Mike Lefebvre is an “uncommon agent” with Hallmark Sotheby’s in the Boston area. He’s also a big Boston Red Sox fan which makes him alright as far as I’m concerned. He has the unique perspective of being both an appraiser and a Realtor. We’re happy to have him as our guest here on Real Estate Radio USA.
OK, let me start by saying “GOOD” appraisers will NOT be influenced by a listing agent. It’s merely a catchy post title to get you to read further. But there are some things listing agents can do to make the appraisal piece come together more smoothly for their properties.
We had two deals fall apart in my office last month because the appraisal came in lower than the agreed upon purchase price, and I feel, as both an appraiser and as a sales agent, that these crises could have potentially been avoided.
You list a property for sale, market the hell out of it, work your tail off to sell it to every living, breathing creature that shows even a remote interest in it and finally you find a buyer (or more likely one is handed to you). It’s all good.
Both parties (eventually) agree to pricing and terms. A contract is signed. The buyers go for financing. Your phone rings and it’s the bank’s appraiser. You set an appointment to meet them at the property to conduct an appraisal inspection.
Most agents I work with treat this step as one of the “boring details” of the process. The truth is it’s actually a missed opportunity where a lot of agents simply drop the ball and put the deal in jeopardy.
It used to be that if someone wanted to buy a property, ways could be found to “get ‘er done”, but the appraisal piece is becoming an increasingly more important component in today’s purchase transactions as lenders really tighten the screws on the lending requirements.
So here’s my list of do’s and dont’s for listing agents to make friendly with the appraiser during the inspection:
Do arrive on time for the appointment. Duh. Common sense for every appointment really, but if the appraiser is having a bad day and has to wait an extra 15-20 minute for you, usually in the rain, it just starts the whole thing off on the wrong foot.
Do bring a copy of the P&S. A house is only worth what an educated buyer in the market is willing to pay for it, and a signed purchase and sale agreement is the strongest piece of evidence you have to support your case.
If it’s not fully executed yet, give them an unsigned or partially copy and tell them you’ll fax/e-mail it over as soon as a fully signed one is available. They will need the information contained in the P&S for their appraisal report.
Do include a copy of the field card and the deed. You did pull both of these documents when you listed the home, right? The appraiser will most likely have these documents already, but if not, you may have saved them a trip. Plus it shows a level of professionalism on your part.
Feel free to include relevant comps. With “relevant” being the key word. It’s an appraiser’s job to research the comps, but if your house is a particularly tricky or unique one, it doesn’t hurt to make some suggestions. If the comps are less than three months old (yes, these days 3 months is the preferred time frame!), less than a mile away and within a 25% range (smaller or larger) than your house, throw them in the folder.
Appraisers (and the lenders they work for) like to look at sold comps. Do not tell the appraiser about all the great active listings in the neighborhood that support the purchase price. Active sales do not set the market; closed sales do.
Pending or under agreement comps are second class citizens as well. Recent, proximate, comparable closed sales are the meat the we appraisers are looking for.
Don’t try and sell the appraiser the house. You’ve already sold it. You’re in the home stretch. Don’t try and sell it again…especially to someone who is not there to buy it. Feel free to point out unique features that may not be so obvious on paper which might add to the property’s value, but don’t wax poetic about the “glorious fireplace family room” or “the expansion potential in the unfinished basement”. Appraisers don’t care. Like Joe Friday said, “Just the facts!”
Drop a Friendly Reminder Hint. Depending on their work load (which is lighter for most these days), good appraisers will turn-around their completed appraisal report within 24-48 hours after seeing the house. It never hurts to say, “Just so you know, these buyers have a mortgage commitment date of X. Do you think that leaves you enough time to do what you need to do?”
Don’t Show Up Empty Handed. It seems like a lot of agents take the approach that all I need to do is let this person in the house and let them do their thing. You can do that, but you are leaving the entire future of the deal (re: your commission) in the hands of someone else without so much as even a little input on your part. If the appraisal comes in low, two very bad things will happen. (1) the financing will not come through and (2) the buyers will get so freaked out that they will run scared for the hills, never to return to this property again.
Use this very unique one-on-one opportunity to present the appraiser with all the tools and facts they will need to do their job.
Follow Up With an E-Mail. A very short e-mail sent to the appraiser later that day goes a long way! “Pleasure meeting you out at 123 Smith Road today. Please let me now if there’s anything else you need from me.” Less than 60 seconds to write, and it leaves the door wide open if they happen to run into any snags that you can potentially help advert before the appraisal gets into underwriting.
In the end, the appraiser is going to do his or her job the best way they know how and you really can’t influence their final opinion of value. But if you know in your gut of guts that your listing is worth well above the agreed upon list price, bring your evidence to the appraisal inspection.
When presented in a consultative, non-threatening way (ie: “Here’s the signed P&S, a copy of the field card, a copy of the deed and the relevant comps that I used to come up with the pricing”) you can certainly make friends with the appraiser. And trust me, that’s a good friend to have. But when it’s presented in a “You-Don’t-Know-How-To-Do-Your-Job-So-Let-Me-Do-It-For-You” arrogant kind of way, it will always have the inverse effect.
