Mary Thompson Lake Lanier Appraiser in Georgia

Okay here is your Thanksgiving Gift early. Here is what you need to do to successfully appeal an appraisal.

First I must say not ALL appraisals are flawed and not all appraisers are incompetent like so many seem to think these days....but there are many appraisers who do not belong in the areas where they are appraising and there are many who just did not learn the proper way to appraise.

So here goes, pass this along to everyone you know, feel free to repost this blog, it will help!

1. Get a copy of the appraisal first. The borrower is by law supposed to get a copy before closing.

Review the top part of the form where the address is make sure that the address, borrower name and most importantly the legal description of the property is accurate. If they can't get these right, chances are the rest of the appraisal has issues!

2. Go over that same page and review the description of the property. Do they have this all correct. Is the bedroom and bath count accurate (REMEMBER appraisers separate the terrace or basement level rooms and square footage from the upper finished levels, so the bed and bath count will only be those rooms on the main and upper levels (above grade) but credit is given for basement area and finished rooms in the basement just at a different value per square foot.)

If they have missed important amenities or basic information like is the home on septic or sewer, etc. Chances are there are more errors to follow.

3. NOW here is the really important part:Look at the page where the comparables are noted and where the actual adjustments are made. If you see across the board adjustments for something like condition or quality of construction:+$10,000 or -$10,000 for example and the description is they are average in quality and the subject is above average, chances are there is a problem here. How can every sale that is defined as average compared to the subject's above average quality be exactly $10,000 inferior in value to the subject. This applies to condition and most definitely to SITE VALUES....watch out for those adjustments.

We appraise Lake front property and when I see an across the board adjustment of say $20,000 for above average lake lots as compared to average lake lots, this is impossible as no 2 lake lots are alike here and they certainly are not exactly $20,000 difference in overall value.

Site values are very important as you well know in many areas you can go just a few blocks over and while the house may be very similar to the subject property, maybe the lots on this block are worth far less than the subject site. So if you see that there are NO adjustments across the board for site values that are similar in SIZE only and you Know that these lots are NOT similar in value then you have cause to rebut this flawed appraisal

4. ANOTHER very important thing...LOOK at the comparable photos used in the appraisal report...ARE they the exact same ones that you see on your local FMLS or MLS? If they are you hit the jack pot, why? Because that tells me that the appraiser did NOT drive by the comps and take their own photos. This happens more than I care to admit but it is very important for you to know because USPAP (our uniform standards of professional appraisal practice) REQUIRES that appraisers drive by the comps! So you have a clear violation of USPAP here and when a LENDER hears this....Bingo you get another appraisal done because how in the world can they assess the home and more importantly the neighborhood in which these comps are located if they did not drive by the property!

5. When appraisers make dollar adjustments there are only 2 kinds.....Positive and Negative. So if you see a PLUS sign in front of the adjustment that means that the comparable sale is INFERIOR to the subject and we add to that sale price to raise it up to the subject. If you see a MINUS in front of an adjustment that mean the comparable sale is SUPERIOR to the subject and therefore we are subtracting from the sales price of that comp. Just remember that we always adjust the comparable sales price against the subject. Another way I like to remember this is CBS and CIA (Comparable better subtract, Comparable inferior... ADD) CHECK THEIR ADJUSTMENT TO SEE IF THEY MAKE SENSE, MANY TIMES AN APPRAISER MAY USE THE WRONG ADJUSTMENT FACTOR PLACING A NEGATIVE ADJUSTMENT WHEN IT SHOULD BE POSITIVE AND VICE VERSA. THIS AFFECTS THE BOTTOM LINE APPRAISED VALUE!!!!!

6. Toward the bottom of the comparable page there is a section where the appraiser must note past sales history of the subject and the comparable sales....Check these dates and make sure they are accurate.

Again, the whole premise is this....The more small and/or large errors you find, the less accurate that appraisal really is....and it does not take long to find such errors, even if you don't know how much the adjustment should be. Remember adjustments are not based upon DOLLAR for DOLLAR costs, it is based upon what the market will pay for the variance...so it could be half the cost, it just depends.....on many factors.

