Help Requested From Appraisers or Others in the Know

Real Estate Agent with Keller Williams Realty Premier Properties BK 3126272

In the past, my Active Rain colleagues have always been an incredible source of information.

I just had an appraisal come back on one of my sales that is killing the deal.  So what else is new, right?

Well, apart from the commonplace complaint, I have some issues which I believe are valid.  So I'm reaching out to the AR community with some questions:

  • Can an FHA appraisal be contested?  I believe some gross errors were made on this report.
  • If so, is there a time-frame?  Someone threw out a 72 hour time to contest an appraisal.  Not sure where this came from.
  • Should a conscientious appraiser make adjustments for condition if he is using run-down foreclosures as comps?  There is a line item for condition.  Why is this not being used?  The subject property is in PRISTINE condition and is being compared to homes that had cabinets missing, mold on the walls, a/c, water heaters and appliances stolen.
  • Does the appraiser signing the report have to inspect the property?  Why do I ask?  Because the person who signed my report was not at the home.  Someone else was, and her name is nowhere to be found on the report, not as a trainee, an assistant or otherwise.  And the appraiser signing conveniently forgot to check off that he DID or DID NOT inspect the home.  Uh huh. Very convenient.
  • Who governs appraisers?  If I have to go to someone to discuss this particular appraiser's actions, who do I go to?

Please, appraisers out there, this is NOT a knock on your profession.  I have been in the business 5 years and not once have I come across an appraisal that I thought needed contesting.  Like everyone else, I have had deals go south because of appraisal issues,  But not once did I find that there was anything remotely unethical going on.  This time, I am not so sure.  At the very least some gross incompetency.

Sorry for not prettying up my post.  No pictures.  No bolds.  Just the facts. 

Thanks for any help you can offer.

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Maggie Dokic, REALTOR, CDPE, SFR is a licensed real estate broker in the state of Florida selling residential real estate in Miami, Palmetto Bay, Pinecrest, Coral Gables, Gables by the Sea, High Pines, the Redland and other select areas of SW Miami-Dade County.

Maggie has earned her SFR certification to be able to better serve the needs of her customers in today's non-traditional real estate market.  SFR is a Short Sale, Foreclosure Resource Specialist.  Designees have been trained to understand the highly specialized options available to Sellers facing short sales & foreclosures and Buyers looking to buy them.

For more information on our local real estate market, or to see or sell a home in Miami, Palmetto Bay, Pinecrest, Coral Gables or the Redland, visit my Miami Real Estate blog or contact me at Maggie (at) TheBlogThatAteMiami (dot) com.

The opinions expressed herein, are those of the author, and not necessarily of  Keller Williams Realty.

None of this information is to be deemed legal or financial advice.  Please contact your attorney or accountant for same.

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Comments 48 New Comment

Maggie Dokic
CDPE, SFR, Pinecrest | Palmetto Bay |
Keller Williams Realty Premier Properties

Lane, thanks for the clarification.  You're absolutely right.  The report can be contested, but by the Lender who ordered it.  I can only get facts that I think are relevant to the Lender.  I've learned so much regarding this in 48 hours!

Rick, thanks for your input.  After the "woe is me" initial blow, the dust settled and the fact remained that the person who signed the report, did not inspect the home, nor was the person who did inspect the home listed on the report.  This alone is reason enough for me to desire that a different appraisal be ordered.   According to many, including Jesse below you, this is fraud.  I think the comps used by the appraiser represent the market.  We do have a lot of foreclosures closing.  But not adjusting for condition in any way brought the perceived value of this home to a place where I don't think it belongs.  And the fact that he didn't inspect the subject tells me he has no basis for making adjustments anyway.  He has no first hand experience of the subject or the comps.  I sincerely appreciate what you've added to the conversation here.  You appraisers are really coming through with some great info.

Charles, thanks for some great links and lively comment.  I just may find myself feeling nerdy enough to read that this weekend.  LOL 

Christine, best of luck with your efforts.  I hope the information that the commenters have presented here will be useful to you.

Chris, I agree about the good advice.  I would even up it to excellent.  =)

Jesse, thanks for the facts.  Two other appraisers I spoke with (due to this post) concur with you.  You are not the first person to mention F-R-A-U-D.  After being presented with all this information, I feel more confident in my pursuing this. 

Thanks again to everyone for your comments. 

March 04, 2010 05:56 AM
Anonymous #50
Andrea Lacerda

I have been dealing with an appraisal issue for the last 6 days. The home was supposed to close Friday with a commitment from big major bank  The appraisal came in at value however they asked the appraiser for 2 additional comps . The appraiser provided the 2 additional comps. The underwriter felt a need to have a field review (another appraisal of the property by a different company). Now the second appraiser came in $10,000 lower. The second appriasor used comps that needed work where as the home being sold is all redone. I have tons of supporting documentation, photos, statements from the listing realtors, no adjustments for condion etc, ...