Then again, there is one agent I always run into on appraisals in town that for some reason consistently has Hershey’s miniatures with her on our inspections (as well as everything else I mentioned above).
Those appraisal inspection always go pretty darn smoothly. I’m just saying….something to think about there, Mr. Goodbar. Please leave your thoughts below, and if you’re not sure whether a particular material object would help push your next appraisal through, please send me the item and I’ll be glad to let you know what I think.
I think Mike has touched on several very powerful points with regard to a relationship between an agent and an appraiser. I hold an active REALTORS License, but am an appraiser by trade. I became a REALTOR to better help me understand an agent’s responsibility and therby helping me in my appraising.
Here in the Atlanta, GA area, agents just do not want to or care to take the time to get to know the appraiser. I have actually been ‘fussed’ at for not having the lock box key on me, thereby requiring the agent meet me at a property. My experience with agents is that they don’t have the time, nor want to take the time to speak with or meet with an appraiser. But many will tell you that an appraiser has ‘killed’ their deal.
I think the bridge between appraisers and REALTORS should be a strong one on which to be used to promote business. But so often just find that it’s a bridge that no one wants to cross.
I, myself, have never felt pressured to use ‘comps’ that may be provided by the REALTOR. Although, I have at times, had to justify why their ‘comps’ weren’t considered in my final report.
So many times, communication between the two groups of people would benefit both sides. If only it could happen.
I appreciate Mike’s candid comments. Well said.
Susan Lynn
ProApp, LLC
susanlynn@proappllc.com
As both a State Certified Appraiser and a Realtor I thought this was right on target! Great job Mike!
Gregory H. Dalessio
St. Cert. Res. REA # Rd 2759
SL # 571729
Thank you for the comments Susan and Gregory! It’s great to hear from people of the same breed. I feel our unique combination of skills positions us well to provide insight to both sides of the appraiser-Realtor relationship. Ever since the lending requirements have gotten stricter, more and more agents in my office are coming to me with appraisal questions. A few years ago, if you signed a P&S and had a pulse, the deal went together. Now that things have returned to normal, I think this message is more important than ever.
Thanks again! I really appreciate the time you spent reading and commenting.
-Mike
mike@theuncommonagent.com
This article should be published in every real estate agent newsletter, magazine, website! Too often the appraiser and agent relationship is one-sided…especially when the appraiser needs more information about a comparable sale, and has only 24-48 hours to complete the appraisal.
I would like to add something to the “relevant comps” point…with current market conditions being stable at best, if not declining, some of your best comps may be pending sales or even active listings. While there should always be 3 closed sales in the appraisal, using pendings/actives as comps 4-6 could further support your value especially if you are making time adjustments. After all, the subject would be competing against those listings if on the market. Adding a 4th comp that is an active/pending sale has been a requirement with my company, a national lender, for years. Just something to think about!
Lara,
Thank you! And I agree about the pendings and actives. I am always include them on the third or fourth page. I just don’t want listing agents to present me ONLY with actives and pendings…obviously that won’t fly and doesn’t help anyone get the deal closed.
Thanks again for the kind words. I really appreciate it!
All My Best,
Mike
Enjoying your blog. Just one thing I have an issue with:
“Depending on their work load (which is lighter for most these days), good appraisers will turn-around their completed appraisal report within 24-48 hours after seeing the house.”
How good an appraiser is is not determined by his/her turn time. As an appraiser who performs many retro-spective reviews, I can say that many appraisals that were turned around quickly lack substance, analysys, are sloppy and are rarely USPAP compliant.
A good appraiser does all the research and due dilligence, provides proper data and market analysis and even bothers to research things like the proper zoning rather than throwing in “residential”.
Form fillers have quick turn times. Real appraisers will send the appraisal in when all the tTs are crossed and Is are dotted.
Annemieke (love the name!)
Thanks for your comment. Point taken. I guess it’s more of a personal mandate that I get my T’s crossed and I’s dotted within 24-48 hours after the inspection. I agree that a “good” appraiser can not be judged by his/her turn time alone. We all know there are reports that flow from the keyboard and fall nicely into place with ease and then there are those that seem to have something against us getting them written.
This almost leads into a whole other post about appraiser pressure, doesn’t it?
Thanks for reading and taking the time to comment. I really appreciate it!
All My Best,
Mike
Mike,
In a non-disclosure state like Oklahoma doing due dilligence on research is often a challenge, even in the cookie cutter appraisal. Add to that complex, rural, etc etc etc and you can be out of time quickly. You show me one of those that were turned around in 24-48 hours and I’ll show you all the short-cuts, canned comments and lack of research/analysis.
Fair enough. Appraising is different for all different parts of the country. Sometimes I forget how lucky I am to have a wealth of research available online to perform most all of the due diligence needed. I’m also lucky to be able to limit my territory to a fairly small market area. I tend to appraise in a lot of the same towns and the same neighborhoods, which helps. I know by heart the zoning for most of the towns I cover. Field cards and plot plans are very informative and 99% available online at 10pm at night (often when a lot of us end up writing our reports). I can see how your situation may be a heck of a lot different!
Just curious. Do Oklahoma appraisal fees run similar to here in Massachusetts? I charge $275 ($300 for some clients) for SF and $450 for MF.