Helpful Appraisal Tips From the Seattle Chapter of the Appraisal Institute
Last Fall I had the pleasure of attending the annual conference presented by the Seattle Chapter of the Appraisal Institute. I was able to sit in on some interesting educational sessions. With all the conversation in industry surrounding CU and other initiatives directly impacting appraisers, I felt highlights from the educational sessions would be beneficial. The following information is from a presentation by Clark Dickson with HomeStreet Bank called, “Appraising for Lenders in Today’s World.”
Mr. Dickson’s presentation was about appraisal quality and what it takes to have your appraisal be acceptable in today’s lending environment. He said that everything in an appraisal now has to be perfect. Small infractions like checking the “HOA” box by mistake can no longer be overlooked. The appraiser will now be getting the appraisal back to fix these types of errors.
All this attention to detail may be painful for the appraiser, but on the bright side, it means that the appraiser has become a very relevant asset to the lending process. Dickson feels that appraisers who think this business is fading away may want to rethink that concept. Lenders are scrutinizing appraisals these days because they are critical to the security of the loan. Dickson believes that good appraisers can be viewed as an ASSET to the lending process when they strengthen their credibility by consistently providing solid valuations and high-caliber customer service. In turn, this can generate greater efficiencies within the process and increased income for the appraiser.
Before getting into more detail about the specifics of the appraisal itself, Dickson reminded everyone that they are also in the customer service business. This applies to both dealing with the lender who hired you and the borrower whose house you are appraising. If a lender finds that you are difficult to deal with directly or that you did not present yourself well at the property, the client can and will drop you from the roster. Don’t make the mistake of thinking that doing good work alone will keep more assignments coming your way.
Also included in his discussion on providing outstanding customer service to your client are some basic rules. These include such things as:
The due date IS the due date. You need to always be on time. It is acceptable to ask for an extension when circumstances fall outside of your control such as incorrect phone numbers, borrower out of town, etc. However, any requests for extra time should be made no later than the day of inspection. “I’m too busy” or “I’m on vacation” are never valid reasons for being late.- Ask a question if in doubt. Don’t be afraid to get direction from the appraisal coordinator. (Editor’s note: This is why we have very robust messaging functionality on AppraisalPort. If in doubt, use it).
- If you lack expertise or feel uncomfortable with an assignment, decline it. Common examples of assignments that are declined due to a lack of specific expertise are condos, manufactured homes, and 2-4 units.
- At the inspection – present a business card, dress business casual, be on time, gladly accept any information the borrower or Realtor provides you (you don’t have to use it in the appraisal), and be positive in all communications.
At this point in the presentation Dickson turned to more specific issues with the appraisal. His overall theme is that the appraiser should “tell the story.” In other words, you are the eyes and ears of the lender and you need to use as much detail and commentary as needed to explain exactly what is going on with that specific property. Don’t just use canned comments. The most important comments with be about the particular area and property-specific issues. It is also very important to be consistent throughout the appraisal. Fannie Mae is now putting a large amount of emphasis on consistency. Overall, Dickson says, “A good appraisal will answer the questions before they are asked.”
Dickson covered a long list of potential issues that can occur with appraisals. Here are some highlights:
- If you have to leave the neighborhood for comps, fully explain why it was necessary.
- Don’t hide behind UAD ratings and/or stop appraising what the market actually dictates. Keep making quality adjustments within a classification and keep making condition or effective age adjustments.
- Just because the rating is the same for the view, construction quality, or condition in UAD terms, does not mean that they are the same to the market or do not require adjustment.
- The actual age of the comparable sale is the age of the property at the time of sale. It is not the actual age of the property when you do your appraisal.
- Please don’t write your appraisal report in all capital letters; it makes the report difficult to read.
