An appraisal report is an essential part of any mortgage transaction as it assesses and assigns the value to a property. While most appraisers are competent professionals with the educational background needed to offer an opinion on a property’s value based on specific elements, occasionally erroneous appraisals are produced.
The National Association of Review Appraisers & Mortgage Underwriters and the National Association of Real Estate Appraisers conducted a private survey of over 300 reviewers and found the most common errors and deficiencies in Appraisal Reports. Amongst this list of 34 errors are inadequate history of property, errors in land area or building site, typing, grammatical and punctuation errors, and mathematical errors.
While homeowners can be quick to file a complaint against an appraiser when dissatisfied with an appraisal, Maureen Sweeney, a certified residential real estate appraiser here in Chicago, suggests a number of precautions that can be taken to prevent the possibility of a deficient report.
1. Make sure you’re working with a competent appraiser. Sweeney suggests hiring a designated member of a professional appraisal organization from one of the following: the Appraisal Institute (MAI and SRA designation); National Association of Independent Fee Appraisers (IFA, IFAA, IFAS, and IFAC designations); American Society of Appraisers (AM and ASA designations); and the American Society of Farm Managers and Rural Appraisers (AFM, ARA, RPRA, and AAC designations).
“Each of these designations distinguish the area of expertise of the appraiser, and they require additional education, which goes beyond what is required for state licensing,” Sweeney said.
2. Insure your listing sheets are accurate and fully filled out. Appraisers often trust the information provided by the listing agent on the listing sheet and forego verification, which, when provided with incorrect listing information, can potentially result in an incorrect report.
“A complete and correct listing sheet will do wonders to assist in the errors and deficiencies in appraisals,” Sweeney said.
3. Sweeney suggests list agents be proactive and meet the appraiser at the time of inspection. This gives the listing agent the opportunity to share with the appraiser additional data regarding the property, including closed and pending sales, listings, improvements to the property, a legal description, a plat of survey, information regarding the neighborhood or any other information the listing agent thinks the appraiser may need to help support the sale price.