Realtor Appraisal Process
We need to take back control of the appraisal process. Since the great recession, there have been some major changes in our industry.
The Home Valuation Code of Conduct was replaced by Frank Dodd Act. While the goal of this sweeping law was to prevent another economic meltdown, there were some unintended consequences.
Mortgage lenders were no longer allowed to communicate directly with appraisers. Guess what though? Realtors are not covered by these rules. The first thing you need to know when taking back control of the appraisal process is Realtors can – and should – be in touch with appraisers.
Realtors have the right – even the responsibility – to discuss value with home appraisers.
Keep in mind, one of the values of having a local mortgage professional is they can be part of a better pool of appraisers. Local lenders and banks are creating local appraisal pools that have better trained professionals. When deals fail to close, owners don’t blame the buyer’s agent – they blame the listing agent for not taking charge.
Important FHA Rules
FHA and VA mortgage appraisals can stay with a property for four and six months. This can impact a seller when it comes to accepting one offer over another in a multiple offer scenario. Moreover, these loans are guided by Federal guidelines. Regardless of the Colorado contract, buyers can terminate on the inspection up to and including the day of closing. Important to keep in mind when working with a VA mortgage.
Realtors need to meet the appraiser at the property! First thing – pull up the 1004MC form. This is the same document lenders require. In our Boulder market, this form can be accessed on the Ires website. These are the documents I recommend having for the appraiser:
- Copy of the contract. write in red the purchase price in big numbers across the top of the offer.
- Listing Brochure. Buyers love them, appraisers appreciate them.
- List of all property upgrades, completion dates and costs.
- A sketch of the property with measurements.
- County Assessor records
- Listing History
- 1004MC form; obtained from IRES MLS
- Comparable property to support the price (Active, Pending, Sold).
Meeting the Appraiser at the Property
Treat this like a showing. Arrive early, lights on, house clean and tidy. Be ready to spread out and share the materials you brought for the appraiser. This is your opportunity to present the case to defend the price. Then turn the appraiser loose. Before the appraiser leaves, ask one super important question.
“Will you please give me the same consideration which VA requires? If the appraisal is having issues on value, please call me and invoke tidewater if you are unable to meet value.” What’s the value of this? Rather than have a low appraisal, this gives you the opportunity to revisit the appraisal process.
When there are issues, don’t panic! Stay calm, and stay friendly. Offer to research additional comparable homes. Consider an extension to the contract. Appraisers are only likely to increase value 10% of the time. An extension may help you deal with an inevitable scenario.
Realtors and Appraisers use different methodologies. Real estate agents are concerned with price per square foot. Appraisers value properties making adjustments for differences.
Stay calm, communicate with the data appraisers utilize and help clients get to “Happily ever after in their homes!”
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