Can You Head Off Inaccurate Appraisals?

No, but you can take a few steps to make them less likely

Appraisers lacking experience or familiarity with an area continue to be a major problem for home sales, but you can minimize the chances of a bad appraisal killing your transaction by helping to ensure the appraiser knows what you know about the property, valuation pros say.

Anna Ruotolo

Ever since New York entered into an agreement with secondary mortgage market companies Fannie Mae and Freddie Mac in the wake of the mortgage crisis several years ago the industry has been plagued by what practitioners say are inexperienced and geographically incompetent appraisers. That agreement, called the Home Valuation Code of Conduct (HVCC), has since been replaced with provisions in last year’s Dodd-Frank Wall Street reform act. The new law aims to curb bad appraisals by regulating how appraisers are chosen. Although the use of third-party appraisal management companies (AMCs) isn’t mandated under the rules, many lenders comply with the law by contracting with or operating their own AMC. Practitioners say many of these AMCs are undermining appraisal quality by hiring inexperienced appraisers who are willing to work for less money and comply with what many appraisers say are unrealistic time frames for turning around valuations.

Working with Appraisers PowerPoint Slides

Whatever the experience level or geographic competency of the appraiser who’s been assigned to conduct a valuation of the house you’re listing or selling, you want to minimize the possibility of an inaccurate appraisal by doing four things, says Anna Ruotolo of RPM Mortgage, Inc., in Walnut Creek, Calif.

1. Meet appraisers when they arrive at the house. Offer to show them around just as you would if they were home buyers. That way there’s a better chance they’ll see the unique features of the house the same way the buyers do. And don’t let the appraisers tell you they can’t talk to you. They can. The law prohibits agents and others from pressuring them to arrive at a certain value, but there’s nothing in the law that prohibits the two of you talking and sharing information. “You can talk to them about anything,” she said.

2. Provide them with comparables that you think are appropriate. They might or might not use them but at least you’ve made them available.

3. Provide a sheet of predominant features. These can be anything that sets the house apart from others.

4. Document any discrepancies with the assessor’s data. It’s not uncommon for there to be inaccuracies, so you want to make sure the appraiser knows if something’s not right. Sometimes the inaccuracies are as obvious as a misstatement of the number of bedrooms.

You also want to ask questions of the appraisers, Ruotolo says. That way you can determine their level of experience and geographic competency. The fact is, there are rules for establishing geographic competency, and if they don’t meet those rules, you can raise the point with the AMC or lender. Among the questions you want to ask:

1. How far is their office from the property?

2. Do they have access to the local MLS data? They can’t know all the facts of the listing if they don’t have that.

3. Are they familiar with the area?

4. How frequently are they in the area? When was the last time they were there?

If you suspect the appraiser lacks geographic competency, raise the issue with the AMC. You might also raise the issue with the agency in your state that regulates appraisers, but you don’t want to file a complaint if it’s just a value dispute.

“You have the right to insist on the competence of the appraiser on behalf of your clients,” said Frank Gregoire, an appraiser in St. Petersburg, Fla., and a past chair of NAR’s Appraisal Committee.

To provide help with these appraisal issues, REALTOR Magazine is hosting a webinar in a few weeks with Ruotolo. She’s going to use the webinar to expand on ideas about meeting with appraisers when they arrive at the property, providing them information they might not know about,  and documenting dscrepencies with the assessor’s valuation.

She’s also going to talk about questions you should ask appraisers before they get to work, like, “How far is your office from here?” “Do you have access to local MLS data?” “Are you familiar with the area?” “How frequently are you in the area?”

There’s also the matter of what to do if you genuinely believe the appraisal is off the mark. Who’s the best person to call?

The webinar lasts an hour and is free. It takes place Thursday, Jan. 12, at 3 p.m. Eastern Time. If you register but can’t make it, you can watch it when you have time.  We’ll be sending you a link with the archived version after the live webinar concludes, so whenever you have time you can click on the link and watch it.

Here’s a link to learn more and register: Productive Engagement with Appraisers 

Robert Freedman

Robert Freedman is director of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at

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  1. jeffbachus

    Before you refinance, check your credit report for anything that could foul up a refinance. You don’t want to lay out the money if a credit problem is going to keep you from refinancing, search online for 123 Refinance I just used them and they are the best, they got me 3.113% rate

  2. Vivianne Rutkowski

    Great article.

    However, it discusses only the seller’s and the listing agent’s perspective … of course, the seller wants a HIGH appraisal …….

    What if the listing agent was SOOOO convincing the appraisal came back TOOO HIGH and is clearly NOT fair to the Buyer???
    What is Buyer agent’s action of defense?

    A good appraisal should be FAIR to both sides.

  3. Mark Street

    All excellent suggestions: these cut-rate, 90-day-wonder appraisers are giving the rest of the profession a bad name, and the people responsible for assigning them work need to be brought to heel.

