Here’s something you might have heard at some point:

“That appraisal firm is really good.”

Ok, that compliment means different things to different people. I am going to try to rank them by what I perceive to be the majority thinking on it. Although my rankings may be biased or completely wrong, the concepts are not:

  1. Speed — This is the number one priority of many consumers of appraisal services. The appraisal is often the last item to be completed on a mortgage approval. It can make or break the deal if it is done too slowly. The proliferation of appraisal management companies, who essentially are only able to rate appraisers by their turnaround time, have created a legion of form-fillers, who can’t afford, nor do they have time, to do a credible job.

  2. Cost – Keeping appraisal costs low, is perceived as a way to make the lender or mortgage broker more competitive. Of course, the assessment of collateral of a $1M mortgage can be decided by a $100 difference in fee and a world of difference in quality. Actual payment of fees to the appraiser are often used as leverage for making the number. If the fees are require in advance, less leverage is available. In the current environment, the appraiser has been relegated to a form-filler and the process is really seen as a “have to do” with little relevance to the overall objective, hence downward pressure on fees continues.

  3. Service – Overlaps speed and cost. Making appointments with sensitivity, handling the applicants professionally, client has easy access to appropriate appraisal staff to get the report turned around in a reasonable period of time. Moral flexibility (aka having business savvy) is very important. Being able to reach out to the appraiser or their superior to negotiate the value is key.

  4. Miscellaneous. Anything can be inserted here. You name it.

  5. Miscellaneous. Anything can be inserted here. You name it.

  6. Miscellaneous. Anything can be inserted here. You name it.

  7. Miscellaneous. Anything can be inserted here. You name it.

  8. Miscellaneous. Anything can be inserted here. You name it.

  9. Miscellaneous. Anything can be inserted here. You name it.

  10. Competence in a specific market – This is a distant placement in the rankings because the person who typically orders an appraisal for mortgage purposes has a financial incentive to get a desired result in a predetermined time frame. Clients rarely ask an appraiser what their experience is in a specific market because the perception is that the process is formulaic and its simply a matter of gathering data, inserting it into a form and the result is automatically determined.

A wise appraiser I know once told me:

Everyone in a sales transaction knows the value before the appraiser does. The buyer, seller, listing agent, selling agent, seller’s attorney, buyers attorney, bank, bank’s attorney, mortgage broker, and title company already know the value. The appraiser is simply late to the party.

Here’s a sample of appraisal firms who market themselves as fast. No real discussion of quality/competance other than brochure-speak.

  • Note the frequent mention of religious background for added proof of integrity. I am not questioning a religious conviction here, but does this make up for the loss of quality that a guaranteed appraisal turn time “or your money back” could result in? I don’t see how. The clients are nearly all real estate brokers and mortgage brokers. I wonder how many have received a “low” appraisal? Its also a very large coverage area.

  • 48 Hour Appraisal More of the same but less personal and more brochure-speak. Large coverage area.

  • Next Day Appraisal Covering all of Rhode Island and parts of Massachusetts. Discounts to loan officers (why would they be speaking with them directly?) Same day service on request.

  • Aggressive Appraisals Offers 24 hour turn time. Covers most of the New York region. I have linked to them before on Matrix. I still can’t believe they use that name…Aggressive = High. So you get the best of both worlds, a high, fast appraisal.

Good grief.

2 Responses to “Good Appraisers, If Speed Is Only What You Need”

  1. Jose Parrot says:

    I have maintained for years that the real estate appraiser should work on behalf of the Buyer as a consultant providing valuation and other expertise. The regulators should hire their own appraisers if they need referee or to supervise the lenders. The lenders can look out for themselves by having qualified mortgage officers. Appraisers work way too cheap for the financial responsibility they take on.

  2. Barry Noble says:

    You turned a light on in my head with the critique on appraisal company names. I was talked into using the name by a short term and now departed partner – and reading your comments on the 24, 48 hour etc. appraisal names, I feel like hiding in a hole until I change the name. I am so not a follower, not a member of the appraisal flock of sheep run by lender herders. I have advocated preached about accurate and ethical appraisals and provided detailed and very carefully researched appraisals for 17 years in the So Cal Desert Resorts area around Palm Springs and before that in greater Los Angeles. I am also a Broker, but love appraising. I have stood my ground against multiple lender attempts to manipulate values and turned down so many jobs because I will not be lead by a lender nose ring. Those banks and lenders I now work with have expressed confidence in my reports and realize I won’t slant a value for any report, up or down, in any market cycle. I just have to get rid of the FastAppraisalValue name because of the stigma you so aptly pointed out, and continue to enjoy my work and be proud of the reports I can stand by with head held high. Now, what name best suits my work Ethic? Barry Noble