The home appraisal can be a major source of stress for homebuyers. Buyers have little to no control over it and are legally prohibited from trying to influence the appraisal. However, an unfavorable or error-ridden appraisal can sink the entire sale.
There are basic things you can do to help ensure your home appraisal goes smoothly, or even prevent a bad appraisal report. The accuracy of the appraisal is going to depend on whether the appraiser “gets” the property. That is, are they familiar with the area and type of property, can they find accurate comparables, and are they sufficiently experienced and qualified for the job? Those issues (and others) could determine whether your purchase goes forward or falls through.
Here are 11 questions that will help you achieve an accurate, favorable appraisal.
There’s an enduring myth in the real estate world that it’s against the law to even talk to your home appraiser. That’s not true — what’s illegal is trying to influence the appraisal. Ultimately, it’s a fine line and an issue that comes down to timing. Interrogating or talking to the appraiser while they’re carrying out the actual appraisal could be considered an attempt to influence them, which is against the law. For extra safety, ask your questions before the appraisal starts.
Because of laws prohibiting efforts to influence home appraisers, some experts recommend being extra cautious and having your agent deliver your questions. A lot of this depends on the particular questions you want to ask, and the tone you’d ask them in, so talk to your agent beforehand about whether you should use them as a surrogate — and if they’re willing to do this.
Home appraisal is as much art as science, so you want an experienced appraiser handling your report. While there are certainly some very experienced, highly competent part-time appraisers out there, a part-time appraiser who only handles the occasional job is less than ideal. If an experienced appraiser dramatically undervalues your prospective home, the lender might not approve your loan— turning your American dream of homeownership into a nightmare.
Familiarity with the area is a very important factor in an accurate appraisal report. If your appraiser works and lives downtown, and they’re appraising property in an outer suburb, that could raise legitimate questions about whether they’re a good fit for this job.
This is a variation on the previous question, but drills down more specifically into their work experience. An appraiser can be professionally familiar with an area even if they don’t live or work there; however, if they don’t ever conduct any appraisals there, that’s a red flag.
There are more types of familiarity than simple geographic familiarity. Even if your appraiser has done a lot of appraisals in your area, they may not have experience with your specific type of property. For example, if they’ve exclusively appraised modest starter homes, and you’re targeting a high-priced condo, they may not have the necessary experience to produce an accurate appraisal.
If you’ve looked at the latest homeownership statistics or browsed Zillow recently, you know the market changes fast. Even if your appraiser has looked at similar properties in your area, recency matters. If those appraisals happened three years ago, they might not have a good grasp of the present-day landscape.
The in-person appointment is just one part of the appraiser’s job. After they visit the property they’re appraising, they should also do in-depth research on the property’s history, as well as look at recent sales of similar properties to contextualize the home.
The best, and arguably only source for this detailed, up-to-date information about recent sales is the local multiple listing service, or MLS. Your local MLS has detailed information about current listings and recent sales that isn’t available to the general public; only real estate professionals with active paid memberships can access the MLS.
If your appraiser doesn’t have access to the MLS, their appraisal report isn’t going to be as accurate as it could be.
Appraisers can hold various levels of certification. Licensed appraisers are at the lowest, most basic state-accredited level, and may be novice appraisers. Certified appraisers have a higher level of state accreditation, and usually have wider expertise.
Some appraisers seek out additional credentials through the Appraisals Institute. To qualify for these credentials, they have to pass frequent exams and adhere to a code of ethics. Appraisers with these advanced credentials usually have much more industry-specific education and experience than appraisers with only state-issued licensure or certification.
This question might seem mildly intrusive, but it’s quite relevant. After the financial crisis of 2008, some critics alleged that some lenders may have used their appraisers to produce inflated appraisal reports, which would then qualify for larger, more profitable loans.
In response to these allegations, the industry created appraisal management companies, or AMCs, to act as a buffer between lenders and appraisers. When a lender needs a property appraised, they put in a request with the local AMC, who finds a local appraiser and sends them to the property.
However, some AMCs skim off half or more of the lender’s fee. This means your appraiser may be working for a much less-than-standard fee for the industry. While this doesn’t guarantee you’ll receive substandard service, it does increase the chances of it— after all, you get what you pay for. If your appraiser is receiving a very small fee and is cramming a bunch of appraisals into his day to make up for it, that’s legitimate cause for concern.
This is a basic but important question. If the appraiser has a record of sloppy work or unethical practices, that’s a serious red flag.