BOTTOM LINE- The whole AMC appraisal system is flawed. It might come as a shock to find that you can no longer order the appraisal from an appraiser of your choice.

You can’t shop for a good price. 

You can’t shop for a knowledgeable appraiser. 

You can’t shop for someone who knows the area.

You can’t shop for someone with a good reputation.

You can’t shop for someone who can do it in a hurry.

No one except the homeowner (listing agent by proxy) is allowed to talk to the appraiser!

Because of the Dodd-Frank Act the appraisal must now be ordered through a 3rd party (Appraisal Management Company) and THEY pick the appraiser. Unfortunately they pick the appraiser who will do it for the least amount of money and the AMC pockets the rest.

An added “benefit” of this system is that the price of appraisals have all but doubled.

For the most part the Appraisers aren’t the bad guys. Although with the Appraiser Independence clause of the Dodd-Frank Act it protects the bad ones. Appraisers simply aren’t accountable to anyone.

But back to price, even with the higher costs, the AMCs siphon so much money off the price paid for an appraisal that the appraisers get much less than they used to so they can’t afford to take the time to do a super, in-depth appraisal or take the time to revisit the appraisal later if you don’t agree with their value.  So you MUST get the proper appraiser the first time, which is going to require some work on your part that you never had to do in the past.

Let’s break it down to see why you’ll need to do some homework prior to ordering the appraisal. The AMC many times gets as much or more money than the Appraiser (and the AMCs don’t do much more than keep a database). This means the Appraisers have to work on volume & can’t afford to slow down or come back a 2nd time. To be able to eat they have to be able to just churn them out.  So..........

.........to get a proper appraisal you have to almost do the work for them. You need to gather a lot of information & get it to the appraiser upfront, when it is useful to them.  Of course, when the appraisers are not held accountable it’s awfully easy for even the best of Appraisers to not work quite as hard sometimes.

Because of all these issues the AMCs don’t offer a easy or fast way to dispute a poor appraisal.  It’s really more of a “The Beatings will continue until Morale improves” sort of system for the appraisers.

There’s one thing to remember,
you don’t have to accept the appraiser they want to send out!!
As a matter of fact making sure you get the proper appraiser is over half the battle. 

When the appraiser calls to make the appointment you need to interview him on the phone and decide if you want to risk letting them perform the appraisal.

At the bottom of the page I’ve given you a list of the 4 things you need to know about the appraiser before you allow them into your home.  Getting the right appraiser is the most important job you have.  Since you are the only person allowed to talk to the appraiser the task falls squarely on your shoulders.

I got caught up in all the intricacies of the new appraisal system & forgot to tell you about the most basic aspect, which is to be sure the appraiser has a list that tells him/her about everything that could influence value in your home. Make it easy for them to do an accurate appraisal.

Make a list & document your house features as well as you can for the appraiser and give it to him/her as they arrive.  SELL YOUR HOME!  You need to sell the appraiser on your home even more than you had to sell the Buyer.

You need to sell the appraiser on the property plus it gives them the data they need to be able to make a valid comparison to other properties so they can come up with a good value.

Don't bore the appraiser to death with minutia but anything that differentiates your house from the "run of the mill" home in the neighborhood can help the appraiser arrive at a better value.

Now RANT MODE ON

With the new "Appraiser Independence" what we've seen is that the appraisers are only independent of accountability and the need to give proper appraisals.  The present system hurts the good appraisers and rewards the bad ones while at the same time takes money out of everyone else's pocket.

See this article: http://www.washingtontimes.com/news/2012/aug/16/mortgage-qa-appraisals-can-defy-good-sense/

2 houses side by side, similar in all aspects but 2 different appraisers assign values $155,000 apart & under the new system there's little to nothing the homeowner can do. I've had the exact same thing happen to one of my Builder customers.

In another situation, because we had the will to wage an all out war on an Appraisal Management Company, we got an appraisal up $80,000.  Actually it’s easier to wage war when the appraisal is way off base than when it’s only $5,000-$10,000 too low, and that’s what’s happening the most.

Since there's no checks & balances to appraiser laziness, incompetence or abuse, the only way you have to protect yourself is to be Proactive & presume every appraiser you meet is a serial abuser. That’s why it’s so important you interview the appraiser before you allow them to come out. It's wrong for the consumer & demeaning to the horde of good appraisers, but since you have no recourse, you can’t afford to take the risk of getting an improper appraisal.

Before you begin lambasting me let me give you my background. I have been a Certified Real Estate Appraiser, have been in the business as a Realtor, was the Training Director for the nation’s largest Real Estate company and then have been a Lender for over 30 years and I know multiple good appraisers. I have the background & experience to be able to see what’s being done to us in the name of political gamemanship (the Super Majority passed this law at about the same time they gave us the Affordable Care Act that you had to pass to be able to know what was in it). They use sleight of hand better than the best magicians.  Aided by the press they make you look one way, when the real issue is another direction entirely.

With the system set up the way it is, to protect yourself as a homeowner, builder or buyer you have to presume the appraiser who will be coming out to your house is an idiot. The appraiser accountability & dispute process is broken & almost non-existent so you have to ensure you never get to that point.

With all that in mind I've given you some tips to help be sure you get the proper appraiser for your property.  Which hopefully also means you'll get the proper appraisal, value & conditions.

You definitely cannot go by Zillow for value.  San Bernadino Valley just found out that Zillow was too low in value by a factor of about 35% when they compared Zillow's values to Core Logic's values. This changed every concept they had about the value losses in their area and how best to deal with them.  Surely you don’t look at Zillow for values do you?

RANT MODE OFF

The music this week is courtesy of Canta Rhythm & Brass a local band here in Fort Worth. A little salsa, a little rock and whole lot of attitude!  You can find out more about them @ http://www.cantaband.com.  We usually see them at Central Market @ Hulen & I30 in Fort Worth.

Watch to the end for a special little extra treat.

FINANCIER$

Mortgage Group

“The approval Experts since 1984!”

David & Debbie Bennett

(972) 644-8244

(817) 204-0028

David’s cell (469) 371-0226

Debbie’s cell (469) 371-0227

718 Boling Ranch Road

Azle, Texas 76020

(while our mailing address is in Azle,
we aren’t actually near Azle)

S.A.F.E. Act Compliant • Texas licenses #2014 & 6426
•  NMLS registration #225460 & 234360

The 4 things you must know about an Appraiser
before you allow them to appraise your home.

There are many more details are in the video.

1. Where are you located?   As an example, if they are coming from Rockwall and you are in Weatherford then obviously you don’t want that appraiser.
   

2. Have you done many recent appraisals in our area?
   

You are trying to determine if they are familiar with your area.

1. I have some sales data for you, how can I best get it to you?
   

If they don’t want your information, you don’t want them!!!

1. The 4th thing isn’t a question but I need to impress upon you the absolute necessity to meet the Appraiser at the property!!  Especially you Builders & Realtors!
   

Get rid of lockboxes & builders lock the house up. 
Make them have to at least meet with you to get a key so that you can talk with them and hopefully open up lines of communications in case they need more information later.

There is much more information in the video!