How To Get a Better Appraisal


Local appraisers were recently asked what factors are holding back higher appraised values. The predominant response was regulations - USPAP, FNMA, Freddie Mac, UAD and other Federal laws, i.e. FIRREA, Dodd-Frank, etc.

USPAP (Uniform Standards of Professional Appraisal Practice) can be considered the quality control standards applicable for real estate property appraisal analysis. USPAP requires that appraisers be familiar with and correctly utilize those methods which would be acceptable to other appraisers familiar with the assignment at hand and acceptable to the intended users of the appraisal. Any violation of USPAP is a violation of state law for which an appraisers' license can be revoked.

 

 

The multitude of requirements from mortgage underwriters was cited as another issue. Fannie Mae, Freddie Mac, FHA, VA and RD guidelines (as well as investor overlays) pose another hurdle as underwriters request data or clarification on appraisal issues and values. The high incidence of investors requiring buybacks of loans have made the underwriting process tougher not only on appraised values but have made the entire underwriting process more cumbersome (as we are all well aware).

When completing an appraisal, several different market valuations are used. There is the general market (i.e. the entire area including several miles out (most times) and all properties encompassed in that area), there is neighborhood specific (located within the immediate marketing neighborhood that can range from several miles down to a few blocks and encompasses all properties within that defined area) and finally, property specific neighborhood trends (these are located within the immediate marketing area but are only determined to be "comparable" to the subject). In many instances these trends are conflicting. There may be an overall increase in the general market but a decrease in values for the specific comparable market trend.

Appraised values generally tend to be derived from historic data and appraisers are only able to arrive at market value based upon a set of rules and not "market driven criteria". The definition of market value has changed from "highest most probable value" to the current "most probable".

As a REALTOR®, you can be proactive and assist the appraiser by following a few of the simple steps bellow.

By taking these actions, you can improve the appraisal process and help move the sale forward to close!

 Thanks to Bill Holmes of Ann Arbor Mortgage and Laurie Buys of The Charles Reinhart Company for contributing their time and insight for this article. 

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