Overall, this was a very interesting and informative presentation. Of course there was a great deal of information presented that I can’t hope to cover in a short article. Dickson’s discussion of adjustments alone could be the subject of a separate article. The basic message from this presentation was that if you don’t want to have your appraisals returned, you need to completely explain what you did and why you did it. If you have any doubt about how to handle any aspect of this process, seek the help and continuing education you may need.
By Steve Costello, a Relationship Manager at FNC working directly with the appraisal community since 1986. When not in the office, Steve can be found riding off-road motorcycles and doing home improvement projects. Steve can be reached on LinkedIn or Twitter. ~ Source AppraisalPort
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The due date is fine if the lender sends the right contact information and the homeowner actually calls you back and sets an appointment in time and when you get there you don’t find the house in various states of remodeling or repair.
In our rural area you should have a set of overalls because after you crawl through the bushes, discarded car and truck parts, cat and dog poop, horse, chicken, pig and cow poop, and interiors of homes that should belong to hoarders, your casual dress attire may not look so good.
The some of the potential issues section should be explained to the lender/client. Used a non canned statement (using for 8 yrs with no questions) the other week on a report and after 20 mins on the phone with a “Quality Control Person” I asked for a staff appraiser. The SA said so sorry it’s fine and sent it through in less then 2 mins. My feeling is anyone that touches my report and renders judgement, because that is exactly what they are doing, should at a minimum be required to have as much appraisal education as the appraiser preforming the assignment. Now you know that’s not going to happen because it would cost them too much money!
Do not know about your area, but my areas that I cover the pendulum is swinging back my way. There are only 600+/- active appraisers for 1.9 million people throughout the state. I have client’s calling me every other week to appraise properties not in my coverage areas. I turn them down because I’m too busy. Within my areas the due date is when I say it is. I’m 100% on time anyway when there is not a client/borrower related problem. Gone are the 48hr turn times (about 10 days out now), gone are the 50% less the my standard rates (never excepted them anyway), gone are the updates every 4hrs on how I’m proceeding with the report.
I agree with the above posting. In my areas try business casual while stepping around dog poop, muddy acreage and so forth. When going to any property the dress code is a clean polo shirt, clean carpenter pants and two types of footwear consisting of comfortable slip on shoes (interior) and a pair of boots (exterior). These pencil pusher need to get into the field once in a while so they can see/remember how it is in the trenches!
Don’t get me wrong I love appraising and everyone I come in contact with knows that with how I professionally present myself and treat them. But I will not be pushed around or taken advantage and that’s how we been treated since this crash that we did not perpetuate.
i agree with Koma.
things are changing, including my attitude toward a lot of things in this business. i used to care about turn times and getting reports back quickly, now i dont. dont get me wrong, i still do a little bit, but our world isnt at all the same as it was 15 years ago. if we are going to be forced to walk on eggshells every minute, and if state licensing boards can prosecute us even without justification, then screw the deadlines. my reports nowadays are about quality and thoroughness, because turn times wont do me any good or will be a valid excuse if i have to defend my report to anyone over the next 5 years.
if someone doesnt like that, then too bad – cry me a river. not losing my license and keeping myself out of trouble comes first. and if someone doesnt like that, then go find a different appraiser. you know – someone who really knows what they are doing, hasnt retired, isnt dead, or may actually still be in business anymore.
also, the other day i fired an AMC for asking too many ridiculous questions in multiple revision requests. feels good.
the bleeding continues . . . . .
This article would make sense, in a perfect world. I can recall just this past month, at least a half dozen instances of amc reviewers being way too under qualified to properly review unique and specific reporting. As long as lenders impose these absurd underwriting quotas of 40+ a day, there will continue to be a preference in assignment for the cheapest and fastest. And time of turn in of the report is relative to the complexity of the challenge. The due date is flexible for the majority of transactions, and appropriately so, because quality comes before quantity. Lenders never had it so good with reliable turn times before amc’s came along. If they have to wait, make them wait. Time does not trump quality, no matter how loud the process clerks cry about due dates.