Phoenix Real Estate Blog: 6 Steps to Ensure a Fair Appraisal

[Bob Stahl]

Two years ago, most of the rules related to real estate were lax. Or, at least, regulators looked the other way. Today, the pendulum has swung completely to the other side – now everything from the mortgage to the appraisal is scrutinized carefully. Where appraisers were encouraged to appraise homes for high values three years ago, they’re now being “encouraged” to assign low values to homes.

But there are steps you can take to ensure that your appraisal is as fair as possible; because whether you’re buying or selling a home, looking to cancel your private mortgage insurance, appealing your tax assessment, or thinking about remodeling, you’ll need an appraisal -- which is an objective determination of the market value of the home.

Step 1: Use a local, licensed, certified appraiser. Arizona requires that appraisers be licensed; ensure that yours is at http://www.appraisal.state.az.us/.

Step 2: Ask what professional designations the appraiser has, and from what groups. According to a recent Realty Times article, “Affiliation with the Appraisal Institute or other trade group is also key. Institute members typically work beyond state licensing and certification requirements to earn a Senior Residential Appraiser (SAR) designation just as real estate agents work beyond state licensing requirements to achieve designations based on greater education and experience.”

Step 3: Ask how long the appraiser has been in practice. More experienced appraisers are more likely to a) know how to determine the market value of a property even in a highly volatile and unusual market; and b) operate with integrity – if they didn’t, they wouldn’t still be in business.

Step 4: Ask the prospective appraiser how much experience he has in your market and your type of property. Just as being a brain surgeon is very different than being a heart surgeon, so is appraising homes in the suburbs very different than urban condos. Also ask how much work the appraiser does in your neighborhood. Again, familiarity with your market will likely lead to a more accurate appraisal.

Step 5: Ask what types of clients the appraiser usually works for. Are the appraiser’s clients typically homeowners, estates, lenders, or relocation companies? From Realty Times: “Determine how much of the appraiser's work is done for lenders. A high number could mean the appraiser is just returning predetermined values the lender wants, rather than true market values. If all of an appraiser's work is done for a lender and the appraiser tells you he or she never comes in with a value that is lower or higher than the sales price, find another appraiser, whenever possible.”

Step 6: Ask to see a copy of the appraisal before the sale and mortgage close. Make sure when writing contracts that they’re contingent upon a fair appraisal. When you get a copy of the appraisal, go over it with your real estate agent. Make sure that the information the appraiser noted about your home is accurate and, if the appraiser’s valuation is out of sync with what you expected, scrutinize the market “comps” (comparable properties in your neighborhood). You can challenge an appraisal if you think the valuation was poorly done (though I’ve been told that lenders rarely overturn an appraisal).


What do you think? Have you had a particularly bad or good experience with an appraiser? Click on the “Comments” link to join the discussion!