Who do appraisers work for? Why won’t an appraiser speak to me?

Appraisers are bound by strict confidentiality rules as outlined by the Uniform Standards of Professional Appraisal Practice (USPAP). When an appraisal is ordered by a mortgage lender – they become the appraisal client, NOT the homeowner/buyer/seller. Although the homeowner or buyer may pay for the appraisal in their closing costs, they are NOT paying the appraiser, rather reimbursing the mortgage lender. Appraisers are paid by their clients, the mortgage lenders. The home buyer is entitled to a copy of the report – it’s usually included with all of the other closing documents – but is not entitled to use the report for any other purpose without permission from the lender. The exception to this rule is when a home owner engages an appraiser directly. In these cases, the appraiser may stipulate how the appraisal can be used; for estate planning or tax challenges, for example.

When will the report be finished?

As discussed in (Why won’t an appraiser talk to me?), the homeowner/buyer/seller is not the client in an appraisal for mortgage lending purposes, and therefore, I am not permitted to discuss the appraisal, including my due date with outside parties. Please understand, even though I may have a due date set by an AMC, the AMC and lender also go through review processes which I have no control or part of and these processes also delay mortgage closings. When in doubt, ask your lender.

My appraisal came in too low or too high – what do I do

An appraisal is an unbiased opinion of market value. An appraiser is not permitted to “hit” a certain value because the client needs the value to be higher or lower. Check the appraisal report for any errors in describing the subject property. If the appraisal was for mortgage lending – please be aware the appraiser is not permitted to discuss the appraisal results with the homeowner directly, rather must communicate through the client (mortgage lender).

Why are appraisals so expensive?

The appraisal industry has been going through numerous changes in the recent years, the largest change of all is the creation of Appraisal Management Companies (AMCs). AMCs were created in response to the 2008 housing crash which accused appraisers of being influenced by mortgage lenders to “hit” certain values. AMCs were the solution because they are a third party (middle man) which keep the appraisers and mortgage lenders separate. As appraisal fees have gone up, the appraiser is not usually the entity which is profiting, rather AMCs are requiring a cut of the appraisal fee. When comparing the cost of an appraisal on your closing documents, understand that the appraisal fee listed is not going 100% to the appraiser, rather some portion of it is being given to AMCs in order to manage the order. Recently, appraisers have been listing the fee that they are receiving in the appraisal report as a way to show consumers what they are actually paying for.

What is an appraisal?

An appraisal is an unbiased estimate of what a buyer might expect to pay – or a seller receives – for a parcel of real estate, where both the buyer and seller are informed parties.

What should I expect during the appraisal appointment?

An appraisal can take anywhere from 20 to 30 minutes for normal sized properties. Large properties with unique characteristics can take longer. The appraiser will tour the home and take pictures of each room and mechanical items (furnace, boiler, hot water tanks, electric panel, etc.). The appraiser may ask questions if the property owner is present such as the age of the roof, windows, mechanical items, and interior features. The appraiser will measure the outside of the home and take exterior photos.

How should I prepare for the appraisal appointment?

The best practice is to make sure all pets are crated or in one room. The home does not need to be spotless! The photos are being taken to show the client the overall condition of the property. That being said –  tidying the rooms in order to make entrance into and exit out of each room as easy as possible for the appraiser is recommended. If you have a copy of the following documentation, it will assist the appraiser in creation of the report: survey, deed, recent tax bill, building plans.

How are FHA appraisal appointments different?

If you are applying for an FHA loan please be aware that the appraiser will need to complete additional items. FHA requires an appraiser to enter the attic and any crawl spaces. If your property has an attic or crawl space, make sure it is accessible to the appraiser. The appraiser will need to test the utilities (electricity, air condition/heat, water pressure, etc.). Make sure all utilities are on.”

What is the difference between an appraisal and home inspection?

Appraisers DO NOT inspect your home for structural, mechanical, or other deficiencies. An appraiser may note issues that they are aware of, but it is not the responsibility for the appraiser to ensure the home is in good condition. A home inspector is responsible for determining if there are any deficiencies in the property. Commonly, a home inspection report will evaluate the amenities and the requirements of the house: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

What is the difference between an Appraisal and Comparative Market Analysis (CMA)?

The difference is based on the person who is performing the report. An appraisal is completed by a certified real estate appraiser, while a CMA is completed by a real estate agent/broker. A CMA is used by real estate brokers to determine the price to list a property for sale on the market. An appraisal is a report which details the property, the market, and carefully documents support for the opinion of value. In Pennsylvania, certified real estate appraisers must have over 200 hours of education, over 2,000 hours of supervised experience, and sit for a certification test after two years

How are appraisers certified?

In Pennsylvania, certified residential real estate appraisers must have 200 hours of education, 2,000 hours of supervised experience, and sit for a certification test after two years. Certified general real estate appraisers have more rigorous requirements of 300 hours of education, 3,000 hours of supervised experience and sit for a certification test after three years.

Where does an appraiser get their information?

Gathering data is one of the primary roles of an appraiser. Their are numerous sources appraisers use such as the home inspection, property condition reports, county property records, county deeds, local multiple listing services (MLS), local brokers, FEMA flood data, and first hand information from the homeowners

What is USPAP?

The Uniform Standards of Professional Appraisal Practice is the generally recognized ethical and performance standards for the appraisal profession in the United States.  USPAP was adopted by Congress in 1989, and contains standards for all types of appraisal services, including real estate, personal property, business and mass appraisal.  Compliance is required for state-licensed and state-certified appraisers involved in federally-related real estate transactions.  USPAP is updated every two years so that appraisers have the information they need to deliver unbiased and thoughtful opinions of value. Please see The Appraisal Foundation for more information.

Where can I find more resources?

Centre County Association of Realtors has many useful resources on buying and selling real estate in and around Centre County. The Appraisal Foundation is the resource which publishes USPAP.