming if the transaction was arm’s-length.

 

Because we need to understand the psychology of the transaction, we must have communication with those that were party to the transaction.  Often enough this will be the agents.  We certainly like to speak to sellers and buyers but that is often not feasible or even possible.  We email and call the agents to confirm what we can.  But this is not just limited to the comparable sales and listings that we use, it is equally important to discuss with the agents on a property that we are valuing for a pending sale.

 

Agent and Appraiser Interaction on a Mortgage Transaction

 

When I am working on a file that is a sale involving a lender, I really like to have the agent(s) available to answer questions. It is imperative that the listing agent make themselves available at least vie phone or email.  I love to have the listing agent present at the appraisal observation on site.  It allows me to discuss the listing history, price changes, and even market reaction.  Feedback from showings can be extremely important as is the motivation from the seller as to why they are selling.  This is important because the appraiser must determine if the sale is arm’s length or if it may have some form of duress that affected the price.

 

I also like to discuss how the property was priced.  I find that in the appreciating markets that we are currently under, it is useful to be able to see how the property was priced.  Of course, I do my due diligence and locate and utilize sales that I believe to be the best and most representative in comparison to the subject. But I do like to get input form the agent, as it helps me tell the story of the listing history and motivations.  If there are multiple offers, escalation clauses, etc.  These things can show pent up demand and it is important to let the appraiser know these things.

 

Some Agents Have a Negative Perspective of the Valuation Process

 

Having read several blogs lately from agents discussing the problems that they have with appraisers it seems some really dislike having to deal with appraisers.  I get it.  To many agents the appraisal is just a box to check.  In all honesty, that is a common perception for loan originators as well and they are the client of the appraiser writing the report.  But appraisals are more than that, they require a full-blown research process followed up by supportable analysis based on market reaction.

 

Many reports that I write take anywhere from 8-20 hours in total file time.  It is not a simple undertaking in many respects.  To use familiar terms to an agent, it is like taking a CMA (comparable market analysis or BPO, Broker price opinion) and adding the requirements to measure the property, take lots of pictures, address any needed problems or repairs, be familiar with lending guidelines such as Fannie Mae, Freddie Mac, VA, FHA, USDA, various investor requirements and interagency guidelines.  Not to mention the myriad of client additional requirements. There is much more to the appraisal than just what is typically seen at the property observation. In fact, on many files that I do, the data collecting that I do at the property observation is the easiest part of the assignment.

 

My point here is that appraising for lending institution is not easy.  It has lots of moving parts and requires specialized knowledge to do it.  And this is in addition to understanding how to value a home.  There are many hours of education and many pages of books devoted to this topic.  Even simple homes require lots of work to just value it.  For the agents and brokers that I work with here in Charlottesville, please ask questions.  Please attend the appraisal site visit if you can.  Please share notable information.  Your involvement and communication to the appraiser is key to our abilities to do our jobs the right way.

Some Appraisers Have a Negative Attitude Towards Agents

 

The only advice that I can give to valuation professionals on this is to stop.  Agents and brokers can and are required to advocate for their clients.  This can be frustrating to appraisers but that is their job.  I understand frustration, but I see some vitriolic comments and less than professional attitudes out there.  And while I sometimes share in the less than positive experiences, I try to live by this mantra: “I may not agree with you, but I will do everything that I can to explain to you why my opinion must be different”.  We are not in the appeasement business, we are in the appraisal business.  Sometimes we are not going to make folks happy, but it is better to respectfully disagree.

 

Thanks for Reading

 

I appreciate that you have read this blog and I hope that it serves as an informative piece.  While I want to communicate with agents and brokers how important their availability is to the appraiser, I also want to remind my valuation colleagues that we need to be talking with and engaging with agents and brokers.  In these hot markets that we all are dealing with (agents and appraisers) open and professional dialogue is needed.

 

I have also linked to this blog the National Association of Realtors:  Residential Appraisal Process – FAQs for Agents

 

Tom Horn, a colleague and fellow blogger put this out on his blog Birmingham Appraisal Blog.

Ryan Lundquist who publishes Sacramento Appraisal Blog has a great article on challenging an appraisal.

 

 

Please feel free to reach out and let me know if I can help you in any way.

 

Woody Fincham, SRA, AI-RRS, Member of RAC

wfincham@valucentric.com