Appraised Value is TOO HIGH!

[DJ Starr]

My concern is not the AV, it's the reaction of the parties involved - as per usual.

Fannie has a property, on the market for $zzz. It goes into multiple offers and I get the assignment. The 'winning" contract is 110% of list price +/-. My AV comes back at about 104% of List Price. Fine, I'm ready for the barrage of "you came in under value","here are some comps idiot"... What do I get?

The buyer's agent calls me direct and on the verge of tears, she says I appraised the home too high. Her clients were counting on me to "come in lower" and then renegotiate with Fannie.

Is this some new school of real estate practice? Sounds pretty sketchy to me.

She says the inspector says it needs a new roof among a littany of other things. It's a 2 story in MN. I looked at the roof from grade and inspected the interior for active leaks (as we do on all inspections) and saw none. I tell her going on the roof is beyond my scope of work and she needs to talk with the lender. Anyhow, now the buyer is contacting me as well.

She and her clients played with fire and got burned. Not my problem. I have to consider the multiple offers as well as the contract price, not to mention, I have legitimate comparables and did not "push value" anywhere. If anything, I'm known as the conservative appraiser no one wants to see on a transaction.

I give up. I know the answer here is to keep it professional and direct all communication through the lender but they are attacking me on my cell and after hours.

I never publish my cell phone, my clients don't even have it, if you can believe that. It's not hard to find but it's poor form for them to do so.

Any thoughts? Why are we ALWAYS the bad guys?

The last thing I need is someone to run this up the flagpole with the state. Oh the aggravation...

 

[23Degrees]

Remember the "good old days" when it was a given as far as realtors were concerned that the OV would be exactly the same as the contract?

At least your opinion was not at contract level or they might have gone into convulsions - Can't you hear it - "How could that dumb appraiser think the house is worth what we bid on it - what a schmuck."

 

[JSmith43]

They could go to another lender, quit their jobs, get themselves unqualified, squeal like stuck pigs to the appraiser. They may be doing all of the above.

Document the level of harassment and your attempts to direct communication back to the lender. Make it clear to them that they have no direct business relationship with you and you cannot communicate appraisal results & prefer to have no further contact with them.

Get their emails first so that you can send them your demand that they stop contacting you. At some point you may have a good case against them for harassment, perhaps, even a criminal charge, if it can be demonstrated beyond a reasonable doubt that they are trying beyond reason to pervert the lending process for their own benefit.

 

[KD247]

I've recently posted a few times regarding the appraiser's promotion to the new job of "Value Inspector".

Maybe I'm reading too much into the increasing number of appraisals that are 10-20% below contract price but it's interesting to see that some buyers (or at least this particular buyer) expect to utilize (and depend on utilizing) that discrepancy as they enter the final round of negotiations. Ironically, there seem to be more and more appraisers asserting their independence and lack of bias by routinely coming in slightly below contract price. It would be ironic if that practice created such a strong reliance on this negotiating tool that the appraiser now has an even more complex role in this dance. The end result would be that the appraiser who tried to appear unbiased just became the most dependable player in the game.

Just curious (not accusing you of anything) but was your specific final number the result of a hard and fast value indicator (like a similar property available at that price)? How wide was the range of possible values? Would the 110% price have been just as reasonable a conclusion as the asking price? If so, how did you end up in between?

If you had some wiggle room in the final opinion of value, and if you had anticipated that the appraisal was going to become part of the negotiations, you had the option of saying that possible values for the subject ranged from e.g. 95% of the asking price to 120% of the asking price but that you concluded at exactly the 110% offer because you believed the offer represented an actual market action in response to the subject property.

Now that would have been fun, to watch the buyer's devious plan backfire as she realized that her disingenuous offer was the reason for the even-higher appraisal.

I still think that appraisers should comment on the Appraisal Contingency clause that is becoming increasingly prevalent in sales contracts.

 

[Mike Kennedy]

1. What Definition of Value was applicable to the assignment?

2. when contacted via phone by parties, other than your client, abruptly and politely interrupt attempts to coerce you AND CLEARLY state any and all comments MUST be addressed to your client - in writing. Oh, and end with
" Have a nice day" ..........and hang up the phone.

 

[J Grant]

Why are you talking to them? STOP TALKING TO THEM! Refer them to the lender.

Why isn't buyer's agent using the roof repairs to get her client out of the contract, or to lower the price? But that is her concern, she sounds like an idiot.

As to mulitple offers, why an appraiser is influenced by that is up for discussion. I've written before in posts that in a multiple bid situation buyers can over pay as the buyer may be reacting to pressures of other offers and is not acting prudently and in their own best interest.

