Tag Archives: baseline

A note from our AM Sales meeting- better communication with appraisals.


G u E S T C O L u M N I S T








Can I Talk to the Real Estate Appraiser?








NAR conducted a survey in September 2012 and found that


11% of REALTORS® had a contract canceled because the


appraised value was lower than the contract sales price, 9%


reported a delay in the scheduled closing and 15% indicated


the purchase price was renegotiated at closing due to the


appraised value being lower than the original contract sales


“The requirements of subsection (b) shall not be construed


as prohibiting a mortgage lender, mortgage broker, mortgage


banker, real estate broker, appraisal management company,


employee of an appraisal management company, consumer, or


any other person with an interest in a real estate transaction


from asking an appraiser to undertake 1 or more of the




(1) Consider additional, appropriate property information,


including the consideration of additional comparable


properties to make or support an appraisal.


(2) Provide further detail, substantiation, or explanation for


Although showings are rising, contracts


are being written, and purchase prices


appear to be increasing, appraised


values sometimes do not match the


contract price. You have a good offer


on your listing and believe you have


provided the seller with competent


information from your CMA, which


properly prices the property to sell at


the most probable sales price for the


subject property in the current market. Then, the appraisal comes back


lower than the original contract price.


You have been told that you cannot


talk to the appraiser under any circumstances because it is against the law.


Well, that is simply not true. There is no


prohibition against real estate brokers contacting


appraisers about a mortgage loan appraisal when they have


the appraiser’s value conclusion.


(3) Correct errors in the appraisal




Although this language does


address the issues that brokers can


ask an appraiser to consider, note


that it does not allow a full blown


“conversation” or “discussion”


with the appraiser. The implication


is that the flow of information is


essentially one-way, from the broker


to the appraiser. A broker can NOT


anticipate there will be any substantial “conversation” or “discussion”


about the appraisal or its




Dodd-Frank does not provide for any other


Brokers are allowed to contact appraisers and provide additional property information, including a copy of the sales


contract for purchase transactions. Brokers may not intimidate


or bribe an appraiser and an appraiser may not disclose confidential information about the appraisal or the appraisal assignment at any time. The language of Dodd-Frank is specifically


form of communication between the broker and the




Appraisers Are Subject to Increased Regulation


The housing market is certainly complex and so is the


appraisal process. The national housing market downturn


brought numerous regulatory changes to the real estate


industry, including the entire appraisal process and those


who provide appraisal services. The Dodd-Frank Wall Street


Reform and Consumer Protection Act was signed into law


by President Obama in 2010.


Dodd-Frank “sunsetted” the


Home Valuation Code of


Conduct (HVCC) and required


the Federal Reserve to amend


the appraisal independence


rules. The interim final rule


became effective April 1, 2011


and applies to all consumer


credit transactions secured by


a consumer’s principal dwelling. Fannie Mae and Freddie


Mac servicing guidelines now


reflect this rule. In addition,


state laws and regulations


require appraisers to comply


with the Uniform Standards of


Professional Appraisal Practice


Dodd-Frank contains provisions about the function and


regulation of appraisal management companies (AMCs).


AMCs remove the administrative processes of appraisal management from the lender’s control. For a fee, the AMC recruits


appraisers, contracts with them


to perform appraisals, manages


the appraisal process, pays the


appraisers and reviews their


work. The regulations prevent


mortgage brokers or real estate


agents from selecting or paying


an appraiser if the appraiser’s


report will be used for lending


purposes. Based on DoddFrank, AMCs have sometimes


instructed appraisers to significantly limit their interaction


with interested parties to the


transaction. This has caused


much of the confusion on what


type of contact and talk can be


10 Tips Brokers Can Utilize to Help the Appraisal Process:


w Don’t put restrictions on the appraiser in making an appointment to inspect


the property. If your MLS utilizes an appointment system, use it. You will be


notified of the appraiser’s site inspection.


w If an appraiser calls, be responsive and provide as much information as needed. Return the call promptly even if your listing has closed. You are the expert


source of info on your listing, and the appraiser may not be aware of the hidden


features or upgrades.


w Be as descriptive as possible in MLS about your listing. Include ample photos


and documents.


w Don’t use or reference tax records as your “source” of information. Do the


proper leg-work on your listing; it builds significant long-term credibility among


your peers and local appraisers.


w Distinguish “Above-Grade” Living Area from “Below-Grade” Living Area in


your MLS, particularly the quality of finish in “Below-Grade” Living Area, Attics,


Bonus Rooms, Decks, Porches, etc.


