In a post-HVCC world, there is both confusion and frustration regarding talking to appraisers. Agents can no longer directly choose an appraiser for most of their deals, so sometimes it seems like appraisal quality is left to chance. Maybe the appraiser will understand the local market or maybe he won’t. Of course the hope is the appraiser is a local expert who will do a thorough job and also initiate contact with the listing agent to ask questions about the subject property too. But that’s just not going to happen in all cases, so it’s important to be ready to talk with appraisers when you can. And yes, you can still have conversations with appraisers about your listings and the neighborhood market – just don’t pressure to “hit the number”.
Tips for talking to Appraisers:
- Meeting: If you can’t meet an appraiser at an inspection, be available by phone or email.
- List of Updates: Provide a detailed list of all upgrades to the appraiser (with costs if possible).
- Background Stuff: What helped you establish the listing price? Or why did your buyer choose this specific property and pass on others? Bring market research to the inspection to help show how you arrived at your price level. Don’t tell the appraiser which comps to use and how to do his job, but rather share information to illuminate your perspective on marketing. Say something like, “here is some market data I used in my research” as opposed to “here are your comps”. You can always share this information on the phone or email too.
- Offer Activity: Were there many offers or showings? What were potential buyers attracted to? Let the appraiser know things like, “I had 14 offers all above asking price in two days” or “No showings at the original list price, but then I lowered the price and had 12 showings in 4 days and 4 offers.”
- Inside the Neighborhood: Is there something you know about the property, neighborhood, street or market area that might be helpful and contribute to the overall value? If the property is selling high above all others, why is that? Are distressed sales selling for less in the market? What are the features in the neighborhood that buyers are willing to pay more for? Share your hyper-local insight and any resources you might have.
- Play Nice: Some agents never return phone calls or act impatient when an appraiser calls. My advice? It’s nice to talk with personable communicators.
Things NOT to say to an Appraiser:
- Deal Killers: Talking about another appraiser that “killed your deal” doesn’t help the current deal or paint a professional image of you in the mind of the appraiser.
- Do your job!: “Here are the best comps” (sounds like you are trying to steer a value conclusion)
- Higher please: “Get the value as high as possible”
- Lower please: “Get the value as low as possible” (yes, I do hear that one)
- Make it Happen: “Is this one going to make value?”
- The Real Hope: “Is it going to appraise for at least the sales price?”
I hope this was helpful. I’d love to hear any tips you have too. What has worked for you? What has been frustrating for you when dealing with a post-HVCC world? Do you find most appraisers to be open to conversation? Do they ask you questions?
If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook or subscribe to posts by email.
I don’t mind when the agent meets me at the home during the inspection, but hate it when they follow right behind me like a lost puppy. My biggest issue is when agents never return a phone call. It happens all the time – I could randomly try to call 100 agents and maybe 5 would actually answer the phone, and another 10 would call me back. Insane.
Thanks, Ben. I like to measure things up by myself where possible and then have a talk inside the house. That’s my ideal scenario, but it doesn’t always work like that, so I have to go with the flow. So many properties I inspect these days are vacant or I use my lockbox key to get in, so an agent would not come out anyway. I seem to have much better luck calling agents between 9:30-11:00am and less luck later in the afternoon. Thanks for the insight, Ben.
Great Post, Ryan! I wish every RE Agent in the US of A could read this and take some notes. Personally, I want the Agent communicating with me, especially those Agents those have been “farming” these subdivisions for years now and may know some facts or trends I might not be as familiar with. Bill
Thank you, Bill. I think you’re so right. It’s incredibly helpful to talk to agents who have been working the neighborhoods for years or decades. Nail on the head, Bill.
Yes this is an excellent blog post – so many times I have real estate agents or homeowners tried to commandeer the situation and it goes awfully awry.
Thank you, Shane. Well said. It’s all about establishing relationship and meeting at the table as professionals. There are so many horror stories out there. I find the bulk of my interactions to be pretty good overall, though there is room for improvement. From what I hear from agents too, there is room from improvement from the appraiser end also.
