Tag Archives: Appraiser

Does the Shortage of Appraisers Affect Your Business?

9 Aug

There have been two recent articles (Reverse Mortgage Daily and Appraisal Buzz) that remarked on the current shortage of appraisers.  Both were accompanied by a graph from The Appraisal Institute showing a steady decline in the number of both licensed and active appraisers nationwide, with thousands dropping off the roster each year.

With the current increase in mortgage activity due to low rates, there is even more of a demand, so why should this be the case?

Part of the problem is the current protocol where lenders must order through an appraisal management company.  These AMCs collect a fee, which is deducted from the total cost of the appraisal.  A borrower pays a typical $450-$525 (in New York, anyway) for a single-family appraisal but the appraiser now earns only $300 or so for the job.

Friends in the appraisal business say that they cannot earn a living if their fee is so low.  And friends in the mortgage business report that it can take days for the AMC to find an appraiser willing to accept a particular job.  They also wonder at the quality of the appraisal work being done.

The cost of appraisals is bound to go up if the trend continues, in order to provide adequate compensation for appraisers to keep working.

We would love to see comments relating your experiences with appraisals and AMCs – please submit them below!

Low Appraisal Values Can Hurt Chances For Refinance

26 Jul
Line art

Line art (Photo credit: that one guy with the camera)

Home values are creeping upwards.  Slowly, and not consistently.  It is estimated that up to 25% of homes with mortgages are currently underwater because of the drop in home values over the past five years.

Anyone who has looked for a refinance in the recent past can tell you that a low appraisal can kill a deal.  The appraisal process changed a couple of years ago when control was placed in the hands of the AMCs (appraisal management companies).  Brokers no longer have a direct line of communication with appraisers, though they may submit an appeal through the AMC.

Homeowners can, however, take steps to get the most accurate appraisal value.  Careful examination of an appraisal may show homes used for comparable sales  were distressed sales, or houses which were not the same size, style or age as the subject property.  The appraiser may have failed to include a recent sale, especially if it was done privately.

A homeowner may respectfully request the appraiser consider additional information.  He can ask around the neighborhood to see if any houses have sold privately and may not have appeared on MLS.  He may be able to alert the appraiser that certain sales were foreclosures and do not reflect the value of the area.

The homeowner may also accompany the appraiser when he does his inspection and point out improvements that may not be included in the latest survey, such as a finished basement or half-bath.  A list of improvements that are not easily spotted, such as energy-efficient windows or a new central air conditioning system, can be handed to the appraiser.

But be warned: most people are surprised, if not shocked, at how their home’s value may have fallen in the last 5 or 6 years.  And cost does not equal value when it comes to most home improvements – $20,000 worth of new cabinets does not increase the home’s value by $20,000.