What to do with homeowner request?

[cgjerdetu]

So I have a message on my voicemail from a homeowner who just had an appraisal done for a refi and is "embarrassed by the appraisal." The appraised value was $40,000 less than the purchase price a year ago. She was referred to me by a local realtor because I live in her neighborhood and wants a second appraisal.

I am a staff appraiser with a national appraisal company. I have an employment contract that states I can not accept any outside work. I can accept referral work as long as it goes through the office. However, things just don't go smoothly with referrals, they are out of the ordinary workflow for the appraisal coordinators and end up being much MUCH more work on my part. So much so that I don't want to accept referrals. :twisted:

Can or should I offer this woman any advice? I don't know any specifics about her property, but this area in general, has not decreased in value, in fact, I have measured about an 8% appreciation in the last 12 months in this neighborhood. [This area is less expensive than other parts of the Bay Area so it is still experiencing fairly strong demand]

I think if the original appraiser used inappropriate comparables, the homeowner's lender should ask the appraiser for a reconsideration. It also does not seem appropriate for me to provide the homeowner with comparable sales information just based on a conversation over the phone as that could be construed as an oral report.

I feel I should not blow off this person entirely and if I were an independent fee appraiser I might consider accepting the assignment on some sort of consulting basis [i.e. a neighborhood analysis that includes a list of recent sales in the area] or maybe do a field review of the original appraisal. The staff appraiser status makes it difficult.

Anyone else dealt with a similar situation. I will discuss this with my manager before speaking with the homeowner, but would love to hear others' opinions.

Carolyn Gjerde-Tu
San Francisco East Bay

 

[airphoto]

Carolyn,

Why don't you share your post with the homeowner? Does a pretty clear job of explaining your difficulties.

 

[Larry Lyke]

cgjer --

You are not an unbiased choice. I would reject it on that basis.

However, you seem shaky and unsure of what to do in performing a random field appraisal. Would having you redo the appraisal "un-embarrass" the homeowner? That's specious!

Behind-the-scenes friends of clients trying to do benefits for their clients through the clients' friends leads to entangled results.

BUT, you're further begging the quesyion -- why WOULDN'T you launder this appraisal assignment order through your employer. Because the assignment will fall to you in the end, anyways.

 

[cgjerdetu]

I don't want this assignment [or any referral assignment] and the company I work for could care less about random appraisal requests from non-established clients.

However, my question, possibly burried under too much extraneous information, was: What advice can I give the homeowner? What if she had a bad appraisal? The trend in the neighborhood is increasing prices.

I think having a second appraisal done (for the refi) is absolutely the wrong thing to do. It looks too much like accepting the assignment based on a pre-determined value. However, IF there are better comparables out there, these can be presented to the ORIGINAL appraiser for that appraiser's reconsideration, but what is the best way for the homeowner to get comparable information? [That is what I meant about a consulting assignment OR a field review, both of which I do not want any part of in this situation]. Do I just dump her back to the realtor and ask him to provide her a list of recent sales?

I don't often get asked this type of question, as a staff appraiser I'm not used to people calling me up randomly asking for appraisal services.

Carolyn Gjerde-Tu

 

[Pamela Crowley (Florida)]

Carolyn,

If she was referred to you by a local Realtor, she can have that Realtor pull the comps for her to give to the original appraiser for consideration. Just remind them that comparables are the 'newest, nearest, most similar' properties as most Realtors have handed me CMAs and lists of proposed comps that were put together ignoring the newest sales within the subject subdivision.

Tell her that because of your employer, you cannot accept outside work and that your employer doesn't like to accept outside work. You could also offer the names of 3 or 4 other appraisers in the area who's work you would trust.

Do you KNOW that the current appraisal is too low? Did they move in and trash the house? I've seen this. Then again, there is real possibility that she did pay too much last year. I'm seeing more and more of this. I also have seen a definite stabilizing of prices in my market since 9/11 which has become even more apparent since 1/02. The Realtors here keep spouting off about how 'Hot' this market is but, that's not what my statistics are telling me.

Good luck and let us know what happens.

 

[Larry Lyke]

You can't give the homeowner any advice unless you are in some way engaged by the homeowner as an appraiser, consultant, whatever.

If she has a bad appraisal, she'll have to figure that out from the kind of help she ultimately decides to seek. That's not a perfect answer, it's just the way it is. BECAUSE, the people steering her to your wise and "friendly fold" will exit stage right the moment you walk through the curtains into the situation.

We all like to take credit for good outcomes, but in this business you can't receive credit without being in a position to accept the potential blame. The situation is all set up for you, all you got to do is trip the wire.

Write yourself a script of 50 words or less. Use your very nicest, gracious manner. Call the right person and deliver it in your own voice. Then QUIT. The bit about writing the script is to convince YOURSELF first.

 

[cgjerdetu]

PROBLEM RESOLVED (I hope).

Thanks for helping me work through this in my mind.
In the end I decided just to focus my conversation with the homeowner on bias. I told the homeowner I couldn't do an appraisal because she had told me her situation and I was now biased. I think she understood this concept. Didn't give her any advice on what she should do or who else she may want to contact. Couldn't justify to myself how to give any advice without being liable for the outcome.

As a staff appraiser I don't spend much time thinking about this type of situation. I receive an appraisal request, complete the order and turn it in. I have no direct contact with the person who ordered the appraisal. I think for me this works pretty well. I like the distance between me and the client.

Carolyn Gjerde-Tu

 

[liznindy]

I don't think you are biased just because the homeowner has told you she thinks the appraisal is too low. Homeowners give their "opinion of value" all the time and the appraiser should not become biased because of any remarks they (or LO's) may make.

It seems the appraiser should have discovered the prior sale (unless the home was not marketed thru a Realtor).

 

[Larry Lyke]

liz --

Or, of course, ... that the home was worth $40,000 less than what she paid for it a year ago!

 

[cgjerdetu]

Liz,

I don't think that having that information automatically meant I was biased. However, it could give the impression of bias. I posed the original question, because I was wondering if I should pass on any "wisdom" of what she should do if she wanted to find out if she had an accurate appraisal. Probably gave both not enough and too much detail in my original post.

After thinking about and discussing the situation, I did not feel comfortable in passing on any "how-to" or "you may want to" information. Her original message was a request for an appraisal. So when I spoke with her, I only said I could not do an appraisal because SHE told me too much. However, I hope that if she or her lender decide to pursue this with another appraiser, she is now aware that she should not give that sort of information if she is looking for an unbiased opinion.

There are way too many unknowns in this situation to know if this person got a good, accurate appraisal or one so sloppy that it should be turned into the state. $40,000 is probably a 8-14% change in value based on how this house may fit into the neighborhood spectrum (I was not given the address, just the subdivision). The only thing I do know is the general trend of home prices in the neighborhood. I would expect that most of you regularly watch home prices in your IMMEDIATE neighborhood, know exactly when a new for sale sign goes up and how long it takes until the sign is changed to pending and when that sign comes down. Sometimes, you may even get the chance to do an appraisal in the neighborhood, or even chat with the real estate agents to get a feel of what buyers and sellers are thinking about the market. Yes, it is possible that someone paid too much for a particular house a year before, but I'm not aware of any sale in this subdivision that was really an outlier. For Sale By Owner transactions are also very rare.

Carolyn