Value too Low? Order Multiple Appraisals!
Appraised value is not as high as the agreed (contract) price get multiple appraisals
Folks,
An article titled 4 Ways to Deal If Your Appraisal Comes in Low with incorrect info has been making the rounds. This is the second time I’ve seen it in different publications.
In it, Diane Saatchi, a senior broker with Saunders & Associates in Bridgehampton, NY, is quoted:
“Order a second appraisal
Most often, if the appraised value is not as high as the agreed (contract) price, the seller’s agent will ask to see the comps and get a second or third appraisal,” Saatchi says.But it will likely cost you — you’re not only paying for the first appraisal (in your closing costs), but you’ll pony up for any additional appraisals as well. They can range between a few hundred dollars and $1,000 depending on the area. Occasionally, real estate agents or sellers will foot the bill if they really want to keep the sale.”
Perhaps some of you would like to send Ms. Saatchi a nice, warm, respectful Christmas greeting with marshmallows, dosed with liberal amounts of cayenne pepper… and mention that ‘ordering multiple appraisals’ is not permitted (if it’s a mortgage lending assignment). Hasn’t been for years.
Here’s the contact e-mail (make sure your Subject line says ‘Message for Diane Saatchi’): i…@saunders.com.
Dave Towne on e-AppraisersDirectory.com
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Just sounds like another Realtor who overpriced a property, most likely to get the seller’s to sign with them, and is trying to point the finger. Not every appraiser is perfect, but they also don’t work on commission.
Go Shopping for the value??? Why don’t you just make it yourself so the appraiser doesn’t take the responsibility of the law suit that will come at a later date.
Remember: Figures can lie and liars can figure.
“hasnt been for years”
LOL
there are a lot of things that havent been “permitted for years”, but that doesnt mean it still doesnt happen. rules/laws are just ink and paper to some people, and too many rules/laws are simply made to pacify the general public.
i will guarantee you that somewhere right now a loan officer is talking to an appraiser about value, or a bank or a govt agency somewhere isn’t following their own sets of rules/laws. somewhere right now a homeowner or licensed realtor is pressuring an appraiser into a value. no rules/laws will keep everyone completely honest. USCRAP is the same way – they can continue to write that absurd document as tight as they want, but an appraiser is either ethical or they aren’t, and USCRAP will never make an unethical appraiser ethical, just like laws wont keep a crook from stealing or a rapist from raping. “Thou shall not kill” was first written WHEN?
“hasn’t been for years”? LOL. whatever.
the bleeding continues . . . . .
If you can discredit the appraisal, you can order another one. Commission based structures render the judgement regarding appraisal credibility to be rooted in result, not merit. Anyways…. What’s new?
Before condemning, lets look at the realities. IF FDIC is to be believed that more than 97% of the 1/4 million WAMU & Countrywide appraisals were non USPAP compliant; and that 90% were “egregiously deficient” (whatever that means separate from non USPAP compliant); then it is a fair assumption to admit the possibility that collectively we are not as error free as we like to claim. I mean, of COURSE YOU and I are, but those ‘other guys’? Probably not so much.
A good agent SHOULD be asking to see the appraisal! It’s called due diligence. IF there are significant deficiencies, then they SHOULD be ordering second appraisals and those second appraisals ARE permitted under current guidelines. Now the fine points, such as documenting the bad appraisal and following up on it are ignored by most lenders (except RELS). Now, we are victims to our own collective pig-headedness here. Rather than looking OBJECTIVELY at the agents reasons & evidence why they believe the value should be higher, far too many o f ‘us’ have said “Upon review of the additional information it was determined that there was / is no significant impact on value therefore the appraised value remains the same…”? It’s even worse now that admitting to a POSSIBLE error is tantamount to saying we did not do our jobs as far as punitive minded state regulators are concerned; or that we produced a misleading report.
Friends, IF we collectively ever get to a point where we can reasonably claim 90% of all appraisals are good, then I would STILL have to consider that 10% chance I ‘missed’ something. BEFORE I climb up on top of my high horse I’ve found its a real good idea to make sure my work is MORE than 100% defensible. In these relatively rare cases I try to DISPROVE my own results and value. THEN I use the opportunity to make sure the report & WORK FILE will pass State Review muster, via whatever addendums are required. I AM allowed to make a mistake.
