Have You Got the Integrity to Be an Appraiser?
We’re talking about downright mad…
Appraising real estate is a tough job, even under the best of circumstances. There are too many occasions where every person involved in the transaction is upset and all eyes are focused on you. Even if you’ve done the best appraisal of your career, had perfect comps, and though you did a great job that no one could argue with; argue they do and at the end of the day, you are the only person screwing up the deal for everyone involved.
And, we’re not talking about being a little upset. We’re talking about downright mad as hell angry. The kind where they will tell everyone they know. They will do their best to hurt you, the way you (in their minds) have hurt them. You single-handily took their dream home right out from under them and how are they supposed to forgive that? It’s not your job to be the know everything better than everybody else, real estate God that never makes a mistake. It’s only your job to complete what the bank needs to get the loan approved. A lot of other people have already figured out the price long before you got involved. They looked at the competition and know what’s going on in the current market. You come along with these closed sales and say that the sellers, the seller’s agent, the buyers, the buyer’s agent, and the lender must all be wrong. The appraiser is basically saying everyone else is wrong and they are right, deal with it. Now that is power!
Welcome to the world of a residential appraiser. Sometimes, not matter your best intentions, the value just isn’t there. You really think the agents must have done a sale’s job on the buyers and the sellers are trying to make a huge profit that’s not even close to what the value of neighboring houses has been.
Sellers overprice a home – anyone ever heard of that?
Real estate agent take an overpriced house just to get a listing – anyone ever heard of that?
Buyer’s love that design or location or something. They are willing to pay whatever, but they want that house. Maybe their best friends live next door, or parents live down the street, or they just have to be in that school district. For whatever reason, they want that house and don’t really care about the price – anyone ever heard of that?
A buyer’s agent go along with what his clients want just to make a commission – anyone ever heard of that?
A lender who only gets paid if the loan goes through – they don’t really care about a house being priced twenty grand over current market value – anyone ever heard of that?
It comes down to motivations…
The question is – what is the appraiser’s motivation?
For the majority of seasoned appraisers (not the ones who came along during the boom years), there is one mandatory goal – price it fair. Nothing complicated about that. The comparables paint a picture, that (even in a rising market) shows a pattern of current market value. The appraiser doesn’t personally decide the value, they just report the market. Appraisers are taught to be fair and honest and not swayed by motivations. They are working hard to protect people who often don’t want their protection. When that loan is sold in the secondary market, if that appraiser doesn’t do their job right, then someone’s retirement account may get the short end of the stick. But that doesn’t seem to happen very often and they are not the ones on your phone and in your face. Buyers and sellers, agents and lenders have an emotional and financial interest in this transaction. Today, they want what they want.
It takes a strong mentality and confidence in your ability to be, and to stay an unbiased appraiser. All these people, with far less training than you have, read your report and tell you where you made errors. Is it really our job to say to them that “because we are smarter than everyone else, you can’t buy this house?” Where do we draw the line?
Seller is mad. Both agents are mad. Buyer loves the house and really just wants to loan to go through. They are mad. Lender is mad and doesn’t get paid unless the loan goes through.
And there lies the appraiser’s dilemma. Do you have the courage to stand in the face of all this pressure and stick to your guns about a value? Do you trust your skills and experience? We’re not talking about a few thousand dollars on a $500,000 contact, none of us are that good. But, how about a $20,000 difference on a $250,000 house? The comps are perfect, you used everything close and used six closed sales plus two active listings.
What would it take for you to change your report?
How much pressure is there to make changes?
Do you have what it takes to stay firm with your valuation?
Should you really care?
If you don’t, maybe you shouldn’t be an appraiser. Yes, it matters. No one wants to bring in a low appraisal. But we also don’t want to see a buyer overpay, even if they are okay with it. If you can hold firm in the face of adversity, then you may have what it takes to be a residential real estate appraiser.