A friend of a friend reached out to me recently questioning some advice on selling his house that he had received from a Realtor®. Sadly, he's going through a difficult divorce. You might say he's the skeptical type, and his concern was that the agent he was in touch with was trying to take advantage of his situation, or favor his estranged wife to line her own pockets. This got me thinking of how rare it is that I see agents engaging in questionable behavior. Maybe I have my head in the sand (reading the list of suspended and revoked licenses from the commission the other day made me wonder), but I honestly couldn't relate to you much of anything specific if I were asked to relate an instance of an agent not working in the best interest of his or her client. I know quite a few agents, and I'm a Realtor® too (though I work in that capacity very little), and even being somewhat "on the inside" with my brokerage I don't see agents behaving badly, or like they are trying to take advantage of folks.
What information Should I Provide To The Appraiser? It seems that some agents are unsure of what information to provide to appraisers, or if any information provided will be welcomed. I generally will send a quick email to listing agents inviting them to provide any information they would like, including comps, and in my opinion it is good practice to welcome this type of input. If you are unsure of how to approach this sometimes tricky interaction, it is helpful to have an understanding of a few points as to what the appraiser is looking for and required to report. One helpful thing to note is that the standardized form appraisers currently use requires the appraiser to report updates or full remodeling of kitchens and baths within the last fifteen years, and it breaks this information down into four periods: 0-1 years, 1-5 years, 6-10 years and 11-15 years. So, if you’re informing the appraiser of kitchen and/or bath updates I recommend being sure to note if what was done was an update or a full remodel and when it was completed within those time frames. A lot of the time I will have an itemized list of any updates completed or a summary comment (a comprehensive renovation) in my condition comment on the report, but I do find it handy if the agent provides a bullet point list of updates which I can just include as an attachment in the report. Contact Comp One Appraisal Services today and put our local expertise to work for you. Based in the Globe Building at Peachtree Dekalb Airport, we are the perfect resource for attorneys, agents, homeowners, and lenders. Thanks for reading! Got an appraisal issue or question? Call my Appraiser On-Call For You Hotline at 404-245-7577.
When I started in the appraisal business in 2002 my mentor told me "Real estate always goes up in value." I suppose a case could be made for that based on the Consumer Price Index or inflationary trends, but working as an appraiser through the Subprime Mortgage Crisis in Atlanta necessitated a more realistic view. That period was the first time I recall marking property values as "Decreasing" on an appraisal report, and it was the first time I recall making any sort of date of sale adjustment to comparable sales. Since then, I've analyzed price trends in the development of every appraisal report I've completed.
Which leads me to a recent Announcement from Fannie Mae which further clarifies their requirements around time adjustments in appraisals, effectively increasing their standards for supporting such adjustments or the lack thereof. Works for me. The tools I've used for years to accomplish this task should easily meet or exceed the recent increase in expectations.
But there is the matter of the following widely distributed graph which Fannie Mae released as further guidance on the subject:
Correct me if I'm wrong, but this graph appears to support making increasing date of sale adjustments, decreasing date of sale adjustments and no date of sale adjustments in the same report! That's a new one on me. Even with the safeguards surrounding appraiser independence which have been put in place in recent years (see last month's email again), I'm a little concerned that my days in this business will be numbered if I start using such practices. Or maybe the opposite is true! The methods I've developed over the years look at quarterly figures for an entire area (generally a high school or elementary school district), year over year figures on a quarterly basis for an entire area and the "1004MC" data which generally considers the sub-market of similar homes. (As a side note, I am considering whether the quarterly method should be updated to a monthly one.) I'll only make a positive or negative date of sale adjustment if there is a clear trend in either direction over the course of the previous 12 months. Makes sense to me. Hopefully it will continue to make sense to those reviewing my reports. Contact Comp One Appraisal Services today and put our local expertise to work for you. Based in the Globe Building at Peachtree Dekalb Airport, we are the perfect resource for attorneys, agents, homeowners, and lenders. Thanks for reading! Got an appraisal issue or question? Call my Appraiser On-Call For You Hotline at 404-245-7577.
A recent article in Business Insider which was included in the Apple News Feed is causing some buzz in the appraisal world. It details the controversial role played by Appraisal Management Companies (AMC’s) in the business. It’s worth reading but is now behind a paywall. AMC's have positively contributed to the restoration of appraiser independence since their introduction in 2010 following the passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act, but there are some AMC’s which engage in dubious practices. These include assigning appraisals to the lowest bidder and taking an exorbitant cut of the fee. Settlement Statements generally note an “appraisal fee” but don’t detail how much the appraiser was actually paid and the portion of the fee that went to the AMC. Appraisers should be paid fees that are “reasonable and customary” for their market, and, in my view, a reasonable target for AMC’s is around 20% to 25% of the total fee paid. If this fee is significantly greater than that, there is cause for concern. I could digress as to my experience in the appraisal space prior to 2010 and my experience since. Certainly, lower volume has put pressure on all players in the appraisal industry, but it remains that most of the appraisal fee should go to the appraiser on the ground. The article proposes that the appraisal fee should be broken down in the settlement statement to note the fee that went to the AMC and the fee that went to the actual appraiser. I think this separation would be a good practice and provide greater transparency to the consumer. Contact Comp One Appraisal Services today and put our local expertise to work for you. Based in the Globe Building at Peachtree Dekalb Airport, we are the perfect resource for attorneys, agents, homeowners, and lenders. Thanks for reading! Got an appraisal issue or question? Call my Appraiser On-Call For You Hotline at 404-245-7577.