_Sounding Bored is my semi-regular column on the state of the appraisal profession. I explore how to get an appraiser to re-consider the error of his or her ways._
Appraisers are human, well most of the time. One of the rights of passage for a real estate broker is to deal with the fact that on occasion, the appraiser is going to disagree with the sales price of the transaction.
A wise appraiser once told me: _Everyone in the sales transaction is smarter than the appraiser because they already know the number. The real estate listing broker and selling broker, the mortgage broker, the lender and of course the buyer and seller all know the number. The appraiser is the last one to the party._
But sometimes it happens and when its does, life can be difficult for the appraiser. The buyer and seller threaten to sue, the mortgage broker may never use the appraiser again, same goes for the lender. The real estate brokers may never refer the appraiser their clients again.
So why would an appraiser want to go through this? Because its their responsibility, their job as an appraiser to estimate the value of the collateral (in a mortgage appraisal assignment).
>Appraisers aren’t perfect, but they have everything to gain by being thorough, accurate, and honest. Encouraging an appraiser to engage in illegal activity in this era of widespread mortgage fraud could lead to a sanction against you and even to criminal prosecution for you and the appraiser. No transaction is worth that.
But what if the appraiser meant well, but either made an error or just didn’t understand the market?
The NAR in the [latest issue of REALTOR Magazine](http://realtor.org/rmomag.nsf/pages/lawjun06) provides the best way for a real estate broker to handle the situation and understand the appraiser’s position. Actually, the method they present is respectful to the appraiser and the process should only be engaged if the broker truly believes a mistake was made.
>You never want to demand or coerce an appraiser to revise the appraisal. There must be a reason for the appraiser to reconsider an opinion of value other than “This is what we need to get the deal through.”
I have to say that I was impressed by their tact.
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Jonathan, Thanks for the comments on the article. The NAR Appraisal Committee is working hard to get the word out to members of the NAR about what is and what is not acceptable behavior when dealing with appraisers. -Frank
I enjoyed your observation that appraisers are always last to the party. Realtors, mortgage loan professionals, buyers, sellers, and borrowers always know the number before the appraiser.
That is why Zaio is reversing the traditional role of the appraiser who typically only gets involved after a transaction has been negotiated. Premiere high-quality appraisers across the nation who are experts in their local markets are partering with Zaio in a coordinated effort to conduct an exterior inspection and pre-appraise every home in their territory PRIOR to transactions. These local appraisers closely monitor every sale from that point forward and constantly update the comps, value estimates and date of valuation of every appraisal. This is NOT an AVM, but rather a USPAP compliant appraisal product produced not by a computer but by a licensed appraiser. This allows appraisers to truly get back to their roots and appraise free of pressure to hit a pre-determined number. It allows appraisers to start building and maintaing a site verified database and improve the gaps in data that exists in all current real estate databases. It also allows appraisers to start re-capturing the approximate 70% market share that has been lost to AVM, BPO and other non-traditional valuation products over the past 10 years.
Freddie Mac recently announced that for the past 3 consecutive years, their AVM portfolio has outperformed their appraiser loan portfolio because appraisers can and are being manipulated to hit artificially high numbers. As a result, the use of AVMs even for 1st mortgages is expected to grow.
If appraisers don’t band together to improve the quality of the data, improve their accuracy, and improve the value and responsiveness of their product, and eliminate the opportunity for people to influence the independent value estimate – in another 10 years there won’t be any need for appraisers because we will likely lose the remaining 30% market share that we now as an industry compete for every day.