It is how I deal with human failings and limitations that determine USPAP and regulatory agency compliance. I ALSO am NOT going to change value opinions gratuitously since doing so can also cause State Regulatory Board problems. However a value dispute instantly raises the risk of a state complaint claim from negligible to probable (in my mind). IF I believe the added data DOES warrant a change (particularly a change under 5%) then there is a good chance I am going to make a change “Based upon a review of additional information not previously available to the appraiser in the normal course of business, I concur that the market value is “X” rather than “Y” as previously reported.” Or, I may state reconciliation toward the higher end of the range is warranted based on whatever new data dictates.
I noted above that RELS follows, or purports to follow procedure for second appraisal ordering. Based upon numerous complaints I’ve reviewed it appears that when an appraisal is alleged to be low and the appraiser declines to change his or her opinion, they then produce or order ‘some type of review’ that finds “numerous discrepancies.” They then order the new appraisal and once it comes in on value they now have TWO appraisers inferring the OA was wrong. THEN they forward the appraisal to their parent corporate appraisal review department (Wells Fargo in Phoenix, AZ) with the new (spurious) support so that formal complaints can be made against the OA in his or her home state. THEY ARE NOT DOING THIS FOR THE BENEFIT OF THE PROFESSION!!! They are doing it to document THEIR paper trail in support of having ordered that second appraisal!
Folks I know times are hard, but anyone that still does work for people like this are damn fools! Its only a question of time before you get caught up in their grist mill. Are $180 fees worth it? $250? The ONLY way THEY will stop doing this is if WE stop doing work for their AMC! I’ve never found their fees or terms to be acceptable and based on complaints from appraisers made to the Guild, I never will work for them. The only question I have is why anyone else does?
When we get a request for reconsideration, lets treat it as being ‘probably right’ instead of automatically ‘wrong’ or unsupported. Try to PROVE ourselves wrong and only when we cannot do so, climb up on that high horse. Even then make the extra effort to carefully explain WHY the new data is no good and ANTICIPATE and head off the future complaint! (IE: three potential higher ‘comps’ were excluded because they were all on the west side of the street with unobstructed ocean views that paired sales or regression shows sell for 1/4 million more than similar houses on the east side of the street….OR GRID them and make the 1/4 million adjustment!
Just saying “value remains unchanged” is an invitation to get a state complaint…even when you did nothing wrong!
Just my two cents. FYI nearly HALF the cases where I get involved on behalf of the Appraiser’s Guild trying to help appraisers defend themselves against state complaints, OR mitigate the damage arose out of cases very similar to what I have described above. It is often the UNRELATED sloppy report discrepancies that are getting appraisers burned. Start thinking defensively folks! State regulators across the country are looking to impose $5,000 fines rather than remedial corrective education al courses. The “gotcha police” are focused on raising revenue-NOT maintaining appraisal integrity.
PS-Call Jan Bellas, American Guild of Appraisers (301) 220-4100 or email to janbellas@appraisersguild.org you just may need someone in your corners some day!
High horses are available to all FHA,FNMA, & FREDDIE appraisers thru our government guarantee programs. Other lenders have to be more careful.
Who’s still accepting reports under $400 dollars? Remarkable.
Old post but hey, thank you Mike for your words of advise, they are still timely. I would agree with most of what you are saying. I complete every appraisal as if I am sitting in a court room defending my work. Consequently, it takes much longer to complete a report but (knock on wood) I rarely get ROV requests. That said, I know I am not perfect and mistakes can be made, I try to keep an open mind. Sometimes it is just easier to grid one or two of the sales they provide which ultimately supports the original value. Agents do not understand as a rule the supported adjustment process.
I welcome agents when they show up at the observation, those kind of agents typically are more dilligent and I know they are working hard for their seller/buyer. I get that, they are just doing their job. There have been occasions through the years that an agent will have data or a comp that I didn’t have for whatever reason. No problem, and thank you Mr/Ms agent. I am also a VA appraiser and I love the Tidewater, gets things out in the open real quick and gives everyone a chance to present to the table.