“Help. We can’t find an appraiser to come to the property. Everyone is saying NO. What do you suggest?” I’ve been getting this question multiple times every week, so here are some thoughts.
Market update: By the way, in case you needed some background noise, here’s an hour-long market update I gave for SAFE Credit Union this week.
The problem: Appraisers have been dealing with record refinance volume and strong purchase volume – even in the midst of more appraisal waivers happening. Seriously, there has been an avalanche of work and not enough hours in the day to finish it. Unfortunately finding an appraiser to do a job quickly is about as easy as finding a contractor.
Four considerations:
1) Expectations: Everyone wants speed, but the appraisal is one of the slower parts. Sure, some appraisers could be more efficient, but keep in mind there is an incredible volume of work right now AND the system has also helped create this problem. Appraisers are being asked to write longer reports than ever and the scrutiny after the appraisal is delivered is unreal. In short, it’s important to have reasonable expectations about appraisers being busy and that today’s reports simply take longer. I’d recommend ordering the appraisal sooner too rather than waiting until the last minute.
2) Is the appraiser getting the full fee? A buyer might be paying good money for an appraisal, but how much of the fee is the appraiser getting? If you didn’t know, Appraisal Management Companies (AMCs) skim part of the appraisal fee and then advertise a lower fee to an appraiser. Sometimes the skimmed fee can be a huge chunk of what the buyer paid too. No wonder why an AMC can shop a fee for weeks and not get anyone to say YES. Here’s the question to ask the lender: How much of the buyer’s fee is the appraiser actually getting? This is hands-down the starting place if you can’t find an appraiser.
3) Rush fee = silver bullet: Money talks and if you aren’t having success, pay a rush fee. If you want to go to the front of any vendor’s line, a higher fee can often help make that happen. I don’t say this to pad my pockets as I only do private appraisals these days (so I don’t benefit from this advice). I’m just saying if you are struggling to find an appraiser for a loan, paying a rush fee can matter. How much? I have ideas, but this really comes down to your market. Feel things out and find the sweet spot until an appraiser says YES. Two weeks ago I gave this advice to a Realtor friend and the AMC said they were not allowed to charge a rush fee. I told my friend to press the issue because that didn’t sound right. Well, it turns out when a rush fee was offered and pressure was felt they found an appraiser. Also, I would ask how much of the rush fee the appraiser is getting in case the AMC is skimming that too.
4) Cherry-picking easy stuff: I do hear of appraisers passing up difficult assignments because there are too many easier ones out there. I mean, why would an appraiser endure huge scrutiny on a complex property for the same pay? If the lender you use cannot seem to attract competent appraisers willing to say YES, then either they’re going to have to solve that problem by adding more appraisers to their panel or you’re going to have to go elsewhere.
5) Other: What has worked for you? What did I miss? Any advice to give the real estate community. I welcome tips from agents, loan officers, and appraisers.
Closing thoughts: Ultimately there isn’t a one-size-fits-all formula for finding an appraiser, but hopefully some of my basic advice is helpful.
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Questions: What do you think of the points above? Anything else to add? Any stories to share?
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