Don't blame the messengerRichard Borges, president-elect of the Chicago-based Appraisal Institute, says that many people find fault with the appraiser if an assessment comes back lower than the price the seller and buyer negotiated, but skilled appraisers take a lot into consideration when evaluating a home in order to determine the market price. Read: Ho w to challenge that low appraisal "Appraisers look at the condition of a property, the competition a property has and the buyer for that type of property in that area," says Borges. "They are there to provide that unbiased, impartial, independent, objective knowledge about the market and the particular characteristics of the property." This means appraisers should not assess a dollar amount solely to make sure a real estate deal goes through, he says.
Appraisal management companiesAnother major source of appraisal frustration within the real estate community has been the increased use of appraisal management companies (AMCs), says Grabel. Due to recent regulations, lenders and appraisers are not allowed to influence each other, he explains. AMCs have stepped in to fill the void, and now lenders who need an appraisal contact an AMC, which then assigns an appraiser for the property.
There have been complaints that AMCs pocket a large portion of the appraisal fee, choose inexperienced appraisers who are willing to work for less money or who are from out-of-town and aren't familiar with the neighborhood, Grabel says. All these ultimately affect their valuations.Borges counters by saying that AMCs have been around a long time, and there is an important place for them in the industry, but trade organizations -- like the Appraisal Institute -- do try work against any situation that encourages the use of inexperienced appraisers.