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Appraisals are getting “tighter,” & soon, even more deals will begin crashing as buyers and sellers haggle the run-up in asking prices.
Understanding that (to an appraiser) your listing is simply a $500 appraisal fee, to you, it’s a 3-6% commission, so by being proactive, you will minimize the risks of losing large commission checks!
Quick Background
Dodd-Frank created a standardized federal licensing process for loan officers (“MLO’s) & appraisers. Appraisals must be completed by an independent 3rd party (“arm’s length”) appraisal service.
The appraiser’s job is to inspect the property, compare it to similar (sold) homes, in closest proximity (up to one mile) and in the most recent time frame (up 6 months).
The appraiser uses math formulas (price per square foot) to derive a market value.
This sounds pretty straightforward until we get to amenities.
Then it becomes subjective. One appraiser can value a fireplace at $8k & another at $15k or a view at $35k & another at $100k. There is no absolute method to determine which is most accurate.
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What Agents Can Do
If the appraisal is going to be “tight,” there are actions you can take.
1) When the appraisal is ordered, ensure the loan officer lists you as the only “property access” contact.
Most appraisers have an MLS super key. So take off the lockbox (and enter a notation into the MLS). This guarantees the appraiser will call you for access to the property.
Meeting the appraiser is an opportunity to present the most up-to-date comps.
2) If appropriate, walk the appraiser through the property. Be friendly and helpful but NOT pushy!! Appraisers are very sensitive to pressure to “hit the value.”
3) Are there listings currently closing? Call the other listing agents and get information on when they are due to close. It’s better to delay the appraiser’s appointment until another home (with a higher value) closes a day or two later.
4) Don’t rely on the MLS; call your title service (daily if necessary) to check on pending recordings. As you know, It’s not unusual for MLS data “to lag” several days!
5) FHA & VA appraisals often focus on more on “minutiae” vs. Fannie/Freddie appraisals.
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Minor repairs (e.g., leaky faucets, missing light bulbs, etc.) can require an appraiser to come out for a second time to “sign off” on the completed repairs, which can delay your escrow’s closing by days/weeks and add several hundred dollars to the buyer’s costs.
So, be prepared to (pre) employ a handyman to fix small items.
Daniel Dobbs
Mutual Home Mortgage
500 S. Kraemer #165
Brea, Ca. 92821
Cell: 949 250-3981
Dandobbs6@gmail.com
BRE # 00986886 …..NMLS# 307631
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