Appraisals: Still a Thorn in Your Side

We know you’re having a hard time with appraisals today. We hear from sales associates and brokers regularly that they’re seeing transactions collapse because the appraisal comes in well below the price agreed to by the buyer and the seller.

Having a value come in at something other than what was hoped for is one thing, but that’s not what practitioners say is the problem. The problem is that valuations are systemically coming in at questionable values because so many appraisers lack experience and famliarity with the market and they’re overly hurried to meet required turn-around times set by the lender or appraisal managememt company (AMC).

Anna Ruotolo

On top of that, many appraisers insist the practitioner can’t provide them information or even talk to them about the property.

Much of what’s happening with appraisals can be traced back to the controversial and all-too-familiar Home Valuation Code of Conduct (HVCC), which is no longer around but whose main intent was made part of the big Wall Street reform law that was enacted close to two years ago.

Although the history of this problem is familiar, how to deal with it remains a thorn in the side of the industry. What do you do when you have a problematic appraisal?

To provide some help with this question, we’re hosting a webinar in a few weeks with Anna Ruotolo of RPM Mortgage in Walnut Creek, Calif., who’s given this subject a lot of thought and has well-grounded advice on how to work with appraisers. 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. I recently had an FHA appraiser require my seller to install a vapor barrier in the crawl space – a first for me – and everyone else I’ve spoken to. The buyer never requested it, and it isn’t a safety hazard.

    Don’t forget about condo rules in underwriting. I sure wish FHA and FNAM would just get together on the SAME condo approval methods. What a pain!

  2. Gary Anderson

    FHA no longer requires a vapor barrier in the crawlspace….this requirement was done away with a couple of years ago.

  3. Gary Anderson

    As far as under valued appraisals go:

    The appraiser is faced with, in many markets, declining home values and few sales. As was reorted in the magazine in the last few days, many homeowners think that their values are higher than they actually are. With declining markets and few sales, values will continue to decline in appraisals until the market rebounds.

  4. Mark Street

    In my experience (appraising FHA since 1979), a vapor barrier is not an automatic requirement in a crawlspace, but a crawlspace must have adequate drainage to prevent standing water. If it does not, a vapor barrier might help, but it is not a real solution, and some provision must be made for positive drainage, up to and including a sump pump.

    In general, FHA discourages appraisers from requiring repairs for other than health, safety, or serious value reasons. Your recourse is to the lender’s Direct Endorsement underwriter, who in turn can review the situation with FHA staff if necessary.

    Mark Street
    Longwood, FL

  5. I find it funny that in the past NAR has addressed instances where agents negotiating short sales have met ‘with appraisers when they arrive at the property, providing them information they might not know about, and documenting dscrepencies with the assessor’s valuation…’ in an attempt to influence a low value and the NAR went so far as to deem such practices as fraud.
    So why are those same practices aimed at influencing a higher value acceptable. Seems a double standard.

  6. Show me the comps!!! If you think I’ve undervalued property. Chances are the comparables don’t exist, or not as good as the ones utilized by the appraiser. Banks want comparables to be as close as possible and as recent as possible. Did you look at closed sales when factoring out your asking and likely selling price. My market (NE Illinois) lost another ~ 8% in market values over the lasts 12 months. What happened in your market and did you factor that continued decline in market values when you were figuring out a likely appraised value and selling price?

    I’ve been yelled at a lot lately; however, when I ask for additional sales that would support your market value fantasy … I get nothing.

  7. Jon Alexander


    I disagree with your premise that the real estate appraiser is solely to blame when a real estate transaction falls through. There is always more than one factor to blame when the appraised value does not support the agreed contract price. It could be a declining market, it could be that the listing agent did not use a CMA when marketing the property, or it could be that the seller is unwilling to list his/her home for a fair-market price. As a certified residential appraiser and a real estate agent I understand both the appraiser’s and the agent’s point of view. Unlike the real estate agent, the real estate appraiser is not an advocate for either party in a real estate transaction. The real estate appraiser is only an advocate for his/her opinion of value. A real estate appraiser must provide an unbiased opinion of value that is supported by reliable market data. An appraisal is only as good as the comparable sales available for consideration in the completion of the appraisal assignment.

  8. Chuck Robertson

    Is this webinar archived somewhere? I would like to see it.

  9. Robert Freedman

    Yes, you can access it here:

    Best, Rob Freedman

  10. Chuck Robertson

    I just got a chance to listen. Good webinar, but Anna made one mistake. She stated that the appraiser could talk to the listing agent and selling agent before he submits his appraisal to the bank because once it is submitted, the bank becomes the client.

    USPAP and other federal and state regs explicitly states that the client and any intended user(s) MUST be identified when the appraisal assignment is accepted and the appraiser owes loyalty and confidentiality to his client from the outset.

    The appraiser can use the listing and selling agents as resources, or anybody else for that matter. The appraiser can discuss comps, market conditions, the amenities of the market area and any other thing he considers important to the assignment. What he can’t discuss is the value and anything that is considered confidential by the client.

    That may be where Anna gets her timeline because the discussions with the agents would be prior to the finalization of the report. Once it is submitted, the only thing that the agents would be interested in is the value, which the appraiser may not disclose without written permission of his client.

    Although the agents and their brokers have a vested interest in the outcome of the appraisal, they may not influence the outcome nor ask the appraiser to tell them the final value. Anna is right that the agents should speak to the lender or the AMC and let them deal with the appraiser. I have a colleague who has turned two appraisers in to our Appraisers Board because of mistakes they made and that they were not geographically competent. She got the idea from this webinar. The Board is investigating.

    -Chuck Robertson, Broker and Appraiser.