Tips to Prevent Common Appraisal Mistakes

Are you frustrated that a property you listed didn’t get the appraisal you expected? Uncertain about what information to provide to an appraiser? Melanie McLane, a broker owner, appraiser, and educator, offers insights into residential property valuation and how real estate professionals can prevent common appraisal mistakes.

Use Accurate Comparables

Understanding the importance of using the correct comparables is crucial in pricing and valuation. According to Fannie Mae’s requirements, comparable sales must be physically, functionally, and location-wise as similar to the subject property as possible. Suggesting a comp that is newer, larger, and located miles away is a mistake and typically results in reverting to the original value after adjustments for differences.

Get Educated

Education is key to accurate pricing. Melanie highly recommends the PSA course (NAR’s Pricing Strategy Advisor class), which she co-authored. This course equips professionals with the knowledge to understand the appraiser’s job and the distinctions between an agent’s and an appraiser’s roles. Agents advocate for their sellers or buyers, aiming to achieve the highest price possible. In contrast, appraisers are not advocates; their primary role is to assure the lender that the property provides sufficient collateral for the loan.

Understand Adjustments

Understanding how appraisers make adjustments is another essential aspect. Adjustments are highly relevant to the market and price range in question, as buyers’ expectations vary at different price points. These adjustments should reflect this understanding.

Build Relationships

For practical advice on working with appraisers, developing professional relationships is crucial. Establishing a rapport with appraisers in the market area benefits both parties, allowing for valuable exchanges about the highest and best use and unusual properties. Communication is key in this process. Providing the appraiser with all necessary property information is helpful and appreciated. However, attempts to unduly influence an appraiser’s conclusions are unethical and illegal. Sharing data, discussing attributes, and offering insights are appropriate, but steering the appraiser toward a specific valuation should be avoided.

Prepare an Appraisal Packet

Preparing a comprehensive appraisal packet can facilitate the process. This packet should include relevant information such as recent improvements, remodeling dates, a property survey (if available), and other pertinent details valuable to the appraiser. Including the comps used in the pricing strategy can provide additional market insights for the appraiser.

Respect Appraisers’ Time

Respecting the appraiser’s time is also important. If committed to meeting the appraiser at the property, punctuality is essential. In cases of unavoidable absence, notifying the appraiser well in advance is courteous and professional.

Real estate professionals bring significant market knowledge to the table. Using this to their advantage when working with appraisers can lead to more productive relationships and enhanced service to buyers and sellers. Understanding the distinct roles in the property transaction process and aiming for a smooth transaction and the best outcome for clients is a shared goal. With these tips in mind to prevent common appraisal mistakes, fostering productive relationships with appraisers is achievable, benefiting all parties involved.