April 9, 2010

Good and bad appraisers?

Have you ever heard it said , “A good appraiser is hard to find”. What definition do you use?I have been around long enough to know there are a few definitions for a “good appraiser”.

The real estate appraiser’s definition of “a good appraiser”: A good appraiser is one who has been well trained through education, experience and mentoring. He understands if the value is off, someone relying on his report might get burned. The appraiser has good and extensive data sources and knows his area of service well. He is expert of the ins and outs of buyers and sellers in the subject properties marketing area, both from his extensive research material and from his experience in the neighborhood. When including comparable sales report, he endeavors to include the most recent sales comparables which are most comparable to the subject property. Property and locational differences are accommodated based on what value differences indicate. The good appraiser also considers active listings and pendings as (after market based adjustments) they will tend to set the high end of value. The certified appraiser reconciles his inspection, data research, reasonings and analysis into a final value estimate that is not affected by biased persons connected with the transaction. The product will be an unbiasedhome appraisal.

From over 21 years of appraising, the following is what I have come to understand the definition of a good appraiser is, from the view point of view of:

Divorcing spouse A: A good appraiser is one who brings the value in LOW because I want to buy my EX out of the house.

Divorcing spouse B: A good appraiser is one who brings the value in HIGH because I want my EX to buy me out of the house.

A few Commissioned loan agents: A good appraiser is one who will, look at a few sales in the neighborhood and state what the value will be before doing the appraisal; use any and all sales that will give the highest value(even if they are not the most comparable); hide bad things about the property or location ( which might kill the deal ); will change the report when the truth about the property hinders the underwriter/lenders guidelines or requirements; will bring the value in for what ever will make the loan work. (Disclaimer: the majority of commissioned loan agents I work with are very professional and do not use the above tactics)

All Lenders (the one with the money): A good appraiser will be unbiased in his appraisal and communicate true market value.

It is kind of funny that the definition of “a good appraiser” can be so varied. In the face of being labeled “a bad appraiser” by those who use another definition, the good appraiser will always stick to his definition, no matter the cost.

Chas Leeper ,real estate broker for over 35 years; Designated member of the Appraisal Institute; an author, outdoors man and grandparent. He is currently the CEO of Leeper Appraisal Services. More about Chas W. Leeper, SRA, go towww.leeperappraisal.com/principalappraiser.htm or call 949-574-5534.