Complaint against appraiser?

[MIRealtor]

I have had a certain appraiser appraise 5 properties this year (as both buyer's and seller's agent) and 4 of them have come in low. The reports have been littered with errors, square footage, distances, etc and with no adjustment for condition when comparing an REO to a non-REO property, and adjustments for declining market citing MLS stats when the MLS stats do not support this. My question is:

1) Do you make adjustments when comparing REO/Short Sale to non-REO property. If not, do you call the listing agent to see what condition issues the REO property has?

2) Can a complaint be filed against an appraiser for using non-subjective bad information? If so, how?

I am in Michigan.

 

[mopickled]

Contact the lender
Contact your state appraiser regulatory board

 

[hglenbetts]

With all the appraisers out there, I'm surprised that, with HVCC in place, that you had the same appraiser on several transactions, unless you're out in the boonies somewhere.

If you feel there's an issue with the results of an appraisal, check with the lender to see if it was evaluated by their underwriters (odds are yes). Underwriters and "reviewers" are looking for issues that would result in a poor report, whether the value opinion is high or low.

Ask if the lender (through proper channels) can get your concerns to the appraiser. Keep in mind that the appraiser can only discuss the appraisal with their client, but possibly, they'll share their methodology with you.

As licensed professional in the field, you'll want to be certain that a complaint against another licensed professional is based upon prove-able fact and not just your opinion of the quality of work that you are not licensed in.

 

[Michigan CG]

First: Are you encouraging your clients not to use Bank of America, Wells Fargo and Chase? Those companies use the cheapest and fastest appraisers with no regard to quality, competence or ability.

Second: Are you putting in the sales contract as either buyer or seller that a local appraiser must be used?

Third: Yes appraisers are supposed to confirm the sales they are using. Not doing so is a violation of USPAP Standard Rule 1-4.

Fourth: Yes you can file a complaint with the state but make sure it is not value motivated but rather bad appraising reasons.

 

[AnonApprsr]

no adjustment for condition when comparing an REO to a non-REO property

Ownership is not a condition issue. Perhaps you don't know how appraisals work?

 

[tim midgards]

Re: question one

If the market (micro: most comparable propertiers) is full of REO and short-sale properties then REO and short-sale properties are the best comparables.

Could non-REO properties be used? Yes, depending on individual characteristics of the subject property. I've seen cases where although 70% of neighborhood sales were distressed the most comparable properties were not. I've seen other cases where the lack of sales required the selection to be mixed.

Would you adjust? Yes, based on market reaction. There are various ways to determine the adjustment, but the easiest way to derive a supported one would be from listing and sales prices, concessions, etc...

REO properties are not always dilapidated; I've seen various in good condition. It really depends on the neighborhood or subdivision.

The appraiser should have checked MLS listings for interior photos, and yes, called the listing agents. These serve as empirical support for the assumptions carried on throughout the report.

 

[redfish]

How many of these 5 transactions included seller paid concessions of 6%?

 

[Lobo Fan]

Time adjustments for declining markets should be clearly identified and the process for arriving at a declining market explained. I perform a 2 year regression analysis on every report, which gives me a $ per day adjustment. Many markets are still in decline if you look at the actual numbers. I have this conversation with a Realtor on almost a weekly basis.

There are not always condition adjustments for REO properties. I have seen many that were in better condition than the subject. It is not always a given that REO properties are in an inferior condition.

Filing a complaint just because yu don't like the value is not enough. You have to prove either fraud or gross negligence. The state board will not reverse your existing appraisals, but may sanction the appraiser if they engaged in fraud or negligence.

Some small typo type of errors make little difference to the appraised value. Small differences in square footage for example make very little difference. Distances are measured as the crow flies and not driving distance.

 

[Smokey Bear]

I'm mixed on this. I've seen some bad appraisals. Too many of them. But I'm also seeing so many really bad BPOs that I can't count on RE agents (no way is the 'broker' really doing them) to have a clue about valuation. In fact, I'm seeing a pattern of agents trying to drive down the price of REOs in order to get a quick sale, or sell to a relative or someone in their back pocket or whatever. Saw one yesterday recommending $66k in repairs for a house they valued at $66k. Wanted a complete remodel, new kitchen and baths, refinish the wood floors (appraisal photos showed beautiful floors), and a listing that made the property sound so bad no one would want to look at it. Only 1 photo, of course. And comps distance stated in 'blocks' when it's actually more than a mile away.

So I have a hard time trusting that what the agent says is true, especially when they're complaining about value. Overall, I don't find them knowledgable about valuation. And the one appraisal class that RE agents are required to take in my state is a joke. There was one taught at a local community college - the instructor wasn't even a licensed appraiser, much less certified.

So... you might want to see if the appraiser will discuss theory with you, but they can't discuss individual appraisals with you.

 

[Webbed Feet]

I have had a certain appraiser appraise 5 properties this year (as both buyer's and seller's agent) and 4 of them have come in low.

What do you mean "I have had..............." are you claiming you were the appraiser's client? What do you mean "........... come in low."? "Low" as relative to what?

The reports have been littered with errors, square footage, distances, etc and with no adjustment for condition when comparing an REO to a non-REO property, and adjustments for declining market citing MLS stats when the MLS stats do not support this. My question is:

Ok, if you say so. Keep in mind that you are citing things that we have no idea about if you are correct about or not as far as being errors. All we know is these things seem to upset you and you claim they were errors

1) Do you make adjustments when comparing REO/Short Sale to non-REO property. If not, do you call the listing agent to see what condition issues the REO property has?

You're sorta starting with asking us to have an assumption that all REO or short sale properties are in inferior condition against all other properties that have some other status not REO or not short sale. The status has nothing to do with research into the condition of comparable properties. Personally, I call a party to the transaction regarding all comparable used in the sales comparison grid and if I cannot contact any party to the transaction I state so and what my efforts were to contact someone.

2) Can a complaint be filed against an appraiser for using non-subjective bad information? If so, how?

Hold on here. "Non-subjective" information has to be "Objective" information. This is like black and white with only two choices of either. So if it was information believed to be factual objective information that would mean the appraiser used a source other than the appraiser for that information. So you are asking us if appraisers can use sources, like the MLS information of real estate brokers just like you are or assessors information, that real estate brokers often blindly use on a MLS without verifying any of it, that turns out later to be found to be incorrect regarding those comparable? You're dang right we can! If the issue is incorrect public assessors tax card information that is blindly repeated on the local MLS by other pros. pros that should have caught it and taken responsibility for correcting the bad information on the MLS listing, then there isn't much appraisers can do about it. We can only use what is available.

I am in Michigan.

Complaints can be filed against appraisers for any ol reason, correctly or incorrectly. How it is done is explained on the web sites of state appraisal boards. If your basic complaint is the appraiser is not arriving at sales prices going on in your transactions you need to know it is not our jobs to support your transactions. Our mission is to arrive at our opinion of market value in most such cases. By the way, contrary to public belief, "Market Value" often does NOT include seller paid buyer's closing costs, down payments, or loan interest rate buy downs.

If none of the "errors" you mention in what was supposed to have been factual information matches either public records nor MLS information, and the appraiser has not explained where that information came from, then there is a problem. However, if it matches a published source and the appraiser stated they were using that source, then there is no error. All the sources being incorrect is not an error of the appraiser's. If the appraiser explained the appraiser's sources and research regarding his/her opinion of the condition of improvements then the two of you just don't agree.

If the appraiser didn't explain anything at all, you may have a case against the appraiser.