Taking the Stress Out of Appraisals

Appraisals these days are as anxiety ridden as an appointment with your accountant or dentist. A below-value appraisal will stick with a property for 4-months with an FHA loan application. Here is a strategy for both home sellers and refinancing home owners to relieve some of that anxiety.

The 2,300 page Dodd-Frank Act enacted July, 2010 states, among many other things, that it is a Federal crime for anyone with an interest in financing a home to:

  • Compensate, coerce, extort, collude, instruct, induce, bribe, or intimidate an appraiser
  • Mischaracterize the appraised value of the property
  • Seek to influence an appraiser or otherwise to encourage a targeted value

So don’t do any of that; however, you do have the right to ask an appraiser to:

  • Consider additional, appropriate property information, including the consideration of additional comparable properties to make or support an appraisal
  • Provide further detail, substantiation, or explanation for the appraiser’s value conclusion
  • Correct errors in the appraisal report

Before the appraisal:

Call the appraiser and ask how many homes he has appraised in the neighborhood in the past 12 months. Tell him that you plan to meet him at the property and that you have additional information to share (the appraiser packet). If you are not satisfied that the appraiser knows your neighborhood, or if the appraiser does not seem receptive to your offer, then ask the lender to assign a new appraiser from the appraiser pool.

  • Contract, listing history, and listing brochure (for home sale)
  • Form 1004MC (we can provide this to you)
  • List of all property upgrades, completion dates, and costs
  • Any previous measurement sketches
  • County assessor records
  • Comparable properties that support your price (listed, pending, sold)
  • Your cell phone number

On appraisal day:

  • Make sure your home is clean, well-lit, and fresh (yes, it matters)
  • Remove your pets from the property including the backyard
  • If you have an attic, remove the cover and set-up a ladder
  • Spread out your appraiser packet on a table
  • Be warm and friendly, but do not follow the appraiser around the house
  • Once the appraiser has completed his inspection, present your appraiser packet
The reciprocity strategy:
Make the appraiser’s job easy without being annoying and you will win some reciprocity so you can ask for the favor.  The favor you want to ask the appraiser before he leaves is to contact you before he submits the appraisal if his calculations do not support your financing needs. Only 8% of below value appraisals are reconsidered once the paper work is filed.  Obviously, you want to make sure that you have a second shot at correcting the appraisal before it is filed.  Building rapport with the appraiser will give you that second shot.
If the appraisal is below your needs don’t panic and make sure you stay friendly with the appraiser.  Ask the appraiser to hold off on filing the appraisal and offer to do more research on the comparable properties.  You may consider extending the closing date to provide you with more time; especially if you know about strong comparable properties that are closing soon.
The Cramer Group:
Knowing how to jump through all the hoops of the contract process is essential to your success.  A “hope and pray” approach to appraisals can create unnecessary stress.  If you or someone you know is looking to buy or sell a home, I would be honored to put our skill and dedication to work to ensure a smooth and easy transaction.
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