12 Best Questions to Ask the Real Estate Appraiser

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12 Best Questions to Ask the Appraiser

How to qualify the real estate appraiser before letting them in the house

The old adage “An ounce of prevention is worth a pound of cure” holds true when hiring an appraiser. Many of the “appraisal” issues we hear today relate to the quality of the commercial real estate appraiser hired for the job.

 

Have you experienced a “failed assessment”?

Let us provide you with an overview and twelve simple questions that will help you avoid the next failure.

From our perspective, the biggest banks don’t seem to hire the best and brightest appraisers, they seem to hire based on quick and cheap methods. The “cheapest” reviewers often do not have the right knowledge or experience and, as a result, produce poor quality reviews that hurt everyone. We’ve seen reviewers travel 150 km from their office to your home, then spend 15 minutes walking before disappearing. Their reports often “kill the deal”, which is why you are probably reading this article.

In our experience, assessors traveling 150 miles from their office indicate that the assessor is likely not geographically competent. This reviewer likely does not have access to the appropriate MLS, a tool necessary to produce a valid review. An assessor traveling great distances is not only a problem, it is simply an indicator of knowledge and skill in the field. (In our experience – excluding VERY unusual property appraisals – the chances of a knowledgeable and knowledgeable appraiser of any area of ​​the market decrease with distance from their office). Hiring knowledgeable evaluators is in everyone’s best interest. Federal and state laws make it clear that no one can attempt to influence the assessor – NO ONE! So how do you increase the chances of a competent appraiser producing a good appraisal without crossing the line?

 

Qualify the bank and who they hire.

Lenders and their appraisal management affiliates (AMCs) ought to hire qualified appraisers, not the cheapest ones. Real estate agents and borrowers should ask lenders about their process for hiring an appraiser. If you ask the questions upfront, it cannot be considered an influence on the assessor, it is the due diligence of the bank. It’s likely that a bank that hires the cheapest and fastest will experience many other internal failures that will impact your loan and interest rate. (Mortgage brokers – you need a fiduciary relationship with your consumer. Do you help them understand the ramifications of a bad lender?)

If the bank’s loan officer cannot answer the basic questions below, could this indicate a lack of knowledge and experience in the bank? If for some reason you are forced to use a particular bank, go to the next step.

 

Pre-screen the appraiser.

Borrowers and real estate agents should pre-screen the appraiser BEFORE allowing the appraiser to access the property. Again, this is not an attempt to influence the assessor, it is an attempt to obtain the services of a competent assessor. Borrowers and real estate agents should ask the assessor questions about their knowledge and experience in the field as a skill selection method.

We have prepared a list of questions that banks, AMCs, borrowers or real estate agents should ask the appraiser before hiring them or allowing them to enter a borrower’s home. There are always exceptions to every rule, but these questions should help you weed out quick, cheap, and geographically incompetent appraisers before they mess up your loan or sale.

These questions are neither insulting nor intimidating. They are strictly for the benefit of the owner, seller, realtor, lender or borrower, and ensure that they will receive a valuation commensurate with the fees paid.

 

12 questions and the reasons for asking

# 1 What’s your name and phone number?

Simple, straightforward and you should write it down for future reference.

Why? We have examples where the designated appraiser sends an inexperienced and unauthorized person to inspect a property.

Why would they do this?

Maybe the appraisal company / AMC can cut corners.

Since you, or your clients, are paying a fee for this service, make sure you get the best, which increases your chances of a good review.

# 2 What is your certification(or license) number?

This question can be intimidating for an assessor who begins to realize that you are serious about the assessor’s qualifications. If they don’t know the answer, they may not be certified. Warning flag which should trigger more questions.

# 3 Where is your office located?

You are trying to get a feel for the experience of the assessor in your area; In the world of assessment, this is called “geographic competence”.

We often find that reviewers who provide bad reviews don’t understand your corner of the world.

So if their office is far away, start asking the assessor about your headquarters. Ask until you are comfortable with the assessors’ knowledge in your area.

