Can Real Estate Agents Talk To Home Appraisers During A Purchase Appraisal?

By
Real Estate Appraiser with Accurate Valuations Group, LLC LA St Certified 851

Can Real Estate Agents Talk To Home Appraisers During A Purchase Appraisal?  In short, they absolutely can!

HVCC was retired yet the policies it set in motion remain in motion. Now, Dodd-Frank's Appraiser-Independence Legislation is the rule of the day and there is a lot of confusion out there between both Home Appraisers and Real Estate Agents on communication!  I just had an Agent this week contact me complaining about an Appraiser that came in short on an appraisal because the Appraiser didn't understand the home on the river had 2 boat slips instead of just 1. This Agent didn't understand that he could have spoken with the appraiser at the beginning to clear all facts up about this property. 

 

 

The November 8, 2010 article in Live Valuation Magazine written by Larry Disney, Change to Appraisal and Appraiser Regulation Has Arrived – Are You Ready? sheds some light on this topic. The language in the new Dodd-Frank legislation appears to help the communication process between Agents and Appraisers and Sellers and Borrowers.  For example, in this article, Mr. Disney states,

 

 

"The above language is not meant to imply that mortgage lenders, mortgage brokers, mortgage bankers, real estate brokers, appraisal management companies, employees of appraisal management companies, consumers, or any other person with an interest in a real estate transaction cannot ask an appraiser to consider additional information, including comparable sales; provide further detail, substantiation, or explanation for an opinion of value; and correct errors in the appraisal report."

It sounds to me like Agents can communicate with home Home Appraisers. 

 

 

 

I asked two (2) nationally known Home Appraisers these questions below:

At what point can the RE Agent talk to the appraiser regarding the purchase appraisal?  

*When the initial appraisal inspection is setup?
*After the appraiser has inspected the property?
*If only at the initial setup, then can that agent provide their comps / support then to avoid an appeal later?
*What's your policy or understanding on this?


I as an appraiser have always considered there to be 3 Real Estate Professionals in the deal: Listing Agent, Selling Agent and Appraiser.  To avoid appeals, I ask for the Agent's comps at the time I set the inspection up.  Some Agents are offended that I do this because they take it as if I'm questioning them.  I'm not questioning, just trying to give them their opportunity to "talk" to the appraiser before I go out for the inspection and avoid an appeal later. I think you should be proactive with Appraisers and take as much control of your deals as possible......and that's done initially when the appraiser calls to set up the appraisal inspection.  It's a myth that Agents can't talk to Appraisers, it's just that the communication must take place before the appraiser inspection and not after the inspection. 

 

 

 

Their two (2) responses I received are below:

In summary, one Appraiser stated that there has been a lot over reaction and that they try to talk to the Agents of most deals.  If a value issue arises, the appraiser said he contacts them for their data, which could be before or after the inspection, without letting on that there is a value issue.  

Washington State Appraiser, Dave Towne, Said:

 

"I’m with you on this.  I sometimes will ask agents for their ‘cma’, saying “I want to be sure I understand how you priced this property at the time of listing.  I want to be sure I don’t miss any properties that you may have considered.”  I do this when I determine the price is too high based on comps I pre-research prior to inspecting.

Often, they don’t even have those in their file, and just provide listings at inspection time that support the price, but that are not necessarily comps from our perspective.

An appraiser has to be careful about accepting carte blanche properties provided by someone financially connected to the deal.  But I don’t think trying to understand the preliminary pricing process is out of line.  However, after the inspection and the report is complete/submitted, that’s not the time to complain – especially if the agent was uncooperative at the start.

We are supposed to ‘verify’ every sale.  That involves communication with the players involved prior to report completion.  Unfortunately agents sometimes have an adversarial attitude, and appraisers don’t do an effective job discussing this.  I think you do, based on your info.

And anyone connected to the assignment can discuss aspects of the property with the appraiser in advance of report submittal, as long as there is no attempt to influence the value."

What does the Home Appraiser's Client Instructions Say About This Topic - The AMC's or Appraisal Management Companies? 

 

 

 

What does the Home Appraiser's Client Instructions Say About This Topic - The AMC's or Appraisal Management Companies?

I reviewed three (3) recent appraisal orders for home purchases.  These Appraisal Orders were 8 pages, 3 pages and 4 pages in length.  None of these orders stated the Appraiser couldn't communicate with the Agent.  Two sets of the instructions read,

"Purchases require that you review the sales contract and state in report that contract was reviewed. Obtain contract from Agent/Contract or Contact AMC for help. Contract must be fully executed."  Fully executed means the contract must have ALL signatures or you the Agent hold up the deal!

"For Purchase transactions, if AMC does not provide you with the sales contract governing the transaction, you must contact us or the borrower/REALTOR to obtain it."

