As owner of an appraisal company, I hear it all the time. "These conservative appraisers are killing my deals." I’m going to tell you a secret. No appraiser wants to kill transactions. In fact, for appraisers, the only thing worse than providing values that don’t support transaction amounts is losing their licenses or getting blacklisted by a lender.
I understand how it could look like appraisers ruin deals. But this is all because of a simple misunderstanding. Let me explain by taking you inside the mind of an appraiser.
It used to be that appraisers and production staff worked together on deals, hand-in-hand, determining whether or not a deal could work before investing the borrower’s money in a full appraisal. Times have changed. Those days are gone. Companies that haven't adjusted are singing the blues, wishing appraisers were back “on their side.” But just because appraisers aren’t working hand-in-hand with lenders the way they were before, doesn’t mean they see lenders as their nemeses and arch rivals.
Appraisers don't look at properties as mortgage transactions. They don’t see appraisals as killing or not killing a deal. They see property appraisals as jobs. This means that appraiser needs to do things a certain way—assuming the appraiser wants to keep his or her profession and livelihood in good standing. Appraisers look at the long term repercussions of pushing or adjusting reports, not whether their valuation will kill or not kill a deal. It would be like an underwriter thinking of “fudging” income or credit—assuming he or she had the power to so—rather than making a sound, unbiased evaluation on the numbers that actually exist.
Every now and then, I‘ll get requests from investors or banks for information on appraisals done as far back as 2005. My father, who founded Coester Appraisal Group in 1970, recently got a bank request for a copy of an appraisal done in 1999. The bottom line is that 20-page report never fades away. It is tied to the appraiser’s license forever. Clients come and go, lenders come and go, but appraisals are forever. One bad appraisal can ruin an entire career. If appraisers are walking on eggshells, it’s because those eggshells last forever and any one of them could do enough damage to put the appraiser’s career on life support.
The mortgage company is just the first stop in a long line of people who will review the appraisal, each of whom has the sole intention of finding out what’s “wrong” with the report. What makes it even more difficult is that appraisers don’t always see all of the documentation the lender has, like a home inspection, well inspection, termite inspection, roof inspection or flood certification. Yet it’s the appraiser that will get slammed if there’s anything missing or inconsistent on the report.
The next time you’re ready to complain about an appraiser “killing” a deal, maybe you’ll remember your foray into the appraiser’s mind. Appraisers aren’t mortgage transaction serial killers. They’re professional folks with long-term careers and families to feed. They want to work with you. They really do. If they can’t accommodate your requests, it’s because they don’t want to roll the dice on their careers and future incomes in order to do so.