Our company, American Home Appraisals, remains focused on three counties, however, we will go further but only when it comes to complex properties that others cannot assess.

# 4 Do you work from home or in a professional office?

If they are working outside of their home, it is an indicator of a one-man operation. We find evaluators working in a professional office who share their experiences, knowledge, and methods.

Evaluators who work like professionals produce a better quality product.

After all, this is what is expected and required by federal law. A one-person office isn’t a business killer, but you should ask questions until you feel comfortable with their knowledge.

# 5 How long have you been evaluating?

We recommend a minimum of 5 years of experience for simple properties and 10 years for complex and unusual homes, waterfront, large square footage or view properties.

# 6 Have you ever been disciplined before?

If the appraiser has been disciplined, you probably have an indicator that the appraiser is cutting corners, or worse.

# 7 Are you a full-time appraiser?

Assessment is complex and requires concentration.

Part-time “form fillers” are of no use to you, the borrower, the real estate agent, or the lender. [I don’t know why AMCs hire them]

If the person works part-time, ask the lender to send someone else.

# 8 Are you licensed or certified?

There are 2 categories of residential assessment licenses (certified and authorized).

A certified appraiser is the lowest level of authorization in a state. Typically, these people are not allowed to appraise expensive or complex properties for loan purposes.

A chartered appraiser is the highest level of authorization in a state. Certified appraisers are authorized to appraise any residential property, in any price range, of any size and complexity.

Appraisers who are only accredited are generally not entitled to perform “complex appraisal engagements” for loan purposes.

The FHA does not accept assessments from “certified” individuals, only from “certified” assessors.

Now, in some areas, such as Northwestern Arizona, the best appraiser in the area happens to be “Chartered” and in other areas, a Chartered Appraiser may be your only choice.

Again, ask questions until you are comfortable with the assessor’s abilities.

# 9 Do you possess a designation, like an IFA, MAI, or SRA?

Certified/licensed appraisers have met the minimum government standard.

A designated assessor indicates that this person has taken steps to become better than the minimum. As an SRA, I have more than twice the training of Certified / Chartered Appraisers. My work is peer-reviewed and I passed additional proficiency tests long before I received the SRA designation. Less than 1% of residential appraisers took the time to obtain an SRA or MAI designation.

A designation is not the ultimate qualification, but it is a reasonable measure of professionalism.

Take a look at my CV, how does it compare to the person who was hired by CMA to appraise your home?

#10 have you ever evaluated properties like this in this area?

An experienced assessor would answer in the affirmative.

Start asking many more questions if the answer is no.

#11 do you a member of the local Multiple Listing System (MLS)?

It’s essential! The MLS is a database of homes that are listed and sold in your area.

MLS is local, there is no national system.

Good reviewers, therefore, have access to the local MLS in your area. Evaluators who do not have access are either incompetent or from remote areas.

For example, MLS in Seattle is different from MLS in Wenatchee. Sedona’s MLS is different from Phoenix’s. Ask the assessor if they have their own private access to the local MLS.

If they don’t have local access – shout for another reviewer and don’t let this one enter your home

# 12 What are your costs to complete this mission?

The fees paid by the borrower are not necessarily the fees paid to the appraiser; The two can be very different.

We find that the fees paid to the appraiser are indicative of the quality of the appraiser.

Why is this important? All major banks use an affiliate commonly referred to as an Assessment Management Company (AMC). These AMCs hire and commission evaluations.

The top 6 AMCs belong to the banks, which seems to create a conflict of interest!

The problem with AMCs? They seem to hire the fastest, cheapest reviewers, not the best reviewers, which is why you’re probably having trouble.

CMAs often send “shotgun” emails to dozens or even hundreds of reviewers and order the review first to respond. Not the best rater, the first to answer. If they are looking at their emails instead of working, how good are they?

In addition, these AMCs take more than 50% of the “fees of nationwide property and appraisal services” that the borrower has paid to the bank.

So, by asking yourself, the borrower, or the real estate agent about fees, try to see if your appraiser is getting paid properly.

We find that properly paid reviewers provide a higher level of service.

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