First and foremost: appraisals are opinions, and everybody has one. The distinction being that appraisers render a professional opinion. Reports by licensed appraisers are certified as meeting the Uniform Standards of Professional Practice. The value reported must conform to the legal definition and concept of “market value.”
As Warren Buffett best put it, “price is what you pay – value is what you get.”
It takes a minimum of 7 – 8 years to get an appraisal license which includes a college degree requirement, another 200 – 300 hours of specialized appraisal education, apprenticeship under a designated appraiser for several years, and passing a very difficult licensing exam.
You can get a license to sell real estate at 18 years old with 63 hours of classroom training.
Most appraisers are very knowledgeable and conscientious. Don’t rush to “shoot the messenger.”
Preparing for the Property Appraiser’s Visit
Make a good first impression in terms of a clean and neat premises. Inform the property appraiser of all recent repairs, upgrades, and special features.
Share with the appraiser any insights or knowledge of a particular transaction in the neighborhood you or your agent are aware of that would be relevant to the comparison analysis. This would include price adjustments that resulted from deficiencies or repairs revealed by an inspection or atypical motivation on the part of a seller.
If the property is under contract, it is important that you or your agent inform the appraiser of what choices were available (current listings) and why you settled on the subject property. The appraisal comparison process involves looking in the rear-view mirror at recent sales. Buyers are looking out the windshield, choosing a property currently on the market. Appraisers can make upward market condition adjustment to a comparable sale. That takes a lot of “explaining to do” but can be supported by local Realtor statistics, pending contracts, and listing information. This is certainly relevant in the current market with high demand and limited inventory.
What Do I Do if My Appraisal for Home Sale Came Back Lower Than Offer?
Most mortgage lenders have an appeal process in the event that your appraisal for home sale came back lower than offer, and in some instances, another property appraisal can be ordered. Check the appraisal report for accuracy of the factual information on the subject property. If there is a factual error, the appraiser is obligated to correct and revise the report. Check the comparable sales used. There may be a more recent sale that closed after the effective date of the appraisal that would support a higher value. If the appraisal was engaged via an online mortgage lender, consider consulting with a local mortgage representative as they are more familiar with the best local, experienced appraisers. Some national online lenders solicit appraisers from a much wider geographical area.
Last but not least, be prepared to put more money down. This is a red-hot market – don’t get burned.
Jim Cooksey, MAI