Oh no! It’s low! - What To Do When The Appraisal Is "Short"

You’ve done everything right. You found your clients the perfect home. True, the property is at the high end of their price range. True, they offered almost full list price after having already lost out on two other homes. Now all your clients need is the mortgage, and the deal is done. But when the appraisal comes in, the valuation is low. What can you do legally and ethically to resolve the situation and not just watch your clients’ perfect home go to someone else? Francois K. Gregoire's article published in the June issue of Realtor Magazine Online : Oh no! It’s low! has some suggestions: You never want to demand or coerce an appraiser to revise the appraisal. There must be a reason for the appraiser to reconsider an opinion of value other than “This is what we need to get the deal through.” However, there are ways to approach a low-appraisal situation that are both legal and likely to produce results. Focus on the facts. Facts, not emotion, will pique an appraiser’s interest. If you have data not available to the appraiser through standard sources, such as the MLS or county tax rolls, you may be able to grab the appraiser’s attention and possibly affect a revision in the appraiser’s opinions or conclusions. Have the details ready. If there are issues you want to bring to an appraiser’s attention, they must be supported by facts, not anecdotes or rumors. An unsupported statement such as “prices have appreciated by 10 percent in this area over the past 60 days” isn’t likely to get an appraiser’s attention. . Present real comparables to support your arguments. Recent sales similar to the property under contract, that appeal to the same market segment, and that are in the same or a similar location are comparables. Other properties are merely sales. Also remember that an appraiser is required to make adjustments to a comp’s price based on differences with the subject property. Adjustments can occur because of changes in market demand, physical differences in properties, or a location’s desirability. You can assist the appraiser by providing all details about the sale and about comps that closely match the property. Remember who the appraiser is working for. An appraiser’s responsibility is to the lender—not to the borrower, the seller, the listing agent, or the selling agent. If your client has an issue with an appraisal, contact the appraiser’s client (the bank) to see if that client will authorize the appraiser to discuss aspects of the assignment. Continuous calls to the appraiser issuing overt or covert threats won’t advance your cause.

"Appraisers aren’t perfect, but they have everything to gain by being thorough, accurate, and honest. Encouraging an appraiser to engage in illegal activity in this era of widespread mortgage fraud could lead to a sanction against you and even to criminal prosecution for you and the appraiser. No transaction is worth that."

Gregoire, RAA, is president of Gregoire & Gregoire Inc. in St. Petersburg, Fla. He’s a past chair of the NATIONAL ASSOCIATION OF REALTORS® Appraisal Committee and chairman of the Florida Real Estate Appraisal Board. You can reach him at francois1@tampabay.rr.com The full article was published in Realtor Magazine Online on: 06/01/2006 by Francois K. Gregoire Oh no! It’s low! If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , Realtor