Agents Talking to Appraisers and the Fogginess of the Dodd-Frank Act

By
Real Estate Broker/Owner with Vision Realty
http://actvra.in/46Mz

Agents Talking to Appraisers and the Fogginess of the Dodd-Frank Act

The Dodd-Frank Act was signed into place in 2010 and is a lot of places major regulations on the financial industry. It originally grew out of the necessity during the recession of 2008 preventing another collapse of a major financial institution. It protects consumers with rules like keeping borrowers from abusing lending and mortgage practices by banks. Because of this ruling it has blurred the lines of communication between appraisers, lenders and agents. According to ColumbusRealtors.com, Real Property Analyst, Inc. appraiser Tom Francis says "many Realtors® think they are not allowed to speak with an appraiser about their listing but they're not only allowed, they most definitely should." This new ruling has created a lot of misconceptions about the communication between agents and appraisers and we've had some lenders tell us that we cannot even contact appraiser and that Agents talking to appraisers and the fogginess of Dodd Frankcommunication has changed due to Dodd-Frank. That this is simply not the case. Because the rulings are so complex, large banks and lenders need to be cautious on the communication rules and we found that smaller lenders don't have that luxury which makes it more difficult for them to comprehend the guidelines.

In reality, the rule states the only party not allowed to speak with the appraiser is the person directly engaged with the loan origination side of the business which is the lender. This prevents any illegal activities, bribes or predatory lending practices. The only restrictions agents have on speaking with the appraiser is when. They are only allowed to speak to the appraiser before the report is submitted to the lender. This means that the agent can meet the appraiser at the property and provide information such as showing activity, sales data, and any offers the property has received. The appraisers typically want this information before the report is completed. This also helps appraisers that may be out of the area. He appraisers miscalculating property values because they are not familiar with a particular area can put a strain on the financial situation.

Also within this article were some great information on how to ensure a quality appraisal process.

Contact the appraiser before they arrived at the property and find out how far their offices from the listing, if they're familiar with the area, and how frequently they work in the area.

After you've qualified the appraiser contact them with your predominant features list, information on best comparable sales and best active listings in the area and any discrepancies with the assessors data.

When you meet the appraiser at the property point out the features on your list, review the comparables and be courteous and respectful with their field of expertise.

Finally, review the appraisal and check for any errors, defects on the comps that were used, remain tactful and send in any additional comps listing any errors on the previous mistakes.

So, communicate with your appraiser. It's allowed and encouraged.

More Valuable Real Estate Information:

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columbus, lewis center and gahanna real estate

Columbus Ohio real estate - Vision RealtyAs a certified Realtor® for the top-rated Columbus Realty Firm - Vision Realty, with 32 years of dedicated real estate experience, I can help buyers, sellers, investors, short sale sellers and more find, sell or invest in the right property, at the right price, at the right time. Contact me anytime for updates and information on the Columbus OH Real Estate market.

 

Donald Payne - Vision Realty, Inc.
4608 North High Street

Columbus, OH 43214

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Joe Jackson 11/13/2013 04:57 AM
  2. Jeanne Dufort 11/15/2013 06:49 AM
  3. Joy Carter & Jeff Booker Brother and Sister Team 11/15/2013 07:11 AM
  4. Winston Heverly 02/11/2014 06:54 AM
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Show All Comments
Rainmaker
1,263,666
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Many people have a lot of different ideas.  Some appraisers are great and will talk to you, even ask for help with comps.  Others treat you like you have the plague.

Nov 15, 2013 10:13 AM #80
Anonymous
Anonymous
Rachel Massey

This is in response to Gretchen's post. Please see that there are several appraisers who have been chatting about issues, myself included. 

Professionals are professional, no matter what part of the transaction they may be involved in. I have found over the years (almost 30 in the business) that there isn't one leg of the business that is better than others and that there are professionals involved in all legs of it. I know a number of honest, ethical, and thoughtful Realtors. I know a number of honest, ethical and thoughtful appraisers. I also know a number of unethical agents acting solely in their own interest, and the same is said for some appraisers. Every single profession that I am aware of has really good people in it and really bad people in it, and everyone should be taken on their own merit. 