I reviewed an appraisal where they "cloned" another appraisal report of a home that was close to the property that they were appraising. Appraisers do this to save time and that is fine except what I found was that they did not remove those items that did not relate to the subject and so they had the description for the subject all wrong and they also had the addresses of the comps wrong. They were using the addresses of the old cloned report but using the actual data of the comp that they were using for the subject!

7. Drive by the comps used, make sure the addresses are correct, make sure that the PHOTO used in the report MATCH the home.....I have seen wrong photos in the reports, they did not match the actual homes!

8. Check the comps and map that is included which shows where the comps are located. Just below the address on the comps page there is a section that asks how FAR the comps are from the subject. Double check this number. Many times the appraiser will reduce that mileage by quite a bit so that it passes underwriting......I have seen some comps show they are only 2-3 miles from the subject when in reality they are 10 miles from the subject!!! Not good.

9. Check the sketch page where they draw the house.....make sure it looks right as far as placement of the rooms and the overall square footage. If they are off 100 feet or so this makes a difference on the appraised value of the home.

So you get the IDEA here......If you start adding up errors, you have the right to tell the lender the appraisal is flawed and this is without even dealing with whether or not the COMPS are good. That is a whole story in and of itself. If you know for a fact that the comps are bad, state why in your rebuttal!

10. Don't get mad about the whole process, just find the errors, state the facts and move forward...Tell the lender it is their responsibilty to use an appraiser who is familar with the area and who can put together an accurate report.

This will NOT always mean the value will be different but you have the chance to get an accurate appraisal on the home and then you will know for sure what it is really worth!

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If you work in the North Georgia area, we offer appraisal reviews. We have been very successful in getting lenders to order another appraisal or a review of the first one after they have seen my reviews!

Mary Thompson

www.marytappraisals.com

No I am not talking about walking around with blinders on while appraising. I am talking about appraising with NO numbers given to the appraiser ahead of time, no estimates of value, no loan amount, NOTHING!

Forever, Appraisers have been given numbers to HIT so to speak, when they were given the appraisal assignment by the Banks, Brokers, Realtors, Sellers, Buyers. Now due to HVCC this is not allowed!

So what does that mean for the Appraiser? Well it means that they are left to their own devices and abilities to chose the right comparable properties and how to accurately analyze the market and make the appropriate adjustments to the "comps" to reflect their variances when compared against the Subject property ( The one they are appraising).

Unfortunately, so many appraisers were used to just appraising TO the given number or BACKING into that number rather than truly evaluating the market and moving forward to the real estimate of value for the subject property. So if the appraiser is not experienced in what I define as BLIND appraising, they may fumble around trying to come up with the true and accurate market value for that property.

The appraiser must know the area in which they appraise. They must know LAND values intimately and they must know what the market is paying currently for all sorts of items that we review, ie: upgrades to the home, bed and bath count, finished vs. unfinished basements, other amenities such as pools, fences, etc. For too long there were numbers appraisers always used to make adjustments for these items, but chances are unless they have analyzed the current market and their reaction to these amenities, these old adjustments are just that....OLD and outdated.

So if you find an appraiser who can truly BLIND appraise, you have found a GOOD one! They do not NEED that number ahead of time!

I love BLIND appraising! I don't want to know what someone thinks their home is worth, that is MY job to provide them with this information and to provide the BANKS with this vital information to protect their RISKS. It is my job not to MISS anything during my inspection process and to talk to Realtors, Buyers, Sellers, Builders, etc. about what is going on in the market today.

Stay tuned....I plan to advise everyone on what to look for in an appraisal that will tell you right off the bat if it is FLAWED and therefore will allow you to request another appraisal or a review of the current one! It could save a deal of yours!

Mary Thompson

Certified/FHA Approved

www.marytappraisals.com

Let's first define good shall we? Good does NOT mean make the number work so the loan will close!

BEFORE you take out your next loan......do some checking into the BANK first, do they use appraisers whose fees have been cut in half? Do they use Appraisal Management Companies (they normally pay appraisers well less than their normal fee and charge the banks more than we would).

Appraisers sole mission in life is to protect the BANK's RISK where a loan is involved. We also protect buyers and sellers by analyzing and reporting the REAL market value so that you do not pay more than the home is worth or you do not under or overprice your home.