Meanwhile based on the commitment seller moved to another state and buyer had plans to move the next day based on the commitment. The value on the first appriasal came in acceptable. I did not think there should have been any concerns since the property is mint, was priced according to area sales etc. I am 15 years in business and this is my direct market area. How is this possible that the large banks can do this to our customers. Both buyer and seller have significant losses and neither agrees with the appraisal. The sellers attorney served time of essence.

We are disputing appraisal now. The underwriter is reviewing again. This took many days for them to pay attention and had to take it to a senior management level. The seller happens to have his mortgage with the same bank. There is no money for the seller or buyer to come up with the difference. If the bank does not change their position I am going to find out how to file a complaint against the bank. Major banks seem to be going out of their way to undervalue properties. WE have heard from others that the appraisers are instructed to make sure they come in low on value. Do not know if this is true but that is what I am hearing.

Thanks for all the information provided Active Rain. I will review all the comments to see if I can come up with additional arguments on the value, etc.


March 04, 2010 06:39 AM
Anonymous #51
Pamela Crowley

It would be extremely rare, and something I'd never experienced, for a bank or lender to demand an appraiser come in with a "low value".  The vast majority of the really low values coming out of these lenders these past couple of years are typically from one of their automated valuation models, known as AVMs.  I have numerous stories and evidence from appraisers all over the country about AMCs and lenders demanding that appraisers should either change their appraisals to match some low-ball, totally unjustified AVM value, or even for the appraiser to qualify each 'sale' listed in that AVM for them, for free.  The appraisers are being unbelievable pressured by these AMCs and lenders.

Then again, there is always the very real possibility that the property just really isn't worth what so many others want it to be.  That does happen a lot also.

Another real possibility is that the 'appraised value' you are being told is from their AVM and not from the appraisal.  Have the borrowers demand a copy of the appraisal.  Most of the AMCs also use 'conversion' software programs which alter the appraisals.  You might want to have your borrowers send a copy of what they received from their lender back to the appraiser so the appraiser will know if their appraisal has been altered.  The appraiser cannot discuss the appraisal with anybody other than their lender client, and with FHA only with the DE Underwriter, but sending them a copy of what the borrower received will help appraisers and ultimately all of us, consumers included.

Something that lenders have done for many, many years is blame the appraisal for declining a loan, when in reality, they don't want to close that loan for another reason, or a number of other reasons.  It's just so easy for them to say it was the appraisal that caused the problem instead of something else.  "It wasn't our fault, the appraisal didn't come in where we thought it would."

March 04, 2010 09:18 AM
Richard Glesser
North Country Appraisal Services

Andrea - Keep in mind that the Field Review did not have the benefit of an interior inspection which enables the appraiser to note the updates you mentioned.  As stated by Pam, lenders often use appraisers as the scapegoat for declining a loan for reasons they prefer not to disclose.  My suspicion is that this is the case since the original appraiser not only estimated the value, but supplied additional comparables requested by the underwriter, very likely expecting that they were not available. 

Maggie - I'm glad this is working out for you.  While it may not culminate in closing this deal, it's imperative that you follow through and get this appraiser out of the profession so this doesn't continue.  (Having Pam advise you is similar to having the Yankees bat for a Little League Baseball Team - she's the best!)

Jesse - As always, your comments are right on the mark.  I may add that the appraiser who signed and should have inspected the property was assigned in the FHA docs for this file and obligated to complete it personally.

Rick - Some questionable statements in my opinion with a couple redirects: I believe FHA does now allow use of clear MLS photos but comp must have been viewed within legal limits (important clarification in my rural market where often homes can't be seen on wooded acreage).  Second, even if two Certified Appraisers worked on a file, the one who signs and must have inspected the property is the one to which the FHA case number is assigned.

Final comment: When contesting an appraisal, it is best to look for factual errors within the report where errors cannot be viewed as subjective.  For example, subject age, site dimensions, or size are way off or comparable data does not agree with sources listed such as the MLS.  Also defining a neighborhood but using comparables from outside defined area without explanation.  There are appraisal guidelines but the key element is explanation since the appraisal report must be, according to USPAP, understandable to the Intended User.

March 04, 2010 12:06 PM
Rick Phillips
I care about you and your transaction.
Keller Williams Realty Alexandria - Old Town


Noted, re the cert line.  I still think there's techincally a way, within USPAP to do both ... but once you throw the fannie mae form into the mix, you're correct--you must follow 25 more items.  Anyway, like I said, it's just one of those things that I never bothered to learn b/c there's really no reason in my small office of two people to do it any other way :)  But thanks for pointing that out. 


Glad you found out the answers.  It's not actually "fraud," but it is a "cheating" of sorts, and there are some pretty in-place penalties for appraisers who take shortcuts like those.  And still, it would be interesting to find out if the woman you met at the property is licensed, a trainee, or otherwise just a helper.  I think the state will come down harder on the guy if it's the old case of the unlicensed trainee.  In VA it's a pretty steep fine and a loss of license for a certain period and then a restricted license after that.

March 04, 2010 02:56 PM

Maggie Dokic

CDPE, SFR, Pinecrest | Palmetto Bay |
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