It is important to remember that an appraisal may well be very well supported, thought out, and presented, but not meet sales price. Conversely, an appraisal can be poorly developed, presented and thought out, but meet the sales price. The appraisal needs to be able to stand on its own and support itself. Many do not, but many do. The problem sometimes lies in what the agents perceive as a good product, versus what another appraiser (in my case, acting as a review appraiser) would perceive as a good product. It isn't about getting a transaction closed on the appraisal side, it is about supporting the appraisal so it stands up to scrutiny.

Back to the original post; appraisers can and do talk with agents all the time. The thing we avoid talking about is the value, and avoid an agent or someone involved in the loan production end pushing for a value. That is part of the situation that got our economy in trouble in the first place and I would hope that everyone here would not want a repeat.

So, talk to appraisers. We are not the enemy. I urge appraisers to talk with Realtors too (and by the way, many of us ARE Realtors). We just have different pieces of the puzzle is all.

Nov 15, 2013 10:14 AM #81
Rainer
59,852
Greg Mona
Realty ONE Group - Scottsdale, AZ
YOUR Local Real Estate and Design Resource in AZ!

Don - definitely a topic that caused lively discussion!  And it is clearly evident there are different practices and methods across the country based on many of the responses to your post.  And although someone wrote the appraisers "don't care about your comps anyway" (I'm paraphrasing here) I would disagree with that as I have been personally thanked for the research I've performed and provided to the appraiser.  Last, we have only had one "bad" appraisal in the last few years, so in our particular area the appriasers appear to do a good job.

Nov 15, 2013 10:15 AM #82
Rainmaker
82,766
Rich Bosselmann R(S)
Koa Realty - Kailua-Kona, HI
Your Kona real estate connection!(808) 345-5085

I always try to meet the appraiser to let them in the property and briefly discuss the property. If there were multiple offers, I talk about desirable the property was at the price listed. It's always good to plant that seed, it can make the difference in them looking a little harder for another comp or giving a little higher adjustment for view, location or condition of a property. I am convinced that it works. Great post, thanks.

Rich Bosselmann R(S)

Koa Realty Inc.

(808) 345-5085

Nov 15, 2013 10:20 AM #83
Rainmaker
128,213
Dora Griffin
D A Griffin Financial.LLC - Fort Thomas, KY
NMLS 6380

My comment.... I am shocked and amazed real estate agents meet the appraiser at the property. I don't think that ever happens in my market. Now that I said that, I have a first, a lake property sale where the agent is meeting the appraiser.  I appreciate her diligence after the sale is made, because it is not over until closing day.

Nov 15, 2013 10:47 AM #84
Rainmaker
688,139
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

Whenever a listing of ours goes pending, I make it every effort for the appraiser to have to contact our listing agent in order to access the interior of the property.  That at least allows us to speak with them and give them our data.

Nov 15, 2013 02:10 PM #85
Rainer
27,629
David Demangos
Keller Williams Realty Carmel Valley / Del Mar - San Diego, CA
REALTOR

Our brokerage recommends doing exactly what you said, give comps to the appraiser, meet them there and ask questions respectfully.

Nov 15, 2013 03:15 PM #86
Rainer
860
GERARD RECORD
R3 REALTY VALUATION - Islandia, NY

Those were some great pieces of advice. Perhaps, a few more from the appraiser's point of view would also be helpful.

Distance to a property doesn't equal geographic competence. The arbitrary mileage cutoffs currently being imposed have caused me to lose a great deal of business. I grew in NYC and did most of my work in the boroughs until Dodd Frank, now, I am often deemed geographically incompetent because I choose to live on Long Island, even though, I probably know those markets as well as or better than my home county. 

