The Tale Of A Low Appraisal
It all started on a mid-afternoon day in the middle of January (last year), with the wind howling and the air so cold that your spit would freeze before it hit the ground. The phone was quiet, the dog was snoring, and then I heard the ding of an incoming email. Yahoo! An appraisal request, and it’s even for a sale. I pondered, “Why would one of the staff appraisers from the largest appraisal management companies in the state not want to do an appraisal for a sale when business is this slow?” I didn’t care, at the time I just wanted the work. Well it didn’t take me long to figure out why every appraiser within their company turned down this appraisal, no comparable sales.
The Appraisal Inspection
I’ve never been one to shy away from a tough appraisal assignment, so I took the case. I donned my winter boots, put on my hat with the ear flaps that button down (think Elmer Fud), gloves, parka, long underwear (no, not the printed animal type), and out the door I went. Driving up to the house in my 4 x 4 pickup truck (ole “Silver”), my first impression was, “This is a really nice house.”
It was the blistering cold outside, and I didn’t want to leave the warmth and safety of my beloved truck (we have a special bond-a guy thing I think), but I had no choice, there was a job to be done. I trudged through the nearly two feet of snow to get the appropriate measurements needed. I couldn’t wait to get inside. I approached the front door, “Nuts”, it’s an electronic lox box and it’s freezing out. After several attempts (it always helps to rub it like a Genie lamp for good measure), and a few nice words, I was granted permission to enter. The interior was in tiptop shape, not to mention warm and cozy (what’s in the fridge, maybe I’ll stay a while). This was a nice listing for being a vacant house.
Finding Comparable Sales
Back at the home front I was now ready to tackle the arduous task of finding some comparable sales (or just even one sale) that sold for the same price. First, a cursory look on the MLS within subject’s neighborhood, no luck. Second, I expanded the geographical area to include the entire county, no luck. Finally, I have a little talk with my computer, “You’re making this job a lot harder than it really needs to be,” no luck. (The one nice thing about talking to my computer, it’s a very good listener.) “Fine,” I say, “I’ll email the agents involved (with the lender’s permission) with the sale, surely they’ll have some good comparable sales, heck they had to come up with the price somehow.” I wait, and wait, and wait, no reply. Hit send/receive just in case. Nothing.
Finally, the next day I get a response from the listing agent, “You’re the appraiser, you figure it out.” OUCH! Really…..good thing I wasn’t a door to door salesman because my nose would have been flattened. Maybe she was just having a bad hair day. Surely, the selling agent will be anxious to help with some comparable sales. Um, not so much. His reply, “Well, it was the best house that we looked at. Neither I nor the buyers know much about the area, that’s why we hired you.” Well, the mortgage company hired me, but at least he was honest.
The Completed Appraisal
Using the best and most recent comparable sales available, I completed the appraisal and sent it off to the lender, mind you it was about $20,000 less than the selling price. I locked the door, turned off my lights, and waited to make sure the coast was clear before I moved about in my home office, knowing full well that the fur was most likely going to fly.
I received the dreaded phone call from the lender. “The listing agent is wondering how much to you know about the area, because she has sent over several comparable sales that you didn’t use.” I thought, “Really, you have to be kidding me.” I wondered how in the world did that happen. First, I let my computer know that I wasn’t very happy with it for letting me down. “Bad computer!” The “missed” comparable sales arrive! They must be thinking about a different house I mused, these comparable sales are for two stories and the subject is a split entry, and her sales are over a year old. The comparable sales used within my appraisal report are of the same style of home, and they’re only 3-6 months old.
I contact the lender and explain that these sales aren’t even close to being the same type of home. The lender firmly states, “If that’s the case, please put in writing why you didn’t use each and every one of those comparable sales.” I felt like saying, “Because you don’t compare watermelons to oranges.” But I took the high road, and did as requested, hoping that this bad dream would be over soon, not so lucky. The lender sends another email, “Please explain why you’re qualified to appraise homes in that area.” You have to be kidding me, this is like a bad dream that doesn’t end!
After explaining that I’ve done dozens and dozens of appraisals within 10 miles of the subject, and over a few hundred appraisals within the same county, and not to mention over 5,000 appraisals in the past 14 years, I felt that I was more than qualified. After my very terse reply, I didn’t hear anything back.
Being a little worked-up, I was wondering why it was only that my credentials were the ones being called into question. I decided to do a little research see what experience the real estate agents involved in selling the home had in this area. NONE! That’s right, neither agent had ever sold a home in subject’s neighborhood, or even in the same county for that matter. I decided to put these lovely little tidbits in a letter and send it off to the lender, “but I never sent it.” I figured it would serve no purpose other than to make my bruised ego feel better.
The Happy Ending
The day before closing I was contacted by the lender to do a final inspection on the work order regarding the deck not being built to code. I contacted the selling agent, as instructed, to find out if the work was complete. He stated that he just left the property this afternoon, and all the work had indeed been completed. He also wanted to let me know that the buyers were extremely happy with the appraisal and the job I did. I thought, “Really! Are you sure you have the right guy.” They were thankful that I did my job, and that I didn’t just hit a number, because they would of not known the difference. And that my friends is how it works.
A Final Thought
In all of the years I’ve been appraising homes, I’ve never had a real estate agent find a comparable sale located within the subject’s same neighborhood that I just happened to miss. Coming in low on a sale is a very serious matter for me, and I go out of my way to make sure all of my bases are covered, which includes communicating with the real estate agents when permitted.
The current rhetoric being tossed around by the NAR and the Builders Association regarding appraisers is only going to exacerbate the problem, and not solve anything. The best appraisers are either leaving the business, or moving on to non-mortgage related work (like myself). It’s tough enough working in this current climate, let alone having two of the largest housing associations throwing you under the proverbial bus every chance they get.
Yes, I know there are some absolute idiots out there appraising houses, but when you find the perfect business where there are no idiots, please let me know, I want in.
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