Can The Appraisal Be Reassigned?

[Mike Seward]

I do a fair amount of speaking th REALTOR groups, Womans council of REALTORS and NAPMW and received this e-mail today:

"We would like to know if Mike is available to be a speaker for Sept 21st ******* REALTOR group meeting in St Pete? It is short notice but with the storms, our regular meeting was changed out to Tuesday, Sept 21 and our scheduled speaker could not make it.

We are planning a meeting around Contract Glitches. Appraisals being one of them. What happens when a property does not appraise, can the appraisal be reassigned and what Realtors can do to help the process. There will be 4 speakers with 10-15 min each then we'll break out to tables for q&A."

I am guessing they mean what happens when the appraiser comes in below the sales price. Can the appraisal be reassigned?????????..............(find a number hitter???????)

How would you respond to that question?

 

[Nancy Wyatt]

Ask them if they think that is the best way to serve their client.

Ask them why they would want a number hitter.

Then talk ethics.

 

[Terrel L. Shields]

Yes, you can get as many appraisals as you like. However, the Realtors need to be informed that the loan officer is violating federal banking rules if they allow the Realtor or buyer/seller/borrower to choose the appraiser. The loan officer has explicit rules that require them to "engage the appraiser directly". If you received an assignment thru a Realtor, that creates a client relationship with you. And that is unacceptable to bank regulators, and you can run afoul of USPAP if you do not disclose it. If you think you have lost business to such an effort, you can file a complaint with the controlling federal or state bank regulators (FDIC, OCC, etc.) Ask their examiners to inspect particular files of properties which closed and report your appraisal on the property and its date. That should establish whether the banker obtained a more favorable appraisal from somewhere else. Don't expect to ever work for that bank again, of course.

 

[wyecoyote]

What happens when a property does not appraise

The way that I would approach this question is multiple ideas. First I would read the defenition of market value (this way you could cut off the talk of "a willing buyer and willing seller at any price make market value"). Second I would state that no an appraiser did not just "kill the deal". The deal is dead when the parties involved refuse to look for new ways to work the deal. I would highlight specific actions. Such as the seller could come in with the extra money, the buyer can lower the price to the appraisers opinion of market value, the buyer and seller can meet half way, the listing and selling agents and loan officer can both drop there commissions a little to help close the deal, the seller can carry a second for the difference, the LO can talk to the UW to write an overage exception, and any other options that are open. I would again at the end state that the appraiser did not "kill the deal" the deal is dead when neither party will consider amending the contract.

can the appraisal be reassigned

I would get some clarification on this one from them. Are they asking about reassigning when a buyer walks from a loan? Then can the buyer have the appraisal put into a nother lenders name. Is this what they are asking? If so I would point out the Fed Comptroller letter and USPAP AO's on this one.

and what Realtors can do to help the process

I would approach this from two stand points.

First the listing agent side. You could state as the listing agent have the sellers prepare a list of upgrades, remodelings, updating, amenities to their house. Also if in a HOA the dues, what they HOA provides, and contact numbers to the HOA. Also provide a copy of the CMA that the prepared for the house.

Second from the selling agent side. Provide a list of properties that they showed the buyers. This way you get an idea of what it was the buyers were considering before they settled on this one house. Time frame that the buyers started looking into housing. Perhaps have the buyers sit down and list what they liked about the house. Although it may not provide you as the appraiser relevant data for the appraisal process for that house. But in terms of consideration if you get enough of these it will give you relevant insight from a buyers perspective.

Briefly I would go into if they are going to provide an appraiser with additional "comps". That they should be truly competetive with the subject. Remember the three main rules location, location, and location. Thus do not provide sales from a superior area and wonder why an appraiser does not use them. Do not pull sales based upon sales price only. Tell them to match the location, and then the house. Just tell them that appraisers are not perfect and may miss a sale or two. But throwing sales at them that are at the sales price may just be round filed. ( you might want to clean that last bit up).

 

[Steve Wyrick]

Ryan's remarks are well done.

I would add a couple of additions. In my opinion I give the most considerations to closed sales as an appraiser, not listings or pendings which I have found most Realtors rely on for comps.

Secondly there is a question about who does the Realtor represent, the seller in which case it is their ethical responsibility to obtain the highest sale price possible. If they represent the buyer, then it is their ethical responsibility to obtain the opposite. In other the words the range of value is important.
This is a fact lost on many Realtors since they work on a commission.

Good luck.

 

[George Hatch]

To expand a little on one of Ryan's comments, it might be helpful to everyone to acknowledge that brokers and appraisers have different roles in the process, and therefore have different ways of looking at the property. Assuming a basic level of honesty, the differences between these two groups are both legitimate and appropriate.

Brokers are required by their ethics to be an advocate for their client's interests. It's somewhat similar to attorneys. To a certain degree, the ends justify the means. So when they say that market value equals whatever a willing and able buyer will pay for a property, they are correct within the context of their job description. They support their definition of value by putting together a sales contract between one buyer and one seller.

Appraisers have a different role, to be the disinterested and objective third party. We are specifically prohibited from being an advocate for the interests of our client (who incidentally is not the borrower). That's why our definition of market value is different - "typical buyer/typical seller/adequate exposure". We support our opinions of value with several sales data, enough to demonstrate a trend.

That's why appraisers shouldn't judge brokers by using appraiser criteria, and brokers shouldn't judge appraisers by using broker criteria. The two groups are somewhat related, but only close enough to be as comparable as apples and oranges.

 

[Thomas Fiehler]

Mike-In answering your question "Can the appraisaal be reassigned?" the answer is yes. It can be assigned from lender "A" to lender "B" without your ever knowing about it. Can the appraiser reassign it? NO!

 

[Mike Seward]

Great information. Thank you to everyone.

 

[Dave Smith]

Also, please tell them we are subject to USPAP, Fannie Mae, Freddie Mac, FHA, VA, etc., guidelines and every state has certification requirements as well. We don't just make it all up up as we go.

Many Realtors think we just PFA (pluck from air) or SWAG (swinging w*** a** guess) the values we come up with.

 

[Mike Seward]

When I received the above mentioned e-mail, I assumed the worse.

After speaking to the person putting the seminar (for REALTORS and lenders) together, I found that my assumption was WRONG. When they asked about "re-assigning appraisals", they want to know what happens when lender A cannot make the loan and their buyer goes to lender B.
I told her I would discuss the Oct 26 FED/FDIC letter and the recent AO's. She said that's what they're looking for.

Thank you again for your helpful information. I will use it.