For listing agents, please don't include foyers, mudrooms, laundries, baths and basement rooms in your totals. I know you are trying to present the property in the best light but you may well be causing the appraiser to overlook some properties when he/she is sorting out potential comps. I personally read through every potential listing to be diligent but don't expect every appraiser to be so conscientious. It is very time consuming and lenders are placing ridiculous pressure to shorten turn time and return reports much too quickly. Also, don't even bother bringing comps more than 6 months old and even more of a waste, don't bring sales 25-50% higher than your purchase price, they can't be used, unless you undervalued your listing. Trying to find the highest sales in a market is not a comp search. The appraiser is required to explain why all of those sales within a 1/2 mile of the subject were not used just to go 3/4 of a mile to find something that supports value. If there is a good reason, (condition, lot size, GLA) then by all means point it out but to repeat, there must be a good reason. You should also realize that just because a comp property sold for less than what you’re looking for, doesn’t mean it won’t support value. Sales are supposed to be bracketed around the appraised value. Some will adjust up and some adjust down. It would behoove you to read a few appraisals thoroughly to understand the process.

Since Dodd Frank, each report takes at least double the time to write at the same time banks are pushing to have them returned in 48 hrs or less from the time of inspection. What used to be a 12-15 page report is now 30. Sadly, appraisers are under governmental constraints as well as bank pressure. If you want the job done properly, don’t chat the appraiser up while he’s doing the inspection,  that is how things are missed. I will always spend as much time as necessary with the realtor, homeowner or whomever before I leave to ask questions, go over qualities of the property and comps. Getting in the way of the photos and pointing out “this is kitchen, the master bedroom etc” wastes time. We can generally recognize what a room is.  

 

The more we understand each other’s responsibilities, the better it is for all concerned.

Nov 16, 2013 08:47 AM #87
Rainmaker
1,203,093
Joe Jackson
Keller Williams Capital Partners Realty - Columbus, OH
Clintonville and Central Ohio Real Estate Expert

This post got a great response and i am glad  I got to read it

Nov 17, 2013 06:27 AM #88
Rainmaker
532,062
Ed & Tracy Oliva
West USA Realty - Arizona - Pinetop Lakeside, AZ
Arizona Agents

Good Morning:  This is some great Info for all,  Keep up the good work and good luck with your sales,  E

Nov 17, 2013 06:54 AM #99
Rainer
189,180
Thomas McCombs
Century 21 HomeStar - Akron, OH

What a range of responses you got to this post!  Excdellent choice of a topic.

I will always offer to communicate with the appraiser about the subject property. Most are interested but some are not, so I play it by ear.

Appraisers generally welcome any information that helps them do their work. As professionals they know what is appropriate and what is not.

Nov 17, 2013 09:18 AM #100
Rainer
120,097
Monique Ting
INET Realty Honolulu, HI - Honolulu, HI
S, e-PRO, SFR

Thanks for reminding us that the appraisal can be such a huge factor in a sale. Except for cash purchases, some appraisal make the sale, others break it! In the interest of all parties involved, the listing agent should be ready to provide comps and addtional information to an appraiser.

Nov 17, 2013 03:33 PM #101
Rainmaker
636,309
Stephanie/Bob The Ruiz/Miller Team
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team
Great post Donald. We use the rule of thumb, if the appraiser talks to us we talk to them.
Nov 17, 2013 03:59 PM #102
Rainer
126,883
Gordon Wood
Canyon Ridge Realty LLC - Scottsdale, AZ
480.226.2842

Donald 

It seems there are a lot of new regulations put in place for both buyers and sellers. Times are changing almost daily.

Thanks for your thoughts. 

Nov 17, 2013 05:08 PM #103
Rainmaker
337,313
John Juarez
Prudential California Realty - Fremont, CA
CDPE, ePRO, SRES, GRI, PMN

I think appraisers have a tough job so I try to make sure they don’t stress over appraisals of my listings. I always bring comps and whatever additional information that I think will make their job easier. They often have the information anyway but they appreciate that I am being helpful and not making their life more difficult.

 

Nov 19, 2013 05:27 PM #104
Rainmaker
357,874
Bill Cobb
Accurate Valuations Group, LLC - Baton Rouge, LA
Greater Baton Rouge's Home Appraiser

Valid Points, Donald!