    On the other hand, avoid looking equally silly yourself:

    “I hope you don’t use short sales as comps.” This kind of remark reveals the Realtor does not understand appraising OR the market. Many distress sales, even the occasional REO, may be considered legitimate arm’s-length transactions, meeting every applicable criterion. to suggest that an appraiser automatically eliminate all short sales from consideration, in a market where even in MLS short sales predominate, is ridiculous and inappropriate.

    “Freshly painted.” This is NOT a distinguishing characteristic, and may even leave the appraiser with the attitude “Is that the best you can say about this turkey?” The appraiser is NOT the buyer – stick to important features, e.g., subject is a designer custom home while recent nearby sales are cookie-cutters. If you want an appraiser to go outside his or her comfort zone with respect to distance, date of sale, etc., you have to have something he/she can support.

    Be knowledgeable. If you know subject is served by A-rated schools, while otherwise similar and recent sales are not, say so. Appraisers value real information, and may not have as much as you do about a specific case. Save the “puff” for someone else, because we tune it out.

  4. Mike Driscoll

    I thought it was bloated innaccurate appraisals that got us into this crisis – now apparently it is conservative innaccurate appraisals keeping us in this crisis. My suggestion, if you think an appraisal is too low, is to have legimate supportable information with which to back your questioning of a value. Most appraisers recognize that they are not infallible. If there is an aspect to a location or condition that they might have overlooked or not given enough weight, I think most appraiser’s would be willing to reconsider their value. I have to add the caveat, though, that cost does not always equal value and superior conditions are not always recognized by the market. The best appraisal reflects the decision making process of the typical buyer. If it cannot be shown that buyers in the market area are typically paying more for the aspects of the property that you bring into question, an appraiser can not arbitrarily change values to reflect these conditions. An appraiser’s work is constantly reviewed by people investing in the loans that fund your transactions and making adjustments unsupported by market data is not well received by these people. Please keep in mind our job is to give our honest opinion, supported by legtimate reasoning, of what a typical person would pay for a property in a given market area. Sometimes opinions differ.

  5. Toby Pagan

    The appraisal profession has been all but destroyed by the AMC model, and the “Walmartization” of the pay structure. Until legislation mandates a cost plus service fee structure for paying appraisers the quality will continue to decline. Most experienced appraisers are hanging on simply because there are few options in the current economic environment.

    Some additional questions to ask an appraiser would include how much they are being paid. If it is thirty to fifty percent less that what you know the normal fee should be then you are likely getting an inexperienced (or desperate) appraiser.

    Realtors should also familiarize themselves with HUD requirements for FHA loans since they still make up the bulk of financing. Common issues: Make sure that all utilities are on, that the appraiser has access to the attic, that the water heater works, GFPs around sinks are operational, and there are no safety or sanitary issues with the property.

  6. I sure can agree with the opinion regarding the way too high appraisals VS. now the overly conservative appraisals that make the housing crisis linger. The more information the appraiser knows about the location, neighborhood and property, the better. Good article, Robert, very informative and helpful to realtors as well as people trying to sell their home. I was fortunate in that the appraiser knew my community well.

  7. As an Appraiser and a Broker, my only problem with this article is the distance from my office to the property has nothing to do with my competency of the market. Please ignore question #1 when talking to appraisers. I do many of my appraisals in communities which are 30-40 minutes away, but I have been appraising in those markets for 6-7 years and can argue I know these markets better than some of the agents in those towns.

  8. christina

    I agree with Labelle, I move around alot, and In the past 3 years, I have had an “appraisal office” located in 6 major cities in my State, anyone wanna say where my geographical “competance” is? Cause I know where I am competent, and it has no relation to where I live, or where my “office” is. The “when was the last time you completed an appraisal in this nieghborhood” question is very valid. In dealing with short sales, and what sale isn’t a short sale these days, I always ask the Listing agent, “What is the buyer reaction to this property when you show it to your buyers” that gives the listing agent the opportunitity to ligitimetly tell me if there is something unique about the property, before I go out there, and then I am prepared to pay special attention to that feature. Sometimes it makes all the difference in the world, and sometimes its not something I can account for. If I know know what the listing agent is thinking, I can create a report that addresses that specific issue.

  9. Norm Curtis

    I recently failed to close on a Ref-Fi because of a low appraisal. When I had an appraisal in 2009 for a Home Equity LOC, the appraisal came in at $489,000.
    Last month the appraiser sent out by the lender put on a value of $375,000. The lender then said I could still close the deal if I paid a “One time insurance premium” of $3,200. I declined their offer. One of the comparables used by the appraiser was a 1 bedroom cabin. My home has 5 bedrooms. Another one of the comparables was 30 miles out of the area.

  10. A friend/appraiser was asked by a Realtor to give a seminar after he killed a deal by the Realtor. Asked to explain to Realtors how to correctly list properties for sale. He declined. What can one tell realtors? Your owners THINK their property is worth X and you just agree? Simple advice for Realtors… your freaking due diligence for once! and when you list a property you TELL your owners their property HAS TO APPRAISE! Realtors need to do what we as Appraisers do……….look at the freaking comps….so when your purchase price of 150,000 gets an appraisal of 125,000 because there wasn’t a sale over 125,000 you won’t be so freaking upset. It’s really quite simple.