Either you are confident in your MVO or you are not. If you are, you have nothing to worry about.

 

[J Grant]

I've recently posted a few times regarding the appraiser's promotion to the new job of "Value Inspector".

I addressed this in the prior thread, but a "value inspector" is what an apprasier does...it is not a "promotion to a new job". We opine value opinions, not price opinions. In the past, realtors controlled who got to do purchase apppraisals, so perhaps you got used to seeing a certain product out there.

Maybe I'm reading too much into the increasing number of appraisals that are 10-20% below contract price but it's interesting to see that some buyers (or at least this particular buyer) expect to utilize (and depend on utilizing) that discrepancy as they enter the final round of negotiations.

I doubt this is really true. I think this is your personal opinion and since appraisal can come in at any value and more often then not, magically makes contract price, any buyer or agent relying on this long shot tactic is an idiot .

Ironically, there seem to be more and more appraisers asserting their independence and lack of bias by routinely coming in slightly below contract price.

I think once again this is your intrepretation. Maybe the appraisers came in below contract price because that's what market data indicated? .

It would be ironic if that practice created such a strong reliance on this negotiating tool that the appraiser now has an even more complex role in this dance. The end result would be that the appraiser who tried to appear unbiased just became the most dependable player in the game.

This is not a negotiating tool., I've only heard this from you. I don't think most appraisers are "trying" to appear" unbiased, they are supposed to be unbiased. .

Regardless of what games agents are playing, appraisers have to arrive at independent value opinions, though they do consider contracts. The market activity and best data should support the MVO.

Just curious (not accusing you of anything) but was your specific final number the result of a hard and fast value indicator (like a similar property available at that price)? How wide was the range of possible values? Would the 110% price have been just as reasonable a conclusion as the asking price? If so, how did you end up in between?

If you had some wiggle room in the final opinion of value, and if you had anticipated that the appraisal was going to become part of the negotiations, you had the option of saying that possible values for the subject ranged from e.g. 95% of the asking price to 120% of the asking price but that you concluded at exactly the 110% offer because you believed the offer represented an actual market action in response to the subject property.

Now that would have been fun, to watch the buyer's devious plan backfire as she realized that her disingenuous offer was the reason for the even-higher appraisal.

Well thatwould be the appraiser's fault. Appraisers who let the contract drive their opinion to that extent are relying on the SC price to define an entire market and that appraiser is giving a price opinion, not a value opinion.

A value opinion over a SC price is fine, as long as it is unbiased and the best market data supports it.

I still think that appraisers should comment on the Appraisal Contingency clause that is becoming increasingly prevalent in sales contracts.

Comment away, but how does a contingency clause impact your opinion, any more than if there is not a contigency clause?

 

[Scott R Marshall]

I'll post something trying to be the devils advocate. You inspected the roof and thought it to be fine but now you have been provided information that it is not. Ask for the roof inspection, see if it's justified and not just some guy trying to make a buck, and perhaps reconsider.

Not saying you have to as it was information withheld from you at the time of inspection (or information you didn't specifically ask for), but it has come to your attention now.

 

[J Grant]

Shouldn't a roof inspection include a cost to cure, and if cost to cure is above what seller will pay in repair costs, isn't that grounds to cancel a contract? If the roof inspection was that bad, the buyer likely had grounds to cancel.

The realtor sounds full of BS but if OP wants to see roof inspection go ahead...but imo all this without lender consent or agreement opens a can of worms. The appraiser should direct buyer and agent to address ALL communication to lender, inlcuding a copy of roof inspection if they wish. Let them provide "lower" comps as well, if they wish.

I have provided value opinions many times above SC price and never run into this kind of issue.

 

[Scott R Marshall]

The realtor sounds full of BS but if OP wants to see roof inspection go ahead...but imo all this without lender consent or agreement opens a can of worms. The appraiser should direct buyer and agent to address ALL communication to lender, inlcuding a copy of roof inspection if they wish. Let them provide "lower" comps as well, if they wish.

Partially agree. It may be a load a crap the realtor is pushing. And I don't think the OP is at fault for not asking the question regarding whether a home inspection had been done. Even if they had, the scenario could have played out entirely different as well, with the home inspection finding multiple faults but the realtor not telling the truth to the OP as well and I typically do not make a habit of asking for copies of home inspections on purchases.

But now there is information provided to the appraiser which the appraiser was not made aware of which could have an impact on their OMV. Should it not be considered?

And I agree, if the roof were so bad, let the buyer and seller renegotiate on their side as a result. No need to throw the appraiser under the bus.