Great article Ryan! For 11+ years I was an appraiser in the Mid Atlantic Region of the country, for the last 5 years I’ve been in East Tennessee. In my experience, the agents in the south are much more responsive. They are kind, helpful, share information and insight and are very friendly, for the most part. I don’t know why but I do appreciate it! However, I have had agents tell me that they can’t provide me a copy of the contract or talk to me because their broker said they can’t. I wish all parties, myself included, were more informed and comfortable with the rules and regulations. I really enjoy reading your blogs. Great work – keep it up!
Interesting, Colleen. I hear things like that too as well as some agents thinking appraisers and real estate agents can no longer talk (at all) due to HVCC. I’m glad you’re finding friendliness and kindness. There it is again y’all…. that Southern hospitality and warmness. Thanks Colleen.
In my current dealings with Realtors I am finding them to be very helpful. I believe they would like to know more about what we do but have not been told, by the appraiser, what they can do to assist us. When they know more then they will be more accomodating.
Thanks, Tom. It’s always nice to have a list of specific questions answered by real estate agents. I agree.
What should a buyer do when they learn that their appraiser (selected by the lender) has discussed the appraised value of the property with the seller’s (listing) real estate agent, even before the appraisal was shared with the client (buyer) that paid for the service?
From what I can gather from searching around the web, this “sharing” is at least unethical, but it seems to have already done damage in negotiations, and I don’t know what we can do in our defense. We paid $450 for this service (in Illinois), and I feel like we’ve been cheated, however, I don’t know much about this process, as we’re simply trying to buy a house and learning about the basics because I’m feeling ripped off.
Any help is much appreciated,
Paul
Hi Paul, thank you for stopping by. I have two questions for you: 1) How do you know the appraiser discussed the specific appraised value of the property with the Listing Agent? 2) How has this impacted your real estate transaction? You said it “damaged” negotiations. I’m curious to hear more about that.
I really cannot say what you should do as that’s up to you, though if a discussion did impact the transaction and harmed you, I would certainly complain to the lender as a starting point.
Hi Ryan,
Appreciate the feedback. To answer your questions, 1) the listing agent called our realtor and told him, saying something along the lines of, “wow, your client’s getting the place for less than the appraised value of x dollars.”
2) We suspect that since the seller/agent knows the appraised value, it affects our ability to negotiate credit for repairs, etc., as we try to finalize the transaction. There were multiple bids on the property, and this bit of information (disclosed without our knowledge) might influence the way things play out.
From a few conversations with those in the business, it seems this kind of thing happens rarely, and not sure what can be done at this point.
Thanks
Thanks Paul. That does sound fishy, though agents do get copies of appraisals sometimes. I’m not saying the appraiser didn’t tell the agent, but I do wonder if someone else could’ve possibly shared the information too. I would maybe have your agent ask specifically how the agent found out about the appraised value. Sometimes it seems agents assume the appraised value will be at a certain level based on conversation with the appraiser about the market and potential comparables (even though the appraiser didn’t share the value).
I do hear from time to time how appraisers will call a Listing Agent to let the agent know if the appraised value is going to come in lower than the contract price. I’m always shocked when I hear of “courtesy calls” like this because it’s a clear violation of client confidentiality and it’s just not prudent.
This is a really good reminder for any appraisers reading this conversation. It’s critical not to share the appraised value because it can hamper negotiation. It’s not the appraisers job to share the value with anyone but the client. Bottom line.
Best wishes, Paul. I hope you are able to still negotiate. Keep me posted if you can.
Dear Ryan:
Read your blog through Patrick.net. In terms of appaisers, I have never understood the relationship between appraisal values and tax assessment. In so many of the houses I’ve looked at in greater Sacramento, these values have often been very different, and I am not just talking about the effect of prop 13. How do appraisers determine whether their valuation reflect bubbles or actually accelerate them? And I have the same question about a declining market. What’s going to happen after investor/landlords here in Tomatotown learn that termites and dryrot never sleep?
