Appraisal Travails

Problems with appraisals are not as common as they were just a few years ago, when many experienced appraisers left the industry and before the new recruits and those who had stayed behind could adjust to new regulations. The National Association of Realtors’ recent Realtor Confidence Index found that 29 percent of agents who responded to the survey were having fewer problems with appraisals, and in late 2014, appraisal issues accounted for just 2 percent of contract failures. That’s a strong contrast to 2014, when 9 percent of Realtors stated that appraisals had resulted in a lower negotiated sale price and another 9 percent reported that a deal fell through because of an appraisal.

Still, there are issues with getting the asking price and the appraised value to match. On the seller’s side, agents can work with appraisers and bring them comparables so that they know about similar homes in the area that are on the market, not just the most recent sales. Keeping an open dialogue with the client so that their expectations regarding pricing are reasonable also prepares them to be flexible in negotiations. If multiple deals start unraveling because of a higher asking price and lower appraisals, it may be time for an agent to rethink his or her pricing process.

“Take a look at your comparables and how you’re pricing a home,” Fay-Hart advised. “We have to put our appraisal goggles on when we’re determining a listing price for each house. We’re often challenged because sellers sometimes have their own idea of what their homes are worth. If you can negate that and you’re realistic with your comparables, you shouldn’t have an issue with the appraisal.”

Agents can challenge an appraisal that they feel is too low, and the appraisers don’t get paid for going out a second time. Fay-Hart believes this can work to the listing agent’s advantage because everyone wants to see the deal go through the first time. Challenging an appraisal has gotten easier and less time consuming, with new rules requiring that mortgage borrowers have access to the appraisal report at least three days before closing.

Teresa Ryan of Ryan Hill Realty believes in actively working to get her clients a higher appraisal. “Meet the appraiser at the home when they come for the appraisal,” she said. “It is okay to have a copy of your valuation to give to the appraiser, updated if your original valuation is more than 45 days old, and showing the most recent closings, adjustments and benefits of the home so they can see how you came to your valuation. Some appraisers may not want to talk in depth with you, as they will want to do their own valuation, but you can give them your valuation so they will understand how you came to their pricing.”

Gavanes advocates for a flexible negotiating strategy and keeping as many avenues open as possible to completing a sale. She brings her own comparables to an appraisal so that the appraiser can be more informed about the area.

“Generally, they’re pretty receptive to that,” she said. “Right now we’re getting many out-of-area appraisers. Certain neighborhoods have $1 million homes that are right next to a $100,000 home. They need to be made aware of that difference in the community. Since I come prepared, and the appraisers are pretty open to whatever help they can get from the agent, I haven’t had to challenge any.”