w Provide an “Appraisers Package” in advance and have it available at the


property when the appraiser is inspecting the property, or meet the appraiser


at the property so you can answer any questions, inform them of the unique


features of the property or neighborhood, and allow the appraiser the space


and time to complete their inspection (Appraisers Package could include: Plats,


Surveys, Deeds, Covenants, HOA Documents, Floor Plans, Specifications,


Inspection Reports, neighborhood details, recent similar quality comparables,


detailed list & dates of upgrades and remodels, photos, etc).


w Provide a fully executed copy of the purchase contract, including all addenda.


w Explain to the seller or buyer that the role of the appraiser is not to confirm


the sales price but to provide the lender an independent opinion of the value


of the underlying collateral. Provide the seller or buyer a copy of the brochure


developed by The Appraisal Foundation entitled “A Guide to Understanding a


Residential Appraisal,” available for download at http://www.realtor.org/appraisal/aguide-to-understanding-a-residential-appraisal – 2013-03-28.


w REALTORS® and consumers can be present during the appraisal inspection.


Make sure all parties allow the appraiser the space and time to complete their


appraisal inspection.


w Make sure the property condition (inside and outside) is the best possible for


the appraisal inspection, and inform the seller that interior and exterior photos


will be taken by the appraiser.


(continued on page 10)


INSIGHT May 2013 9


For many years the National Association of REALTORS®


has spoken out for an “independent appraisal process” for


licensed and certified appraisal professionals. In 2012 NAR


adopted the “Responsible Valuation Policy” outlining NAR’s


position on valuing and pricing property. This NAR Policy


can be found at http://www.realtor.org/appraisal/responsible-valuation-policy.


What Can Appraisers Discuss After the Report Has


Been Sent to the Lender/Client?


Once an appraisal assignment is completed and sent to the client, the Uniform Standards of Professional Appraisal Practice


(USPAP) prohibit an appraiser from discussing the results


of the report with anyone other than the client who ordered


the appraisal, or parties designated by the client. In order to


ask an appraiser to correct errors in the appraisal report, a


broker must use the client, typically the lender, as an intermediary. The client may choose to provide additional data to


the appraiser for consideration. The language from USPAP’s



There are many things brokers


and sellers can do to put the


property that is the subject of


the appraisal in the best position


possible for the most favorable


appraised value outcome.



“An appraiser must not disclose 1) confidential information; or


2) assignment [appraisal] results to anyone other than:


w persons specifically authorized by the client;


w state appraiser regulatory agencies;


w third parties as may be authorized by due process of law; or


w a duly authorized professional peer review committee except


when such disclosure to a committee would violate applicable


What Can Brokers Do to Help the Process?


First, recognize that the appraiser’s function is to develop an


independent and impartial opinion of the value of the property for the lender (the appraiser’s client) to determine what


the value of the underlying collateral is for the lender to base


their financial lending decision on.


There are many things brokers and sellers can do to put the


property that is the subject of the appraisal in the best position possible for the most favorable appraised value outcome.


The most important is providing as much accurate, current


and detailed information on the subject property as possible.


Most of that information can easily be provided through the


local MLS, which is not only beneficial to the appraiser of the


subject property, but equally beneficial when the appraiser


uses that same information as a future comparable. Potential


homebuyers also benefit from the information during their


search process. This is the first opportunity for the listing


broker to provide accurate, current and detailed information about the subject property as well as the broker’s unique


knowledge of the local real estate market through supporting


information and documentation on the subject property.


An example would be when the subject property has extensive “energy efficiency” amenities, “green” or other similar


“high-performance” characteristics. It would be appropriate that the lender is informed, in advance, that a properly


qualified appraiser who is proficient in appraising “green”


properties should be selected. Some MLS systems provide for


energy efficiency details and certifications that can be incorporated directly into the listing information as an integral part of


the listing data. Take advantage of this feature.


Another thing brokers can do easily to help the overall


appraisal process is to incorporate as many photographs as


the local MLS system will allow. Include not only a front


photo, but also a rear photo and possibly a street or other


neighborhood amenity photo, in addition to photos of all


the major rooms and all the special features of the property.


According to NAR, those listings with more detailed photos


of the property sell much more quickly than those which have


few or no photographs. An accurate, detailed MLS listing


is vital to all interested parties, including the appraiser. The


more details the better.


NOTE: As of March 1, 2013 there were 3,498 licensed and


certified appraisers in North Carolina.


NOTE: The Appraisal Subcommittee (ASC) of Congress has


been charged with implementing the Consumer Financial


Protection Bureau (CFPB), which gives consumers an information resource to help complainants determine the appropriate


legal authority to receive their complaint involving allegations


of non-compliance with USPAP or appraisal independence


requirements. Access the Hotline at http://refermyappraisalcomplaint.asc.gov/ or by calling toll free (877) 739-0096. v