(01/17/2011) - Home buyers and sellers who know the role of professional, licensed
appraisers can be sure homes are financed based on true values and enjoy a
smooth transaction.
That sentiment has prompted the Appraisal Institute to offer consumers the
timely "Helpful Tips: What Consumers Need to Know About Real Estate
Appraisals."
The new rules are designed to protect consumers and keep appraisers independent, free from third
party pressure, honest and compensated fairly.
The institute says "Appraisers have been wrongly accused of prolonging the
nation's real estate downturn by developing value opinions that are below
proposed sale prices."
To the contrary, "Credible and realistic value opinions help to stabilize
real estate loans and investments, which promotes socially desirable real
estate development. Appraisals are particularly valuable because they are an
objective and unbiased source of real estate information," the institute
says.
"Too many consumers in this struggling real estate market face problems
with appraisals when attempting to buy or sell a home," said Appraisal
Institute President Joseph C. Magdziarz, MAI, SRA. "But rather than
passively endure delays in closing a sale, home owners and buyers can take
proactive steps to avoid pitfalls," he added.
According to the institute, here's what consumers need to know.
• Learn the role of mortgage appraisals. Lenders order appraisals to
learn what a property is worth in the open market
so they can determine if the collateral supports the loan. Not necessarily
provided to confirm a sales price, appraisals can help both lenders and
consumers make sound financial decisions.
• Hire a qualified appraiser. Demand the use of a qualified,
experienced, licensed appraiser. Memberships in good standing with a state
or national trade group also provides some evidence the appraiser knows his
or her stuff. Ask the lender for the appraiser's qualifications.
• Join the inspection. The institute says consumers can ask the
lender if he or she can accompany appraisers on the inspection tour. Sellers
may provide the appraiser with information they consider important. Take
notes. Did the appraiser spend enough time at the property to observe
important features or improvements or potential problems?
• Get the appraisal disclosed and examine the report. Consumers
have a right to a copy of the appraisal under federal law. Look for common
errors including misuse of adjustments to comparables, disregarding special
financing and concessions, or miscalculation of the living area.
• Appeal the appraisal or get a second opinion. Lenders typically
offer appraisal appeal procedures, known as "Reconsiderations of Value." If
you are aware of recent, comparable sales information or items that may not
have been available or
considered by the appraiser, provide those to your lender.
If problems are found with the first appraisal, you should obtain a second appraisal.
Make sure your lender uses a qualified appraiser the second time, if they
didn't the first time around.
