Did you try to get a loan or sell a property but had appraisal problems? I hear all the time from real estate agents, home owners and investors about bad appraisals that killed their deals. What can you do about a “low” appraisal? Honestly, not much sometimes, but you can at least write a well-reasoned cordial letter to the lender to ask the appraiser to reconsider the value in the report based on support you offer in a brief letter. I’ve seen some clients have success with the points I explain in the video below when they legitimately do have a “low” appraisal. When I say “low” too, I’m not talking about a value that is lower than the sales price because we all know market value and price are not the same thing. I really have in mind an appraisal that is truly botched and plain bad. By the way, you can read a blog post about challenging low appraisals in case the video is not working for you.

I’d like to hear about your situation with a “low” appraisal and what you did about it. How did the appraisal impact your deal?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

There was an interesting article in the Sacramento Bee a couple days ago entitled “Home appraisers work under tougher rules“. There were some good points made overall, and I think the author was fairly well balanced, but I wanted to respond to a few things.

Finger Pointing: There are many recent articles lately about how appraisers are to blame for the housing crisis. There is certainly some blame to accept if an appraiser misstated the market, and I am not minimizing that at all, but it’s important to keep in mind that the appraiser is absolutely not always to blame. During the housing boom there was certainly mortgage fraud, but let’s remember that prices really did rise to ridiculous levels, buyers were willing to pay those prices, and lenders had extremely loose standards where almost anyone could purchase a home – whether they could afford it or not. For instance, I had a friend who bought in the Natomas area of Sacramento and didn’t have to show any verification of income to borrow more than $400,000. Maybe the appraisal on his loan in 2004 was bad for some reason, but one thing for sure is that there need not be an automatic finger pointed at the appraiser in an instance like this.

Appraisal Reviews: The article quotes a loan officer saying he used to have so few appraisals reviewed, but nowadays the bulk of his appraisals have to be formally reviewed by the lender at a cost of $125 a pop to the Borrower. I’m not saying there aren’t really bad appraisals out there, but had lending guidelines in 2005 been what they are today, this loan officer may have experienced just as many appraisal reviews then as he does now. Lenders are requiring more of Borrowers these days, and even more work from appraisers too. If you are in the lending industry or in the process of obtaining a loan, I’d be curious to hear your perspective.

Low Fees: The article discusses the “middleman” and how appraisers are hired by neutral third-parties nowadays called Appraisal Management Companies aka “AMCs” (for loan appraisals only – not other types of appraisals). I think the article did a good job describing this process. There are some solid AMCs out there who treat their appraisers well and pay them decently too, but there are also some really bad ones. Here is an email I received a couple weeks ago verbatim from one of the “bad guys”. This was a blast email that went out to numerous appraisers for a property in a semi-rural area with VERY limited market data. I have never worked for this company because of their low fees. Based on their email, do you sense they are interested in obtaining a quality appraisal report?

We are searching for an appraiser to do a Drive by appraisal. The standard fee is $175.00 . Please let me know if you are currently employed through an AMC. We must get special approval to have you complete if that is the case.

Please let us know if you would consider this appraisal request for our standard fee. If you require a different fee, please specify by responding to this email with your fee and turn time. If the fee requested is higher than the standard fee, we will note it in our system and continue our search.

DO NOT PROCEED WITH THIS ORDER, THIS IS AN INQUIRY. You will not be paid if we do not send the formal order and obtain your acceptance.

If you have any questions or a need for an appraisal or consulting in the Sacramento area, give me a call at 916.595.3735, send me an email, catch me on Facebook, or see my company website at www.LundquistCompany.com.

Has a low appraisal destroyed one of your deals this year? We’ve been hearing so much about how real estate appraisers are “killing escrows” ever since the Home Valuation Code of Conduct came into effect last year. I’ve read and listened to countless horror stories from brokers, real estate agents, loan officers, and publications.

I’m not saying there aren’t legitimate complaints to be had about HVCC or certain appraisals. I simply want to provide a helpful resource to maybe clear things up a bit about what type of value appraisers are looking for in the market. My hope is that this article (linked below) will shed light on the appraisal process and give insight into the appraiser’s mind. It’s a good thing when appraisers and local agents can understand each other’s roles and mutually benefit one another.

PDF file: “Closing the Gap Between Sales Price and Appraised Value”

This article was published with permission and comes from Patrick Egger, a Certified General appraiser in Nevada with 35 years of experience in valuation, consulting and real estate studies. Comments are welcome below.