A big part of the housing crisis is due to faulty appraising. Many know that the BANKS, Realtors and Mortgage Brokers dictated TO the appraiser what the value should be on the appraisal report. This is 100% backwards and RISKY to say the least. Our housing crash is proof of this!

Thus the inception of the HVCC. Appraisers must be independent from all who have a vested interest in the property and get back to the real job of reporting the true market value for the subject property. Or to put it another way if YOU default on your loan, what can that home be sold for by the bank to get it off their books. Banks have a bloodshed on their hands as the appraised value in many cases was inflated. Why? Because appraisers were backing into the number since the lenders would give them the ESTIMATED VALUE right on the appraisal request form and expect them to come up to that number! I am NOT saying all appraisers played that game, but trust me many did!

Now appraisers have to do what I call BLIND Appraising. They have no numbers to work toward, which is a GOOD thing, they must actually use their appraisal skills and report the market in an accurate way to come up with their opinion of value. Remember we do not determine value, we report it to the client after we conduct a thorough analysis of the market. The MARKET determines value not the appraiser.

So my question to all END USERSof appraisals, don't you think it is worth the FEE appraisers charge to produce a credible, meaningful report? I think so because a faulty appraisal report on either side of the value equation can have significant financial negative impact.

Just as an example: If you live on Lake Lanier and you have an appraiser from Atlanta who does not cover this lake with any regularity appraise your lakefront home, chances are very HIGH that the appraised value will be off and I mean WAY off. SAME thing holds true for any appraisal in any given neighborhood. If an appraiser for example does not know that people pay more or less for a home in a given SCHOOL district for example, the appraised value will be off.

Therefore it is imperative that the appraiser know the market in which they appraiser and better yet LIVE in that same market area.

So you do have control buyers and sellers and homeowners. Do not use banks that feel cheapest is the best, because in this world you get what you pay for and in this case it could financially hurt you BIG time!

A few extra dollars to get an accurate appraisal report is WELL worth it in the end.

Thanks for stopping by my blog!

Mary Thompson

www.marytappraisals.com

HUD has stated that in addition to adopting HVCC language, that appraisers should be paid their normal market fees for FHA appraisal products.

Well after my discussion with a well known. long standing Appraisal Management Company who most appraisers know as they have been around forever, here are their exact words to me as of yesterday "

"The new national debate will be over exactly what is "normal", and as I understand it, that is a question that will be answered market by market. "

This same Company also tells all appraisers that Appraisers set their own fees, they have control over their fees the AMC does not......That language sticks in my craw BIG time. Why? Because if Appraisers set their normal market fees they will NEVER get work from AMC's. AMC's DO set the appraisers fees as the appraiser is forced to reduce their fees in order to get work from them. I know this because I do NOT get work from them because I refuse to work for 1/2 my NORMAL Fee. I complete a very thorough report and I know the value of my work.

BUT here is the issue.....If HUD asks AMC's what is the normal fee for FHA appraisals in their given market, that NORMAL is reduced by anywhere from $100-$150.00 per report because that is where they set their FHA fees in order to get work from AMC's. So HUD may in error think that this is the true NORMAL fee, when in reality it is not. If they were to call an appraiser and ask what is your normal fee for FHA appraisals they would give you a totally different number than if they were to ask what is your fee for an AMC..

So Realtors, Buyers, Sellers and BANKS need to know the value of a good appraisal and that one has to pay the fee for a truly accurate and meaningful report.

Please see my other post below about what you can do to help with this problem:

http://activerain.com/blogsview/1304602/realtors-you-can-take-control-of-the-appraisal-process-and-hvcc-by-doing-just-one-thing-

Our mission in life is to protect the BANKS risks, this is HUGE...Let me repeat Appraisers exist in this world to protect the Banks Risks, by analyzing and reporting their findings. WE DO NOT DETERMINE VALUES. This being said would you want an appraiser whose fee has been cut in half doing apprasials for YOUR BANK? I think not!

The trend is to standardize all appraisal reports and automate them as much as possible, based upon software that will essentially produce reports with a great deal of numerical analysis, unbiased reporting and market based adjustments for variances in comparable sales vs. the subject property. BUT you cannot automate the entire process.