Thanks, Ricardo
South Natomas
Thanks for the comment, Ricardo. I’ve had quite a few hits today from Patrick.net, which I’m thankful for. Let me take a stab at your questions:
1) The values are very different for a number of reasons. Of course there is Prop 13, so sometimes a low value will be locked in based on the “base year” when a house was purchased (but you know that). Also, the Assessor bases the assessed value on January 1, and an appraisal will likely be on a different date. If the market has increased since last year, for instance, there can be a big difference if the appraiser is doing an appraisal in today’s market when the tax roll still has values from January 1, 2012. Additionally, the Assessor sometimes is not aware of condition or quality of upgrades. These are of course reasons why values can sometimes be lower, but all things considered, I find local assessments tend to be on the higher side of the market in many cases (easily 5-10% above market value in many cases – as a standard). There are many reasons why this happens. Sometimes it’s because of the lack of reliability for a mass appraisal process used by the Assessor, but other times an annual increase of 2% allowed under Prop 13 can really increase the assessed value of a property over time. Here are two links that might be relevant: https://sacramentoappraisalblog.com/2011/05/17/do-tax-assessments-affect-property-value/ and https://sacramentoappraisalblog.com/2011/11/11/why-are-your-property-taxes-increasing-when-they-should-be-going-down/.
2) I’m not sure what you mean by whether an appraiser’s valuation reflects a bubble or accelerates it. I’ll say this though. Appraisers interpret the market. Right now this market is going up, so appraisers should be explaining what property values are doing and why they are heading upward. I know in my reports I am explaining how external forces like investors, low-interest rates and low inventory are driving the market right now. I say this because it’s true. Buyers have been willing to pay more for many reasons lately, so I am simply interpreting what they are doing. We’ll see if there is eventually a “pop” in the market. Ultimately higher values are legit right now – even if there are red flags (external forces driving the market). Ultimately appraisers do not make or break the market – they only interpret it. Sure there is responsibility to be had when appraisals come in too low or too high, but this market is driving itself, and appraisers do not control it, but only act as a measuring stick for it.
3) You’re right that termites don’t sleep. Investors ought to care for their properties and tenants. Some will do a good job and others a not-so-good job. Hopefully will have more good ones than not.
Dear Ryan:
Thank you for your thoughtful reply. I am encouraged that as an appraiser you are concerned with maintaining a sense of independence and fairness.
My dealings with real estate agents over the past six years have been consistently disapointing. Their first question, inevitably is not ‘what do you need in a house?’ but ‘how much money do you have?’. That and an incredible array of childish, high pressure sales tactics have earned Sacramento real estate agents the abyssimal reputations they now ‘enjoy’. They remind me of the mayor of Amity Island in Jaws – ‘No problem,folks; water’s fine, jump on in!’
No doubt a real estate bubble popped in 09-10, but currently, historically low interest rates at the Fed window have prompted investmet funds to look at buy/rent models, especially in places like Sacramento that has a stable government payroll. So this is the only factor I know of that has increased house prices here
(and many other places). People’s actual wages are flat or decreasing with inflation.
And the current market is potentially very volatile. All can change very quickly given a bump in inflation or interest rates. The investment models would change and money would wash out of the real estate market like a rip tide leaving resident buyers high and dry (well, er um ‘underwater’ to mix a metaphore.)
I would be curious to get your views on that. Also, could a buyer go to an appraiser to get a general idea of the local market BEFORE going to a real estate agent/broker to look for a house?
Thanks,
Ricardo
Thanks Ricardo. There are some great agents and some who probably shouldn’t be in the business. Isn’t it the same with any business though? That’s the truth.
Unemployment is down from 13.2% to 9.9% now, so a little bit of a better job market is helping to create positive movement in local real estate. However, during the previous boom unemployment was at 5% whereas now it is double. You’re right that the market is increasing in large part due to investor activity. I would also put low inventory and historically low interest rates in the external forces category too because those are both fuel for the market. I actually just wrote about external forces in the market a few days ago. If it’s relevant, check out this post where I go into more depth about this very subject (and provide some stats): https://sacramentoappraisalblog.com/2013/02/20/the-crazy-market-bubble-talk-crunching-numbers/
Yes, a buyer can get an appraisal when purchasing a house. However, the lender will order their own appraisal and use that appraisal, so it’s important to keep that in mind. On top of that, it’s not easy to get into contract these days, so unless the buyer had a strong connection to the seller, the buyer may be paying for an appraisal that is useless because many others are probably already lined up to buy the house. I would probably recommend against getting an appraisal in this situation because the buyer could essentially waste money if there was no contract in place. On the other side, sellers can always order pre-listing appraisals to get a sense of the market before placing their properties on the market.