Lender Appraisals vs. Independent Appraisals

[Terrel L. Shields]

The best way to settle is for each of you to pick an appraiser and then have the two appraisers pick a third... Obviously, that is more expensive. It is also more likely to give you a range of value from which you can pick the "right" value.

Forget the mortgage appraisal....different scope, different client, and that appraiser is not going to be very keen on being dragged into court if one of you disagree.

 

[Lee Lansford]

Generally speaking, are they the same thing?

I ask because I am trying to refinance to get my soon to be ex off the mortgage and to pay him out his share of the equity.

I have suggested we each get our own independent appraisals and compare them and take an average to arrive at a fair value for the home.

He suggests we just go with the lender's appraisal.

Any ideas on whether this could or would work FOR or AGAINST me?

Thanks very much - all input welcome, VL

The answer to what you seek is this: the results depend upon the competency (and ethics) of the appraiser. If the "lender's appraiser" is one who was engaged based upon how quickly and how cheaply he (she?) was willing to work--good luck.

I do some appraisal work for use in dissolution of marriage. I've observed that all I have to do is my usual competent and ethical effort and I can "depend" upon the other appraiser to act as an advocate (a "no-no" for an appraiser) for the other party.

Unfortunately, you will find "many" appraisers aren't very good at what they do. Lacking your awareness of who is "good" and who is not, look for an appraiser who is a designated member of a professional appraiser association (Appraisal Institute, National Assoc. of Independent Fee Appraisers etc.). If the appraiser who you engage does not require that you sign a "letter of engagement" (the contract for the appraiser's services), that's one hint that the appraiser is not familiar with what is necessary for such an assignment.

Good luck.

 

[VesperLynd]

Hello again, thank you all for the comments.

My mortgage broker tells me that the newly enacted HVCC is intended to make appraisals more conservative/legitimate - and so thefore, a lender appraisal should be more conservative anyway.

Thoughts?

Thanks, VL

 

[Jay Emmar]

Hello again, thank you all for the comments.

My mortgage broker tells me that the newly enacted HVCC is intended to make appraisals more conservative/legitimate - and so thefore, a lender appraisal should be more conservative anyway.

Thoughts?

Thanks, VL

I do NOT mean to patronize you with the above laughter, just that the above comment provided by your mortgage broker highlights 90% of the discussions here on this forum over the past few months since the HVCC was enacted, and the above comment also demonstrates what a typical mortgage broker would say, in my experience.

HVCC is NOT intended to do anything other than prohibit direct communication between the appraiser and the mortgage broker, because in the past (many not all) mortgage brokers would generally pressure appraisers to "hit a number" on value to make whatever loan product they were providing get to closing, so the mortgage broker could get his commision. It is the opinion of many that this practice is quite largely to blame for the current state of the real estate market nationwide (declining values). The unintended consequences of the HVCC have been thrashed about, ad nauseum, on like 1,000 other threads here, so I won't bore you with the details.

Appraisals have, for the past several months, been "conservative" but not because of the HVCC, simply because values are what they are and most markets are flooded with short sale and foreclosure properties, along with desperate sellers that will take whatever they can get.

The previous posts in this thread are your answer. I too have done some attorney work, and agree with Mr. Lansford that you are best suited to contact an appraiser on your own, through either the Appraisal Institute (AI), or the National Association of Independent Fee Appraisers (NAIFA); the appraisers that hold these designations are generally better educated and more experienced than those you will find in the yellow pages or on the web.

Good luck

 

[The Warrior Monk]

Hello again, thank you all for the comments.

My mortgage broker tells me that the newly enacted HVCC is intended to make appraisals more conservative/legitimate - and so thefore, a lender appraisal should be more conservative anyway.

Mortgage Brokers (MBs) are not a disinterested party in the transactions, so that must be considered when taking advice from one.

Appraisers are never advocates, at least competent ones, when it comes to their appraisal (i.e., opinion of value). The "value is what it is." Many MBs were relentless in pressuring appraisers to "make the number." Thus when they no longer have a say in the process, and values fall where they should, the values appear "conservative."

I'm of the opinion that an appraisal used for lending purposes should not be used in a divorce case. Some reasons:

• It has the appearance of bias. The other party in the divorce can very easily argue that the value came in high/low for some reason, and get the appraisal tossed of court.
• The borrower is never the client. In other words, you'd be using an appraisal prepared for a third party to prove your side.
• Appraisals are prepared using a particular scope of work...which includes the identification of various items necessary in the preparation of the appraisal. Various items in a report prepared for lending are completely unnecessary for an appraisal prepared for a court. Expert witness don't want to be drilled on nonsense that has nothing to do with the case at hand.
• Appraisals prepared for lenders have disclaimers regarding testimony. Furthermore, you aren't the appraisers client. The appraiser cannot discuss various confidential matters with you, unless permission is given, or a judge orders it. But even then, the appraiser is not obligated to provide expert testimony.

So, in short, I recommend hiring an competent appraiser that is familiar with this type of work.

 

[Lobo Fan]

All the HVCC does is codify how appraisers are selected. Anyone with a financial interest in a closed deal can no longer choose the appraiser. Realtors, mortgage brokers, loan officers are no longer allowed to choose the appraiser.

The value you are seeking should be the same regardless of a lender or private party assignment. It is more fair to the appraiser to be up front about the purpose of the appraisal. You will also want to get someone that can testify in court. If your ex challenges the value then the appraisal and the appraiser need to be above reproach.

I would suggest choosing someone from the Appraisal Institute site and asking them if they do divorce appraisals. There will be a fee for the appraisal plus an hourly fee for court or deposition appearances.

The HVCC was not designed to make appraisals more conservative, but to be more accurate.

 

[Dennis J. Black ASA IFAS]

Forget averaging. Go ire the best appraiser you can find. I suggest one who has at least 10 years of experience and is designated with one of the professional organizations. If you send me a private message I can help as I have served as a national officer and know appraisers across the country.

 

[David Sawyer]

Independent by all means!
I have copied and pasted below the directory for the Worldwide ERC relocation appraisers.
This is a directory of appraisers that also do appraisals for relocation companies that generally buy the residence of a corporate employee transfer. The ERC appraisal is what real appraising is about.

https://www.worldwideerc.org/Directory/Pages/ssl-us_appraiser2a.aspx