Conclusion. It appears from ALL sources reviewed that Agents can communicate with Appraisers during a purchase transaction.  My advice as a Home Appraiser is to provide the Appraiser with a list of relevant features, upgrades, your Sketch showing your measurements and a list of your supportable comps used to market the property.  By providing your comps up front, you are avoiding an appeal after the appraisal is completed, which will also help speed the closing process. 

Why Did I just state, "your Sketch showing your measurements"?  Because in the month of May in my market, one deal did not appraise simply because the Agent either did not measure the home, simply copied a previous incorrect MLS listing or measured them incorrectly per the National "ANSI" Standards.  Another listing just barely appraised.  The MLS Listings were incorrect by 173sf and 215sf.  The 173sf error was in a market where homes were selling in the $121/sf range.  When I contacted Agents to compare sketches, none were offered by the Agents.  If you have your own sketch, you can be sure that your listing is the right size, priced properly and be less questionable in terms of the appraisal.

 

AUTHOR'S BIO:

Bill Cobb is Greater Baton Rouge’s Home Appraiser frequently called upon by banks, homeowners, and savvy real estate investors to assess property values. A home appraiser with 20 years experience, Bill Cobb brings a wealth of knowledge to the table as a home appraiser.

Bill’s company, Accurate Valuations Group, serves Greater Baton Rouge (East Baton Rouge Parish, West Baton Rouge Parish, Western Livingston Parish and Northern Ascension Parish).

Contact Bill Cobb and Accurate Valuations Home Appraisal Group for your next home appraisal:
Office: 225-293-1500, Cell: 225-953-0638
Fax: 1-866-663-6065
info@accuratevg.com
http://www.accuratevg.com/ 

 

 

 

 

 

 

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. James Lowenstern 05/19/2011 11:07 PM
  2. June Piper-Brandon 05/19/2011 11:10 PM
Groups:
31 Days of May Challenge 2011
Tags:
appraisers
real estate agents

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Rainmaker
332,564
James Lowenstern
Castles UnlimitedĀ® - Newton, MA
Castles Unlimited. Newton MA Real Estate

Excellent post. So many things are not clarified and confusing to many of the brokers in the market today...this is one of those points that needs to be clarified. thanks!  i will re-blog.

May 19, 2011 11:05 PM #1
Rainmaker
680,731
June Piper-Brandon
Century 21 New Millenium - Baltimore, MD
Piecing Dreams One Home at a Time

Bill, excellent post.  It's not just agents that don't understand, some appraisers don't too, they all think there's some big secret or collusion going on - when it's just good business.  Thanks for clearing t his up.

May 19, 2011 11:08 PM #2
Rainmaker
343,831
Sonja Patterson
RE/MAX Realty Center - Cypress, TX
Texas Monthly 5-Star Realtor Recipient for the Hou

I have represented two sellers that didn't truly have comps for their property (on acreage).  The appraiser appreciated the list I gave him with all of the upgrades to the property...and thankfully, we appraised!

May 19, 2011 11:23 PM #3
Rainmaker
362,124
Bill Cobb
Accurate Valuations Group, LLC - Baton Rouge, LA
Greater Baton Rouge's Home Appraiser

Thank you so much James, June and Sonja!! I talk to so many Agents that believe they absolutely can not communicate with the Appraiser.  I am an appraiser, I do appreciate receiving list of features, upgrades, a sketch if supplied and their comps.  Many Agents know these local neighborhoods better than I do, or better than some appraisers do, because they still live in the area and "farm" them for their marketing.  Sometimes they inform me about a comp's condition that was inferior.  That's why I've believed that there are 3 RE Professionals in a transaction and the Appraiser can learn much from local Agents as well.  We do need to communicate.  Agents don't need to overprice homes during these correcting times in our markets and Appraisers need to be more open minded when reading market interaction.  Unfortunately, the FNMA 1004MC can sometimes dictate declining adjustments based on comps 3 months ago when sometimes these markets are on the mend.  Appreciate All of You!

Bill 

May 19, 2011 11:36 PM #4
Rainmaker
362,124
Bill Cobb
Accurate Valuations Group, LLC - Baton Rouge, LA
Greater Baton Rouge's Home Appraiser

It's always the Appraisers responsibility to measure the home themselves regardless if provided the Agent's Sketch or not.  For FHA, an appraiser can be suspended from the FHA Roster simply for a 10% error on living area size!  

May 19, 2011 11:38 PM #5
Ambassador
622,160
Marilyn Boudreaux
Marilyn Boudreaux, Century 21 Mike D. Bono & Co.'s - Lake Charles, LA
Lake Charles LA Century 21 Realtor

Bill this is great information and this question also came up in our continuing education this week.  I never show up for the appraisal I am of the opinion that the agent no matter whether you are listing or buying agent, needs to let the appraiser do their thing.  Appraisal is between the lender and the buyer and considered confidential information that belongs to that buyer.

May 19, 2011 11:50 PM #6
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Rainmaker
362,124

Bill Cobb

Greater Baton Rouge's Home Appraiser
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