SOME AMC's want to automate and standardize our process as much as possible so that the time it takes to complete a report is cut in half and yes you guessed it keep our fees LOW. But when you appraise in an area like ours, you are not dealing with cookie cutter properties and you cannot automate the entire process. You still have to be adept at determining which neighborhoods are really comparable, which sales are really comparable and to do this you have to know your market WELL.

There is a shift toward using appraisers who live close to the subject property and who regularly appraise the area. I am all for that shift. When appraisers drive 30+ miles to homes they just do not know the ins and outs of that particular county and neighborhood, unless they work in the area on a daily basis. But it happens all the time as that is where the work is for many appraisers.

So my request of HUD is this, do not use AMC's fee data to determine what is normal market rate. It is far from normal. They essentially drive down and dictate our fees FOR us as they pit appraiser against appraiser for the best fees. We do not have control of our fees with AMC's. There are a very few AMC's that do pay FULL fee to apprasiers and I commend them for this. I hope most banks work with them. SOLIDIFI is one of them. www.solidifi.com They do not feel the need to dictate fees or dictate every step of the appraisal process to the appraiser and how it should be completed. They look for experienced, well seasoned appraisers to get the job done....as it should be!

It is very important that all parties understand the importance of good appraisal reporting See post below on this subject.. and YES..appraisers need to be paid for their expertise.

http://activerain.com/blogsview/1312887/buyers-sellers-realtors-banks-do-you-really-understand-the-value-of-a-good-appraisal-

The housing industry will rise again or fall based upon the quality of a GOOD appraisal. BY good I do not mean make the number work, I mean to report the REAL value of the property in question. Remember we are protecting the Bank's RISK.

Realtors you have more control than you realize in this business or maybe you already know this....

With all the complaints about appraisals killing deals and coming in low and in turn keeping the real estate market depressed, here is ONE single thing you can do to try to make an impact in your business.

I know that many of you recommend mortgage brokers or Banks to your clients, well when you do, find out via the broker or directly from the BANK if they use AMC's (Appraisal Management Companies). There are still plenty of Lenders who do NOT use AMC's. A few of them are Guaranty Bank, Fairfield Mortgage, Fidelity Bank, Suntrust Bank, Shelter Mortgage and Guaranty Mortgage Services right here in Georgia and I believe these Banks originate loans in other states as well.

So do some checking around in your areas and see which Banks and Mortgage Brokers are NOT using AMC's. There are some good AMC's out there but most pit appraiser against appraiser and they will use the appraisers who charge the least amount of money, regardless of experience and quality reporting.

Remember even if these other large Banks like Bank of America and Wells Fargo who DO use AMC's have better rates for your clients, what difference does it make if the appraisal kills the deal for them. So they need to consider this fact when selecting a bank.

Realtors, you can have a huge impact on this problem by forcing the BANKS who DO use AMC's not to use them since you will not be sending your client their way any longer!

By using BANKS who do not use AMC's, chances are far greater that you will be getting a quality appraisal report and the appraisers will know the AREA in which they appraise. WHY? Because the Banks who do not use AMC's pay the appraisers their market fee and because most of these banks have hand selected the appraisers that they have worked with for years and they do not want to lose that relationship.

The HVCC still provides a wall of independence so that there is no pressure involved to HIT a number, which is a good thing so that people do not pay more than the home is worth, but at least the banks know that these appraisers have been around for years and they know they produce quality reports and thus the reason for hand picking them. This is also the reason they DO NOT take their chances with AMC's. They use a non production work force to order the appraisals within the bank. HVCC does not require banks to use AMC's like so many people thought.

So use the CLOUT you have as REALTORS and do some research. Tell your clients that you go beyond the call of duty by making sure that when the property is appraised it is by someone who knows the area and who has the experience to get the job done and who is NOT being paid cut rate fees to perform the job at hand. Trust me when I tell you appraisers who get paid 1/2 their rate will CUT corners, I know because I have reviewed their reports and they are scarry to say the least.

I know being a Realtor these days is ONE TOUGH JOB...but you CAN make a difference by exerting pressure or diverting business where it needs to be and your clients will thank you for it!

I am a true believer in the "You get what you pay for" philosophy and in this case the poor appraisals many times are due to the cut rate fees the AMC's are paying the appraisers and sending appraisers to uncharted territories because they have the lowest rate for that county.