Taking charge of the appraisal process : Rooftop Views

Rooftop Views

Taking charge of the appraisal process

According to the America Society of Appraisers it is now vitally important that home buyers and sellers understand a home’s current market value as houses are staying on the market longer, and prices are falling in many areas.

“With all the publicity about foreclosures and scams surrounding the real estate finance industry, consumers are understandably nervous about buying and selling a house,” said Mike Evans, a Fellow of the American Society of Appraisers. “As long as they understand how to stay on top of the transaction, they’ll do okay.”

The system is structured so that the mortgage company has control of the appraisal process. The mortgage company hires the appraisers; not the buyers—even if they are paying for the report. The pressure on the appraiser happens because deals are made or broken depending upon whether a house appraises for the sale price or not. Buyers need to make sure that they are getting an accurate home appraisal and not just an appraisal that hits the right number to make the deal go through. If they don’t, they may buy a house that costs more than it is worth and they will lose money if they have to sell it within a few years.

“Home buyers need to protect themselves by checking the credentials of everyone involved in the transaction and requesting that their assigned appraiser be state licensed and accredited by a national professional organization,” said Evans. “Appraisers with advanced accreditations have more to lose if they succumb to pressure by the agents than appraisers who are new to the field or only maintain the minimum certification required by law. They also have more experience dealing with this type of pressure and are not as affected by it”.

ASA understands that lender pressure is a reality for many appraisers and supports legislation to change the system. In the meantime, however, they offer the following advice to consumers about how to protect themselves:

- An appraisal is not the same as a home inspection. Appraisals are an opinion of value and not an assessment of individual problem areas. Home inspections determine the condition of the property.
- Home buyers can request that their lender select an accredited appraiser who belongs to a professional appraisal society. Real estate appraisers accredited by the American Society of Appraisers are required to adhere to the United Standards of Professional Appraisal Practice (USPAP), which are standards of best practice and ethics recommended by Congress. In addition, ASA-accredited appraisers have demonstrated their skills, completed extensive experience and education, and must adhere to the ASA code of ethics.
- Home buyers should ask their lender for a copy of the appraisal report—it is a consumer’s right under federal law. Reading the appraisal report will give the home buyer an idea about what similar houses sold for and what factors made the house worth more or less. Homeowners then have an idea of what fixes could add value to their homes before they sell it.