As a Home Appraiser, I sent this to my State's Appraiser Board this morning asking for guidance be issued to ALL Louisiana State Certified Residential Appraisers: 

"LA Appraisers Need Guidance On Agent Appraiser Communication

There’s tremendous “fogginess” about Agent Appraiser communication during and after an appraisal.  We need Appraiser’s Board to issue detailed guidance, based on Dodd-Frank, on how we are to communicate with Agents before and after report submission, seriously!  

Honestly, I hate revisiting a report for comps I may have overlooked based on an Agent’s opinion. So, when I’m setting up appraisal inspections, I tell the Agent as a common professional courtesy that this is their opportunity to provide any comps used to establish listing price.  Some Agents “Farm” neighborhoods and sometimes know more than Appraisers about neighborhoods and more about individual sales that may have shown.

I was brought up in this business to understand theirs 3 professionals involved in a home sales in terms of value: Listing Agent, Selling Agent and Appraiser.  And, I do this to avoid an appeal after report submission.  Some Appraisers have a different opinion and think any Agent communication is an attempt at influencing their value decision.  This is crazy to me in that we as professionals must be able to communicate more and I thought that’s why Dodd-Frank was written, to correct the wrongs HVCC had on our industry.

Two Local Agents Stated This To Me: 

Bill, I will ALWAYS speak with the appraiser when I get the call. I like to meet the appraiser at the listing to go over the property details too. But a lender told me recently that I wasn't supposed to do that anymore. What exactly is permissible these days as far as communication?

Bill, I welcome the opportunity to speak with and on occasion meet with the appraiser either over the phone and when possible, at the appointment time. This does give me the opportunity to point out the highlights of the property as well as pass a copy if the original CMA that was done just prior to the listing. It is our job To make sure that any and all information is passed whenever possible. I would like to see open communication after the appraisal is done as well. The shoe is now on the other foot as some agents will defer you to a showing service because of time issues (not always because of fear to communicate with) and so will the appraiser is off to his next appointment. No exact right answer here, but effort by both can go along way." 

Bill 

 

 

Nov 21, 2013 02:43 AM #105
Rainer
13,460
Judie Berger
Premier Sothebys International Realty - Siesta Key, FL
Sarasota Luxury Homes Expert

A lot of good information here.  Thanks for putting this together

Nov 21, 2013 05:25 AM #106
Rainmaker
159,610
Sharon Miller
RE/MAX Platinum - Crane Hill, AL

Donald,

Your post should be required reading for realtors, lenders and appraisers.....Thanks.

Nov 21, 2013 06:58 AM #107
Rainmaker
200,258
Dan Pittsenbarger
Keller Williams - Bellingham, WA
Dan Pittsenbarger

In my opinion whether an agent "should" talk to an appraiser or not doesn't have anything to do with any law. It comes down to the individuals involved. If the communication is delivered with respect for the other person and what they do and has a "here's some data that "may" be helpful" feel to it & the receiver is willing to accept that kind of communication then it can be a great thing and benefit all parties. If either side is off (ie the agent deliveres their communication wtih a "must use this data" type of feel or if the appraiser is the kind of person that resents anyone suggesting anything), then the clients are probably better off if the no communication between agent and appraiser takes place.

As I've often never met a specific appraiser before and don't know them,  I have found that a simple request works well before delivering my communication. I ask something along the  lines of, "I have some data about this home, comps and trends in the neighborhood - do you want it? 99% of the time they say "sure". The other 1% I bet it's good that I asked before just giving it to them.

Nov 21, 2013 09:21 AM #108
Rainer
40,356
Jim Joeriman
Coldwell Banker Riviera Realty, Inc - Lacey Township, NJ
Helping Agents Reach New Heights

In my market the appraiser contacts the agent (sometimes the listing agent and sometimes the selling agent) for entry into the property.  Often the agent will provide them with comps.  I understand the desire of either agent to get the highest legitimate appraisal price, however it seems to me that a buyers agent, functioning as a buyers agent could run into some ethical issues if they influence the appraisal. 

Nov 21, 2013 01:20 PM #109
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Rainmaker
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