It’s been taking appraisers longer to get their reports done lately. Have you noticed? In many parts of the country appraisers have simply been flooded with work, so quick turn-times have suffered or vanished. In light of this I wanted to give some tips for working with appraisers during times like these. This is really geared toward appraisals for loans instead of private work (divorce, estate, litigation, etc…). Anything else you’d add? Feel free to comment below.
Tips for working with appraisers when they’re really busy:
- Turn-times: Sometimes agents say, “We really need the appraisal in three days because that’s when contingencies will be removed”. But the appraiser just got the order yesterday and the lender may be giving 7-10 days to complete the file. For whatever reason the appraisal was simply ordered way too late in the loan process (not the appraiser’s fault).
- Communication 101: If an appraiser emails you, I highly recommend emailing back. The appraiser may be trying to save time by avoiding a phone call. Or if an appraiser calls you, just call back (even if you don’t like to use the phone). These days it seems like good business etiquette to try to communicate with people in their preferred method. I know that sounds petty or even offensive, but it’s true. Obviously if an appraiser is asking a million questions via email, just email back and say, “I’d love to chat, but let’s make this a quick phone conversation instead.”
- Don’t call incessantly for status: It doesn’t help speed up an appraisal when everyone is asking for status updates. On a practical note, keep in mind appraisers don’t owe status updates to anyone but the client.
- Information up front: Take a few minutes to answer common questions and get this information to the appraiser (preferably during the inspection). I recommend using my Information Sheet. Sometimes agents wait to share information about the property until the value comes in too low. Why not be proactive instead about telling the story of the marketing of the property on the front end of the transaction? This just might save time in the transaction too by avoiding challenging a low appraisal.
- Offer a rush fee: If lenders or AMCs are concerned about turn-times, one of the best things to do is offer a reasonable fee to begin with AND also a rush fee. Right now many appraisers are still getting blasted with low-ball appraisal fees from Appraisal Management Companies. During such a busy season appraisers are frankly turning these orders down and gravitating toward working with clients who pay better fees and are easier to work with too. The truth is some AMCs are spending extra days or weeks searching for an appraiser who will take a lower fee (and then blaming appraisers for taking too long). Remember, a Borrower might fork out good money for an appraisal, but how much of the fee is the appraiser actually getting? If you find an AMC is scraping way too much off the top, maybe it’s time to do business with a lender or AMC who is actually paying the appraiser a reasonable fee. On a related note it seems like the market is experiencing an upward fee correction since appraisal fees have been undercut by AMCs for years.
- Longer escrows: It can be frustrating that turn-times change because we like to think they’re set in stone or always less than a week, but that’s what markets do. I find something similar has happened with contractors locally as many are absolutely swamped. In short, it might not be a good market to promise a 30-day escrow.
- Do repairs up front: If an appraiser is busy, the same appraiser may also need more time to go back out to the property to verify repairs were made. If you know there are obvious repairs, it might be a good idea to have the owner make them in advance so you can avoid a re-inspection. If you are concerned about repairs, reach out to a local appraiser or a loan officer before the property hits the market so you can maybe glean some wisdom.
- The little stuff: Some of the most common repairs are actually installation of smoke detectors and carbon monoxide alarms (in California). Even if the appraiser doesn’t care about these things since they have nothing to do with value, a lender may be asking the appraiser to verify they are there. As an FYI, it’s been law for 5 years in California for CO alarms to be in most residential properties, yet this is still one of the top repair issues.
I hope this was helpful.
Podcast with 2 Agents: By the way, last week I did a podcast with two local real estate agents (The Two Jakes). You can give it a listen below (or here) and check out iTunes or the Worley Real Estate website.
Questions: Anything else you’d add? Did I miss something? I’d love to hear your take and any stories you have to share.
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Cheryl Rouse says
You have totally hit the nail on the head, Ryan! The last appraiser I spoke with stated she was slammed and just didn’t know how she could turn the number of requests into reports in time to satisfy everyone. I represented the seller in this deal; but, the buyer paid for a “rush”. The appraiser came out quickly; but, the report came in 10 days later. Because I have taken your class, I had all of the data ready to forward to her. I’d like to think that the information I gained from your class; and, having the data in a comprehensive format has helped me receive favorable appraisals. I am always confident that I can substantiate the list and sales price because of your shared knowledge. One more thing – I heard that appraisers are turning down “rush” jobs because the extra fee is not being passed on to the appraiser. Is this something of which you have knowledge or input?
Ryan Lundquist says
Thanks so much Cheryl. I hoped this would be a relevant post. It sounds like you are doing a great job out there in the trenches. Way to go!
I have recently had a few lenders actually pay for a 10-day rush. I had one pay for a 3-day rush too. I have not heard of the rush fee not being passed on to the appraiser, but I honestly wouldn’t be surprised about that happening at all. The reason why I actually choose to do very little lender work is because of how unfortunate it can be to work with AMCs. On a related note, I have heard of some AMCs offering a bonus if the appraiser meets the due date. However, does the “bonus” mean the AMC is simply now paying a reasonable fee because their initial fee was too low to begin with? I’m not sure what the answer is. I do know money talks when an industry is busy, so I’ve been encouraging loan officer friends to push a rush fee where relevant. This is not to take advantage of buyers in any way, but only to put buyers in front of the line.
