Appraisals: Working Together – Part 1
Veteran real estate appraiser Jay Josephs spoke candidly about the love-hate relationship between agents and appraisers at the 2017 Arizona REALTOR® Convention. Here is an abridged transcription of his presentation.
Jay Josephs: I bring a unique perspective to this group today because I’ve been appraising for 26 years. I am also the owner of one of the largest appraisal management companies in the state, Value Trend Solutions.
In any given month, we might see 2,000 to 3,500 appraisals go through our office. So, I have a pretty good understanding, from field experience and from seeing appraisals day in and day out, as to how I can help you do the best job for your clients.
First, I want to say something that I guarantee you’ve never heard another appraiser say, I love REALTORS®!
I actually do, I’m happy to be here. I decided a long time ago that the best way I could impact the real estate industry is by helping bridge that communication gap between REALTORS® and appraisers.
Jay Josephs: Two days ago, my last inspection of the day was a manufactured home. The house is under contract (I’m making up numbers) somewhere around $230,000 for a 13-hundred s.f., one-acre manufactured home.
I ran comps before I went out there. The sales for a 12-hundred square foot, manufactured home in (this area) are $160,000 to $190,000. We’re at $230,000. So, I get out there thinking I would see something spectacular because it says ”remodeled”. The only thing remodeled about this house is one bathroom.
My point is, here is an agent who stands to make a good commission on this deal if it closes. They have to be aware of the kind of things that I’ve seen because when you pull up “manufactured homes under 2,000 square feet in (this area)”, there aren’t many choices and yet they don’t care enough to meet me? Especially under a circumstance like that?
They’re not doing the best job for their client, okay? So, that’s why I’m here. You need to start coming to these appraisals. You need to meet your appraiser. You need to interview the appraiser.
Jay Josephs: There are some really dramatic things happening in my industry that you have to care about. For example, three weeks ago Fannie Mae reinterpreted the guideline where a trainee appraiser (an unlicensed appraiser who maybe only has been appraising for 2 weeks), can now go on inspections without a certified appraiser.
REALTOR®: Is that because there’s not that many of you anymore?
Jay Josephs: Yes, there is a shortage of appraisers and Fannie Mae has decided that instead of taking a really pragmatic approach to how can we improve the industry, they want to do something quick and dramatic. So, the quick and dramatic solution is to say, “Okay, a trainee can out without the appraiser.”
That puts another responsibility onto you. If you’re watching out for your client’s best interests that includes not letting an unlicensed appraiser do an inspection on your property.
REALTOR®: I’ve had appraisers tell me, “I know my job and I know the area, you don’t need to send me any comps.” How do you handle that sort of thing?
Jay Josephs: First of all, you don’t ask. You tell. “I am going to meet you out at the property and go over comps.” Part of protecting your clients’ best interests is putting yourself into this appraisal process. It starts with interviewing these appraisers before you ever let them into the house.
Jay Josephs: There’s a term everyone should know. It’s called “geographical competence” and it is a very important term in my business.
As the owner of an appraisal management company, one of my bundle of requirements is that I have to give you a geographically-competent appraiser and what I mean by that is, does that appraiser who’s coming out to value your house have the locational expertise to give you an accurate appraisal?
Have you ever felt that an appraiser who is meeting you on the property lacked location expertise? It’s reason number one why appraisals come in erroneously; usually too low, sometimes too high. So, plan ahead of time for this call and have some questions ready for that appraiser.