Who's Team Is The Appraiser On? - How Lenders Can Evaluate Their Appraiser Relationship

Is your appraiser always on your team? Often, the appraiser is the person with bad news: the one who reinforces or kills the deal. It is unethical to influence an appraiser's decision, and many of them seem to develop an attitude if their work is questioned in even the smallest way. The lender/appraiser relationship is often stressful, given the roles that each one plays. Stress seems to be an everyday occurrence between some lenders and their appraisers, despite the fact that each is dependent upon the other to put bread on the table for their families. To most lenders and appraisers, none of this is late-breaking news. In many cases, our relationships are like a bad marriage. Neither party is satisfied with the other, but getting a divorce may seem to be a worse option than just holding our nose and living with a less-than-desirable situation. And yes, there is the temptation to try a greener pasture from time to time, mostly to no avail. Don't misunderstand me, there are many lender/appraiser relationships that work well, where each party is pleased, or at a minimum, accepting of the relationship. Just like marriages, there are also those professional relationships of convenience, where each party is less-than-fulfilled. It doesn't have to be this way. Like a successful marriage, it takes commitment to make the best of a relationship. A mix of psychology, strategy and common sense on behalf of the lender can go a long way toward greasing the wheels of the relationship. For those lenders interested in having a smoother relationship with their appraisal provider, there is hope. Listed below are a few questions that lenders can ask themselves to evaluate your appraiser relationship:

• Is my current appraiser deserving of my business? Is my business appreciated?
• Do I have realistic expectations of my appraiser?
• Am I willing to pay my appraiser a fee that is equal to or higher than the market?
• Am I a seasoned professional, or do I come across as a "know-it-all," who actually knows very little?
• Do I deal with quality clients?
• Am I thorough in providing the appraiser with details about the property, the specific type of appraisal, the type of loan, copies of contracts of sale, etc.?
• Do I attempt to use the same appraisal vendor for most or all of my work?

If your appraisal vendor is not on top of their game, fire them and hire someone who is. Your business should be appreciated and it is worthy of investment in a competent vendor. Having realistic service expectations will pay dividends toward a smoother relationship, as well.

For an appraiser, there is no greater frustration than a lender who waits until the last minute to order a rush appraisal, or expects a $100,000 property to be appraised for $150,000. A conscientious appraisal provider will work hard for their compensation, in many cases investing more time than the fee warrants. It is my contention that the extra few bucks paid for a service generates the highest return. If the appraiser sees the lender as a cheap corner-cutter who is unwilling to pay a fair price, service will suffer. That extra $25 or $50 can be worth hundreds or, in some cases, thousands of dollars to the lender, when the alternative is considered.

A professional, humble approach will endear the appraiser to you. The lender who overplays his hand and comes across as a "know-it-all" (especially when their knowledge is limited), tends to shoot himself in the foot.

Appraisers do not respond positively to lenders who always associate with marginal borrowers. You know the type borrower we are talking about, here--the one whose house has a lot of deferred maintenance, the one who wants to obtain a larger loan than his house is worth, etc. This may not seem to be a big deal, because those people need loans too, right? Let's remember to keep our eye on the goal of having smooth transactions, while promoting team play with the vendor, thus creating the best return on the resources invested by the lender.

It has been my experience that many lenders are hesitant to provide the appraiser with all the information available when ordering an appraisal. This is not to say that all lenders do this, but it is all too often the case. If we want our appraisers to act as team players, then it is important that they see the playbook. If we claim that the property is under contract for $200,000, then send the appraiser a copy of the contract. This would hold true for almost any information that provides an indication of the property's condition or value. Providing the appropriate paperwork is a signal to the appraiser that you trust them with all the information available to you, and that you have included them as a player on your team.

Finally, appraisers--just like anyone else offering a service--dedicate themselves to those who favor them with material business volume. This holds true, particularly where those difficult assignments come into play. Additionally, the more experience an appraiser has with a particular client, the better the appraiser will understand the needs and requirements of that client. Therefore, better service and quality may be expected.

The key to a smooth lender/appraisal relationship is to approach it as a team effort. Communication, openness, dedication, loyalty and compassion on the part of the lender can go a long way toward insuring that the appraiser is a true team player and, most importantly, that they are on your team.

Charlie W. Elliott, Jr., MAI, SRA, is president of ELLIOTT & Company Appraisers, a national real estate appraisal company. He can be reached at (800) 854-5889, charlie@elliottco.com or through the company's Web site, at www.appraisalsanywhere.com.

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