“Many REALTORS® think they’re not allowed to speak with an appraiser about their listing…. They’re not only allowed – they most definitely should,” says Tom Francis, appraiser with Real Property Analysts, Inc.
Ever since the Dodd-Frank appraiser independence law was established in 2010, communication between the lenders, REALTORS® and appraisers has gotten a bit foggy.
“Dodd-Frank has created a lot of misconceptions about who can speak to whom,” says Francis. “For example, communication between REALTORS® and appraisers is almost nonexistent; and that’s not the way it should be.”
Since Dodd tightened up the rules in 2010, REALTORS® are unsure on how to speak with or even contact an appraiser. Donna Grove, REALTOR® with Superior Homes Realty, says “I’ve had lenders tell me not to contact the appraiser—that I’m not allowed to. Communication is not clear—the regulations have completely changed since Dodd-Frank.”
It’s not just REALTORS® who are bamboozled by the Dodd rules. Marianne Collins, Executive Director of the Ohio Mortgage Bankers Association says, “Because the Dodd-Frank rules are so complex, large lenders have legal staff to take care of and interpret communication rules. However, smaller lenders don’t have that luxury, making it much more difficult for them to fully comprehend the guidelines.”
Without proper understanding of the rules, accurate information cannot be supplied. The perception that REALTORS® and appraisers are not allowed to speak to one another is simply untrue. The rule states the only party not allowed to speak with the appraiser is the person(s) directly engaged with the loan origination side of the business (the lender). This is to prevent any illegal activities, such as bribery, threats and predatory lending practices.
However, there are restrictions as to when REALTORS® can speak with the appraiser. REALTORS® are only allowed to speak with the appraiser before the appraisal report is submitted to the client (the lender).
“Before the report is submitted, the line of communication between the REALTOR® and appraiser can be completely open,” says Francis.
“Meet the appraiser at the property and share vital information that includes showing activity, number of offers, and sales data. The majority of appraisers prefer REALTORS® to participate because appraisers want to discover key information before a report is completed.”
Another issue REALTORS® are having with the appraisal process is appraisers appraising properties outside of their territory.
“I had an appraiser come from Westerville to appraise a listing in Italian Village, which resulted in the appraisal being off by $10,000,” says Brandon Prewitt, Broker/Owner of RE/MAX Metro Plus. “If the appraiser isn’t familiar with the area, how can they properly appraise the home’s value?”
Outside appraisers could be a result of the overall lack of appraisers in the industry. Anne Petit, Superintendent for the Ohio Division of Real Estate, says she has seen a significant reduction in the number of appraisal apprentices in recent years.
In 2013, there were 63 appraiser assistants registered, compared to 90 in 2009. The number of certified appraisers is dropping, as well. In 2009, there were 286 appraiser license/certificates issued, compared to just 72 in 2013, according to the Ohio Division of Real Estate.
“The number of new appraisers coming into the industry isn’t down much from 2012, but it is from 2009,” says Petit.
Much of the decrease is attributed to the new education qualifications set to take place in 2015. Come Jan. 1, 2015, to become an appraiser, one needs to have a bachelor’s degree, instead of (currently) a two-year degree, along with 3,000 hours in an apprenticeship program before they can sit to take the certification test.
To throw a wrench in the works, lenders can refuse to work with appraisal assistants, making it very difficult for some apprentices to gain field hours. “Some experienced appraisers are very reluctant to take on new trainees because a number of lenders prohibit certified appraisers from using an apprentice or assistant in any part of the appraisal process,” says Petit.
However, Petit believes because the new education requirements are already out there, appraiser applications will flatten out next year and begin to tick up in 2015. Petit says there have also been discussions about finding alternatives to field training, such as virtual inspections and other technology-driven opportunities to gain those required field hours.
Even though there’s a shortage of appraisers in the industry, that doesn’t mean you can’t have a top-notch and seamless appraisal. In a recent REALTOR® Magazine webinar, Anna Ruotolo with RPM mortgage outlines what steps to take to ensure a quality appraisal process.
Contact the appraiser before they arrive at the property to ensure they are not an outside appraiser. If you are unsure how to contact the appraiser, call the Centralized Showing Service (CSS) for the contact information.
- Ask how far their office is from the listing?
- Are they familiar with the area?
- How frequently do they work in the area?
- When was the last time they were in the area?
REALTORS® do have the right to deny access of an appraiser. Make sure the appraiser has geographic competence.
After you have qualified and accepted the appraiser, e-mail him/her
- Your predominant features list
- Full listings for 4-6 best sales and 3-4 best active listings
- Documented discrepancies with assessors data
Share this information with the appraiser to show them how you came up with your value.
Meet the appraiser at the property:
- Point out features on the list
- Review comps you used to develop the listing price
- Do NOT sell them; they are working—not trying to buy a house. Be courteous and respectful.
Review the appraisal:
- Are there gross errors on comps that were used?
- Is there a gross error on the property?
- Be specific, remain tactful in your communication
- Send in additional good comps and list any detailing errors to the AMC. (Most AMC’s contact people are customer service reps, not appraisers so be very specific in your details so they can rely the message)
The bottom line, agents are really cutting themselves short by not communicating with the appraiser. Follow the steps, communicate clearly, and above all, be respectful to the appraiser.
For additional information on Dodd-Frank, appraisal independence, or communication between an agent and an appraiser, visit realtor.org/appraisal.