Phone: 951-255-6466View Profile
In the 1970s, my dad was Chief Appraiser at Far West Savings and Loan in Newport Beach and "bugged" me to take appraisal courses. He had me come down to the bank for a couple of weeks and go out with his appraisers. I found that I liked appraising. My official career began in March 1978 when I was hired by California Federal Savings and Loan. I worked for them for 3 ½ years as a loan officer and appraiser until I was laid off in the bad market of 1981.
I went out on my own from August of '81 through February of '83 when my dad left Far West and we started our own firm. That firm lasted until he passed away in 1996. I've had my own solo company since then, John C. Carlson Real Estate Appraisals, and I specialize in the valuation of architectural, historic and luxury homes. I also work with attorneys as an expert witness. My Certified General license allows me to appraise commercial properties as well.
While it is very difficult to "quickly" walk through the process, let me explain what I can. Basically an appraiser analyzes a property through what we call different "approaches" to value:
Again, the above are very simplistic examples of the valuation approaches.
I take offense to this term. It is used when the appraised value is less that either the sales price or the value needed to qualify for a refinance of a property. The term "assumes" that the appraisal is deficient. The appraiser may have arrived at a reasonable value. Just because the sales price is $5 million does not mean that the property is worth $5 million, and, just because the borrower needs a value of $5 million in order to get the refinance they need, does not mean that the appraisal is "low" if he appraiser does not estimate the value at $5 million. However, I have to admit that many of my peers are not completing competent appraisals.
First, if they are the borrower or the buyer, they need to immediately get a copy of the appraisal. Buyers or Borrowers are entitled by law to a copy. If they are the seller they need to try to get a copy, perhaps from one of the agents involved. Once a copy of the of the appraisal is obtained, you need to sit down and go thru the appraisal. Take a look at where the appraiser is from. There will be a page in the appraisal where the appraisers name and license number are presented. If the appraiser is from 500 miles away, you will probably have a problem with what is called "geographic competency".
Make sure the appraisers comments and analysis of the property is correct. There will be one or two pages of the "comparables" the appraiser used on an adjustment grid. Get in your car and drive by and look at the comparables the appraiser used. If you really think that one or more of the comparables is not a good representation, you need to sit down with a real estate agent. Have the agent pull each of the comparables from the listing database and carefully read the listings. If the comments in the listing and the listing photos show that the appraiser has misrepresented the details of this comparable, then you probably do have a "low appraisal."
Then have the real estate agent run a search in this neighborhood areas looking for better comparables. If you find better comparables, hopefully ones that will support a higher value, have the agent print out what are called "agent copies" of the listings so that you can provide them to the lender and appraiser and ask for a reevaluation. Now here is where there have been problems with my profession since May 1st, 2009, when the HVCC, or Home Valuation Code of Conduct, was created. The HVCC is no longer current, regulations set forth in a new Federal Document known as Dodd-Frank now rule the day. The problem is that nothing in either HVCC or Dodd-Frank requires the appraiser or lender to respond to your request. I belong to an "Experts" Website and answer questions from people all over the country. The highest number of questions come from people who have received a "low appraisal." I give them the information above and I get feedback all the time that the appraiser refused to look at the comparables. The only thing you can do is follow the steps I have presented above and hope that you get an appraiser who is professional enough to reevaluate the appraisal they completed.
When you are thinking about selling or getting a refinance, long before an appraiser will come to your property, slowly walk around the outside and inside. Carefully look at your house. If you've lived there a long time, it is easy to overlook problems. Make a list of problems you see: peeling paint, rough areas of the stucco, bare spots in the lawn, rot in the wood. It is probably well worth the $275 to $400 to have an experienced Home Inspector come out. The Inspector will crawl under the house and go into the attic, something an appraiser does not do. Estimate the costs of fixing each problem area. Seeding a bare area of lawn a few weeks before the appraiser comes out, and putting on a new coat of paint, will put your property in a better light. These are small things, but the appraiser won't be thinking: "Boy, the yard is dead & the paint is peeling off." which always helps.
This was a good idea before the enactment of HVCC in 2009. Now most lenders order their appraisals through what are called Appraisal Management Companies (AMCs). AMCs send an email blast to all appraisers on their list. The appraiser who gets the assignment is the one who hits the "accept order" button the fastest. That is why you may get an appraiser from miles away. The bottom line is that while you can order an appraisal from another appraiser, and it may show you what is the correct value for the property, it won't be useable to give to any lender if the new appraiser is not on the lenders list. By federal guidelines, the lender has to order the appraisal.
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Phone: 951-255-6466View Profile