Gary Kristensen says
Love the post Ryan. This is the hottest topic for real estate agents in my area because appraisers are take months, rather than weeks. You’re absolutely correct that some AMC spend weeks trying to get appraisers to accept a low fee and then report back to their client that they cannot find an appraiser. I’m seeing that every day. In a couple cases an AMC has called me looking for an appraiser at a low fee, then the homeowner will contact me saying that the AMC cannot find anyone and tell me that they offered to pay $1,000 or more if they can get the appraisal done quickly.
Ryan Lundquist says
Thank you so much Gary. This indeed is THE topic right now and it’s a complicated issue to solve too. I appreciate hearing your story. I bet owners would be ticked to hear how much the AMC was offering an appraiser out of that $1000. 🙂
I have heard many appraisers say an AMC will offer an order to an appraiser but the appraiser will counter the order to a higher and more marketable rate. The AMC doesn’t accept the appraiser’s cost, shops around for a few weeks, but then comes back to the original appraiser accepting the fee that was quoted weeks ago. It’s like AMCs are looking for the lowest-possible bidder instead of a qualified individual who is a good candidate to appraise the property. I find out-of-town AMCs are sending quite a few “please join our panel” emails too (while advertising fees that are easily low and out of sync with the market). In some cases an AMC will then say it’s impossible to find an appraiser. Yet the issue is in some of these cases is they are not offering a market rate fee for the appraiser. So yes, it doesn’t make sense for an appraiser to do that appraisal.
NOTE: I am not price fixing and I have not mentioned any prices whatsoever. I am only saying appraisers ought to charge a fair market rate.
Do not try and “game” the system. With it being so busy I am seeing more agent’s or lenders try and “game” the system. Ordering the appraisal before they have a fully executed sales contract. Or ordering final inspection before the work is done. These often cancel, get put off and puts the appraiser in the spot of explaining they are not the project manager and time is best spent on jobs that are true jobs and ready to go. If you are in need of a final inspection for repairs, please go check to be sure the repairs are done BEFORE sending the appraiser out. More and more I find they are not done. Get the full and complete contract with all addendums to the appraiser in a timely manner. If there is a lockbox often the appraiser can get to the inspection quicker if they can just use their lockbox, being able to fit it in rather than be sure they can make it at a specific time. And be respectful, EVERYONE is in a hurry. Asking in the order “please do this as soon as possible” is well . . . really? I do not know any professional appraiser’s that are not doing them “as soon as possible”. You may be up against rate lock but so is all the other jobs. Writing reports now take at least 2x as long as they did 10 years ago due to “scope creep” or additional requirements and the turn times “expected” went from 2 weeks to about 5 – 7 days. Writing a 30 days close and or 17 days contingency removal is setting it up for failure at this time.
Ryan Lundquist says
Fantastic comment Cynthia. I hope everyone reads this as there are some solid nuggets of wisdom there. I agree about a 30 day close and contingency period. Markets change all the time. We cannot expect the same thing in every market. If we look to the past and remember how many short sales there used to be, that alone reminds us contingency periods and waiting time was simply longer.
Tom Horn says
Great post Ryan! You make some great points and I hope lenders and agents will use these tips to facilitate the process. Like you said, it seems like the appraisal is the last thing ordered and then we are put under the gun to hurry so the loan can close. The appraisal is the last think that you want rushed, because you want the appraiser to do the best job possible. I’ll be sharing this with agents in my area, thanks.
Ryan Lundquist says
Thank you Tom. Great point on rushing the appraisal. That’s not always a good thing. 🙂
Joshua Walitt says
One key factor is for the lender to provide accurate and multiple contacts for entry, as well as the fully-signed contract (including all fully-signed amendments) at the of the order. This typically means the agent needs to communicate timely with the loan officer. To do otherwise is to waste time.
Ryan Lundquist says
Great point Joshua. This is definitely important. For any onlookers, appraisers are required to analyze the purchase contract in the appraisal report. If the contract is not signed, the appraiser needs to get one that is signed. Otherwise it’s not considered an executed contract, right? Thanks again.
Zequek Estrada says
For the most part, it sounds like you won’t have trouble working with a busy appraiser if you stay proactive. These eight tips are probably helpful for working with one who doesn’t have a tight schedule. There is so much we can do ourselves and that’s something that’s good to remember for most situations.
Jay Jorgenson says
When it comes to working with real estate appraisers you have to give them advanced notice before you ask them to come to appraise. I like what was said about turn times. Sometimes, appraisers just can’t do last minute appraisals.
Ryan Lundquist says
Very true Jay. The same holds true with many professions. We might need a car or home repair right away, but vendors cannot always get out right away.